So a comment over there gets his teeth into him.
No I’m sorry, following your logic benefit fraud cannot, simply cannot be only £1.5 billion, not if it is “the most important factor determining the size of the informal economy”. There cannot be £60-70 billion of tax evasion driven by the desire not to lose benefits if that loss would only be £1.5 billion.
And you cannot claim with regard to the level of benefit fraud “I engage with what the government says it is” when you make it quite clear over many years that you do not believe the gov’t\’s figures on the tax gap etc.
For what it’s worth I wholly share (as do you) the report’s analysis that the high effective marginal rates suffered by the low paid is driving much if not most of the shadow economy. So reducing these would increase tax compliance, as it would for higher income individuals, non-doms, corporates, everyone in fact.
Just to expand this. The Murph is shouting that the IEA agrees with his £70 billion estimate of the tax evasion going on. For the record, I\’m sure that it\’s in that general region. This being because the Murph\’s original estimate was using a decent data source instead of just makin\’ stuff up.
We all also agree that the tax evasion stuff is not large corporates and the rich. This is the cash for no VAT economy: it\’s hundreds of pounds to a couple of k by many millions of people. Who checks paper boys for income tax for example? And is there any way in which we could remain even a modestly free or liberal society if government were to take the powers (or enfirce those it has) to beat this?
Which is where Ironman does his twist. The benefits fraud bill is said to be £1.5 billion, as Murph constantly reminds us. But much of that tax evasion is driven by not declaring income so as to continue to gain benefits. £30 for cleaning the loos of the grand lady down the street: who thinks that gets reported so that housing benefit will get cut? And there won\’t be £70 billion of tax dodging going on in order to retain £1.5 billion in benefits. Therefore the benefits fraud bill must be much higher than that if the tax evasion number is true. Precisely and exactly because people are tax evading in order to maintain access to benefits.
The Murph doesn\’t want to hear this of course.