Tax campaigner Richard Murphy has just published his latest assessment of the Treasury’s missing taxes – a gap he sets at £100bn. The difference between this and the Treasury’s £35bn estimate comes partly from Murphy’s recent uncovering of some 360,000 companies not declaring income, never checked by the staff-starved HMRC, with a sample of 40% of declarations found to be fraudulent. But most of all, he would change the law to assert a general avoidance principle, to stop rules being wriggled around, but let HMRC strike down any activity whose purpose is plainly to avoid tax.
The major difference between the two estimates is that Murphy classes as tax avoidance things that the Treasury does not class as tax avoidance. And on this matter the Treasury is correct for they are following the law and the Murph his own delusions.
Ask Murphy where money is to be had and he has large sums to offer. Start by bringing back the level playing field, abolished in the Thatcher era, between tax on earnings and investments. If the same 13% national insurance was charged on earned and unearned income, that would stop people setting up artificial companies just to avoid it – and it would bring in £40bn.
And that’s just sodding stupid. It’s a well known result of optimal taxation theory (you know, that economics that MonsterMurph insists is all wrong because he disagrees with it) that capital income should be taxed at lower rates than labour income. On the grounds that the deadweight costs of capital taxation are higher than of labour taxation.
Hodge would confront Amazon and the rest right away. “Don’t wait for international negotiations. It will take forever; just close the loopholes now.”
But Amazon isn’t exploiting any fucking loopholes you terminally dim cow. Haven’t you noticed? The entire company as a whole makes losses! There ain’t no profits to tax!