Ritchie\’s got a new report out

And it\’s a corker.

Three major points.

1) It\’s written for the main union representing HMRC staff. And it says that there should be more HMRC staff. Funny that, quite amazing how he gets to that position really. If we didn\’t know that Ritchie is entirely incapable of such behaviour we might begin to wonder whether he\’s whoring his good name around.

2) We\’ve got yet another estimate from him of the tax gap. Now it\’s £120 billion a year….something of an increase on his earlier estimates of £25 billion, no? The method used is quite gorgeous as well.  HMRC thinks that the tax gap on VAT is around 14%. Thus 14% of all taxes must be being avoided/evaded and 14% of all taxes is £120 billion.

I might have missed a number or two there but that is his argument.

3) There is some very good news though. By Ritchie\’s estimates of tax that should be but isn\’t paid there is no need for tax rises. For the structural deficit (as opposed to the current cyclical one) is estimated by most at being around the £100 billion level. So, all we have to do is hire a few more union members, collect the taxes already due and we\’ve covered it.

There should therefore be no tax rises. For of course in our current situation no one wants the fiscal contraction of a rise in tax rates and by the time we might be able to think of such things there\’ll be no need, for both the structural and cyclical deficits will be closed.

This is always the propblem with writing reports that lead to a pre-determined conclusion (that policy based eveidence making thing). The implications of your conclusions might not be what you\’d want to point to under less, how shall we put this, \”directed\” circumstances.

2 thoughts on “Ritchie\’s got a new report out”

  1. Yes, he is badly compromised here.

    We know that his TUC ravings are there to soothe the sponsor’s ears on the class wars. That’s why he is so evasive on the incidence issue – not on message with the sponsor.

    Now we know an important concern in any tax policy he advocates is retaining HMRC jobs – something not many of the rest of us would consider important.

    His opposition to extension of a simpler broad based VAT (fewer people involved in the admin) and preference for complicated taxes on income and profits (particularly on those with complicated residency issues and high earners generally) now must be judged in this light.

    Recently he had a go at Guy Hands and the need for HMRC staff to inspect his travel records to determine how long Hands had been in the country. A complete waste of anyone’s time, not to mention an intrusion on privacy. But this was lost on Ritchie. All he could see is more workers to join the union which pays him.

  2. I hope Richie will forgive me for being contrary here, but: If I see a 14% shortfall in the tax take due to avoidance my mind immediately springs to the theories of Mr Laffer, for it would appear the nation finds itself on the righthand side of his famous curve. If this is the case, then, according to his line of thinking, we should actually reduce the level of taxation.

    Put bluntly, that would mean they should be handing out P45’s at HMRC, not writing job adverts.

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