The second myth of British politics is that austerity was the only correct response to the high-living of the New Labour boom. That was always opposed by some of us – now it is exploded with each new tax investigation. Drawing in part on data from last year’s Panama Papers and the HSBC files leaked in 2015, Zucman recently co-published a study that found wealthy Britons have stashed about £300bn – equivalent to 15% of our GDP – in offshore tax havens.
Three hundred billion quid would more than cover our entire education budget for the rest of this decade and into the 2020s. Or, if you prefer, it is the equivalent of £350m being paid into the NHS every week for the next 16 years. Instead, it is funnelled offshore and used to buy yachts and mansions and other baubles – tax efficiently, of course.
£300 billion is not the amount of tax which would be due on £300 billion now, is it?
It is the income from £300 billion which would be subject to an annual levy. Say, at 5% (a good return in this low interest rate world), some £15 billion. Of which what, 50% should be tax? So, £7.5 billion.
At which point we’ve got to ask well, what tax was paid? As far as we know, from the Panama Papers and that look at David Cameron and his father’s offshore etc, the tax due was in fact paid. Similarly, from the Swiss bank thing we found that the vast majority of accounts were either paying tax due or didn’t owe any as the holders weren’t UK resident (or perhaps were non-doms).
That is, weirdly, presently we don’t know what the “tax loss” is or was, we’re not even sure there is one and any reasonable estimation of what it could be is small.
Chakrabortty also claims that Ashcroft promised to give up non-dom status on taking vermine. That’s not how I recall it – does anyone else? – rather, that he would become resident. Which he did as far as I recall. Not understanding that distinction is one of those things that shows a paucity of knowledge about the tax system.