It’s the £10 in cash that is actually the problem

For another thing, it’s falling into the Tory trap by comparing the tenner-in-cash worker to suitcases full of cash emerging from secret bank accounts in Switzerland, organised in active collusion with HSBC’s local arm.
But, as the Guardian has graphically showed here, the scale is vastly different, as are the penalties.

Well, here’s the problem. Let’s say that we actually believe Richard Murphy’s numbers on tax avoidance and tax evasion. I am minded to actually agree with his estimates of evasion actually, given that they are a simple multiplication (in large part) of the size of the grey economy against the normal tax percentage of GDP.

Evasion is very much larger than avoidance, even by his estimates. And evasion is almost all about the cash tenner, not the Swiss bank. There’s no evasion by large corporates for example. There’s some thousands of rich people who evade, as the HSBC case shows (they found 1,000 Brits who did at one of the world’s largest banks). But this is trivial as against the tens of millions who do the odd tenner here and there.

It really is the cash economy in the UK, not offshore nor the rich, that is the largest leak from the tax system.

11 thoughts on “It’s the £10 in cash that is actually the problem”

  1. Swimming against the tide, Tim.

    Facts have very little place in this (or any other) pre-election season but expecting the 0.2%ers who write for the Guardian not spend their time encouraging the mob to beat up those evil capitalists who have the temerity to earn more than Guardianistas?

  2. So Much for Subtlety

    Not just swimming against the tide. Logic doesn’t work with lynch mobs. The Left is whipping up this lynch mob as they have nothing else.

    It is useful and necessary to be on the right side of history by speaking out, clearly and often. But it is only future historians who will praise you. No one else will remember.

  3. It’s heartwarming to see Murphy adding his comments to the Guardian article of the ‘scandal’ that Osborne gave IHT avoidance advice on the Daily Politics in 2003.

    Presumably this means that he’ll be publicly rebuking himself for telling people to incorporate their nannies and moving trivial pursuit to that board game powerhouse of barbados?

    Also, the devious cnut has linked a youtube clip of it on his website that is titled 2013, rather than 2003. without comment, thus implying that Osborne was doing this two years ago, not 12.

  4. the more significant problem is the difference between what they collect in tax and what they spend. Why would they care about getting the tax they collect if it has no bearing on what they spend. I would propose that they are only allowed a salary out of the tax above what they spend.

  5. Tens of millions. Really? The working age population of the UK is about 45M. So what are you saying, most of them?

    Also, you’re well into wrong side of the Laffer curve territory here, tax it and it stops happening. Net result, lots of unhappy voters, negligible extra revenue.

  6. Don’t believe his work on evasion. He basically takes the size of the shadow economy by taking the VAT gap, multiplies it up then applies a very high marginal tax rate to the whole thing – which gives him a huge number for evasion.

  7. Forgot to add – he gets his huge number by taking the total sales volume, then ascribing all that sales volume as profit.

    Just because his business runs at incredible profit margins doesn’t mean everyone else’s do.

  8. I don’t believe his tax evasion figure either. And, given that cash – in – hand also means benefit fraud, don’t expect him to discuss how we should all go about bridging this particular tax gap.

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