No Richard, that\’s not what we\’re saying

We discussed if that gap could all be capital allowances as accounts and some of my critics imply – and he laughed at the implausibility of that. He knows – and said he knows  – that this is is also an issue of transfer pricing, of non-remittance of profits captured outside the UK, of genuine tax avoidance – which he admits exists – but towards which he takes a different moral stance.

We all agree that there is tax evasion: that there is tax avoidance. Even that there is tax compliance and tax planning.

What we are saying is that your estimate of the size of (with respect to corporation tax specifically, and if you make this error there we assume you make it elsewhere) tax avoidance/tax evasion is wrong because you have included in your numbers the entirely, even by your standards, righteous use of such things as capital allowances and others  (like the R&D credit) when even you agree that these are either tax planning or tax compliance.

It is the very method you are using to make your estimates, your look at the difference between headline tax rates and effective tax rates, which is at fault.

Think through this for a moment. If the current government goes ahead with lowering the headline rate and paying for that by scrapping some set of those allowances, as they claim they will, then the tax gap, as measured by you, will shrink.

Which really, really, isn\’t what you\’re trying to show, is it?

5 thoughts on “No Richard, that\’s not what we\’re saying”

  1. Tax avoidance is things Ritchie doesn’t like. Tax planning is things he does like, like not paying business rates on his office.

  2. Do you not understand what he has written?

    He claims that the difference between the headline rate and the effective rate cannot be accounted by capital allowances.

    This seems obvious, as main effect of CA is to create timing differences rather than extra relief.

    Do you accept this, or is he wrong?

    Tim adds: No, I do not accept this. For he is claiming that the difference between headline and effective rates is the measure of tax avoidance. But there are many other reliefs than capital allowances. Thus his method of measurement if flawed. As he himself admits in his original paper.

    Now, if he were to then go on and say, “Ooops, you know some of my critics are right, here’s the calculation done again” then I would say “Great, well done”.

    But he doesn’t, does he?

  3. Richard Murphy conflates the two, and yet the media outlet that publishes a lot of his stuff, the Guardian – via the Scott Trust – does precisely the kind of tax mitigation that he constantly attacks.

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