Pretty good from Ritchie’s new report

Only 5 paragraphs into the introduction and already we see a blatant mistruth:

This report estimates that tax evasion might cost the UK £85 billion a year whilst tax
avoidance might impose a cost of £19 billion a year and tax not paid could result in a
loss of income of £18 billion a year.

Tax evasion, tax avoidance and tax unpaid don’t cost the UK anything at all.

They may well cost the government coffers of the UK that sum (subject to the usual disclaimers about the factual basis of the Murphmonster’s work) but they don’t cost the UK that sum at all. The money doesn’t disappear, it doesn’t cease to exist in fiery destruction, it just doesn’t move from the citizenry to the government.

You could, if you were extreme about it, argue that this £122 billion a year is actually what the UK saves from the depradations of the governing classes. If the people contributed less to the expenses of some feudal warlord then we would regard those people as having made a savings, not suffered a loss. That people working part time on minimum wage are taxed in order to pay Ed Miliband’s £139,000 a year salary starts to suggest such feudalism to me. But that is to be extreme.

Without being extreme we can still say, though, that there is no loss to the UK, the nation, the citizenry, as a result of tax evasion, tax avoidance or tax unpaid. So the entire concept Murph is straining for just doesn’t exist.

11 thoughts on “Pretty good from Ritchie’s new report”

  1. But if you believe as Ritchie seems to that everything belongs to the state and that business success is little more than an accident that happens to some people because of the beneficence of the state then anything not given back to the state is practically theft from the state.

  2. Even by his own pathetically dire standards, this takes the cake. The report argues simultaneously that the tax gap is £119.4bn and £122bn because he obviously changed his mind at some point about whether evasion should be £82bn or £85bn. So you end up with the ludicrous position that this ‘cut and shut’ report has £119.4bn on the cover but a foreword from Mark Serwotka saying it’s £122bn. No wonder Ritchie can’t make up his mind whether the tax gap is increasing or decreasing.

  3. Two things strike me about Ritchie’s, er, “report”.

    1. The PAS represents thousands of Tax workers, but felt entitled to call in Richard Murphy to write his bollocks and to call him (and not its members) a “tax expert”.
    2. His projections going forward assume a level proportion of GDP being taken by the shadow economy etc. So his projection are hugely dependant on his projections for GDP growth. And what faith he appears to have in our present Chancellor! He must be Gideon’s biggest fan.

  4. In fairness, “the UK” is often used as shorthand to refer to the state or government of the UK rather than the folk living in it. Probably less egregious than referring to the US Federal Govt as “Washington”. Metonymy isn’t necessarily a symptom of idiocy.

    And since some of the tax allegedly avoided would otherwise have been paid by foreigners, and in some vague sense the moneys of the British state might be said to belong to the British people (in the limited sense that they purportedly have democratic control over said state) one might claim that the fact any such tax was not in fact collected leaves British people worse off.

    Whether it would be just or even legal to collect such taxes is rather more to the point, in my opinion. And on a factual basis, whether the suggested figures are anywhere near accurate. Picking up on a common metonym seems petty in comparison.

  5. @Christie

    You obviously don’t understand. The tax gap is going up because HMRC are evil and Tories and business capture and stuff. The tax gap is also going down because Ritchie’s campaigning is working.

  6. The real tax gap is the difference between what parasites of Murphy’s ilk mulct in taxes from the productive and what is actually needed to run a country the size of the UK. It’s about half a trillion quid a year.

  7. Picking up on a common metonym seems petty in comparison.

    I read Tim’s piece less as pendantry, and more as objecting to the implications of a common, and linguistically acceptable, mode of speech.

    In some ways it is not unlike, when another expansively refers to “all of us,” the retort, “Speak for yourself!” We know it’s a legitimate use of the language at one level, but it also achieves (whether wittingly or no) a rhetorical purpose to which we object.

  8. According to Murphy everyone in the black economy is already paying tax at the 40% rate on their legal income declared to HMRC!
    Alternatively their business is registered for VAT because it is turning over more than £88k and they have no cost of sales.
    It may not have occurred to Murphy that anyone with income of £88k from the black economy and paying only basic rate income ta on his/her legal income might be noticed?
    There are two basic flaws in his argument – the first is that all the VAT gap is down to fraud (“evasion”). HMRC does not ask anyone with VAT-able turnover less than £88k to register for VAT so half-a-million or so self-employed guys do not choose to register with all the hassle. That is most of the VAT gap. A few of these guys may understate their income to HMRC but most are honest anyhow they don’t have enough profits to make the effort of trying to dodge tax worthwhile – if you are earning £8k or £11k the hassle of dodging just isn’t worth it compared to the tax you pay. NB there are a horrendous number of self-employed guys esarning less than £11k.
    The second big flaw is his claim that 100% of revenue in the black economy is net income liable to higher rate tax. No cost of sales!?! Much of the black economy comprises unemployed guys doing a day’s work for a pal without telling the DWP (although a large part involves gals doing a night’s work to feed their drug habit) – in neither case is a 40% tax rate relevant.

  9. john77

    Yes, that’s my understanding of it as well. In fact the biggest loss to the Treasury from VAT/Tax/NIC evasion is quite probably the means – tested benefits that aren’t given up. The social implications of going after this sort of evasion on the scale he envisages is less than optimal – and probably lost on a nut job writing his world manifesto in his shed.

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