Note to New Labour Shadow DWP Rachel Reeves: ‘Sort out the tax dodgers, Labour, then the benefit bill won’t be a problem’ ~ Vox Political

Labour Cartoon

 

 

Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.
Off-message: If Rachel Reeves had promised to get as tough on tax avoidance in her previous job as she is promising to be on benefits now, Labour might have had more credibility.

 

Sort out the tax dodgers, Labour, then the benefit bill won’t be a problem

By Vox Political Sunday 13th October 2013

A lot of people have been getting their knickers in a knot about Rachel Reeves’ interview in today’s Observer – and rightly so.

In it, she tells us (wrongly), “We are not in an environment where there is more money around,” and says that Labour will be tougher than the Tories when it comes to slashing the benefits bill. She stressed that she wanted to explode the “myth” that Labour is soft on benefit costs.

There are a few myths feeding into these statements. Firstly, the myth that millions upon millions of British citizens are living a life of luxury on benefits, which is, quite frankly, infantile nonsense. Benefits do not pay the ordinary claimant enough to afford huge luxuries and never did. They were always intended to cover the cost of survival while the recipient looked for something better. Anything else is a lie concocted by unscrupulous politicians, that you would be a fool to believe.

Then there’s the myth that the British taxpayer is being defrauded out of a fortune by benefit cheats who are (again) living a life of luxury at our expense. One look at the figures dispels that idea! The fact is that only seven people in every thousand commit benefit fraud – at a consequently small cost to the overall budget – and the amount they receive simply would not support the lifestyle our politicians are suggesting for them.

Let’s move up to a bigger myth – that people prefer to live on benefits than get a job. We’ve now moved from infantile nonsense to dangerous nonsense. The current situation, engineered by the conservatives in both Coalition parties, means there are very few jobs available – around 500,000 at any one time, with 2.5 million people chasing them.

And what kind of jobs are they? How many are zero-hours contracts? How many are part-time? These jobs do not pay more than benefits (“Making Work Pay” – another Tory lie) so anyone taking them will be out-of-pocket.

Meanwhile, the Tories in power have rigged the system so that anyone who does not spend the entire working week pestering local businesses for jobs that they aren’t offering will be sanctioned and will lose their benefit for a period of up to three years! It is entirely disproportionate, considering the state of the economy, and may cost jobseekers a lot more than a few quid a week in the long run.

But this is how the benefits bill will be slashed – by the Conservatives and by Labour, if Rachel Reeves is to be believed. Ministers of any party, living in the la-la land of made-up statistics, will sanction people for failing to work hard enough at securing jobs that don’t exist!

Ms Reeves says Labour’s jobs guarantee will ensure that those jobs do exist but we don’t know that for sure. We do know that she intends to continueTory policy on sanctions – blindly.

Finally, we have the biggest myth of all – that there isn’t enough money. HM Revenue and Customs just released estimates for the last-but-one tax year (2011-12), suggesting that it failed to collect £35 billion in evaded or avoided tax during that year.

That’s seven times more than the national bill for JSA, and more than 29 timesthe estimated cost of all benefit fraud. But wait – it gets better! This is only an estimate and it has long been believed that the true cost of the so-called “tax gap” is £120 billion – equal to each year’s national deficit, 24 times the cost of JSA or 100 times the cost of benefit fraud.

Why isn’t our government going after these criminals? Why hasn’t Labour promised to go after them if the Tories won’t?

Simple: Both main parties have been re-writing tax law to make it easier for rich individuals and large corporations to avoid paying tax, and ignoring flaws in tax laws that make avoidance possible.

So for example: In the late 1990s, the then-Labour government removed the tax on dividends that meant companies had to pay tax on profits if they wanted to pay them out to the owners. So for example Arcadia boss Philip Green’s wife Tina, who is technically the owner of the company and lives in Monaco, received a tax-free £1.2 billion dividend in 2005; if this tax had been in place, £300 million of that would have gone to the UK Treasury.

Gordon Brown slashed Capital Gains Tax from 40 per cent to 10 per cent in 2000, meaning income that his friends in private equity managed to engineer into capital gains would be taxed at a lower rate than was paid by their cleaners. Not the finest hour for the Party of the Worker!

And towards the end of its term, New Labour started dismantling the rules that guarded against industrial-scale tax avoidance by British multinationals, meaning profits returned to the UK from overseas subsidiaries would be exempt from tax. This created a substantial incentive for firms to send their income offshore.

Before the 2010 election, our old friend David Gauke made a lot of noise about stopping the limitless tax deductibility of interest payments, that had been used by Boots (the chemist) to slash its tax bill. Six months after the election, when he was in a position to do something about it, he was telling everybody the rules would not be altered because business considered them a competitive advantage.

The Coalition brought in tax exemptions for companies’ tax haven branches and for profits parked in tax haven subsidiary companies. Meanwhile, tax breaks for the cost of funding these offshore set-ups, from the UK, are also provided.

Corporation Tax will drop to 21 per cent by 2014, even though there is no evidence that cutting the rate will make the UK any more competitive in world business.

The Treasury’s mission is now to adjust the framework of tax laws to suit big business. The ‘Big Four’ accountancy firms are now well-entrenched in writing our tax laws for us – and they run the most popular tax avoidance schemes. Consultations have descended into a process of agreeing laws demanded by big businesses.

There are clear and irrefutable arguments that reversing these legislative idiocies and closing every other tax avoidance loophole will do far more for the economy than flogging the unemployed to death, looking for jobs that don’t exist.

But I don’t think former Bank of England economist Rachel Reeves will be interested in that. In 1975, an appalled taxpayer wrote to then-Chancellor Denis Healey, complaining that an employee of the Bank (which is supposed to work on preventing tax avoidance) had been giving advice on how to avoid tax. “I wonder if this is really part of the Bank of England’s duties,” the correspondent wrote.

The behaviour of Ms Reeves, the former Shadow Chief Secretary to the Treasury, suggests that she believes it is.

Vox Political

Labour will be tougher than IDS on benefits, promises party’s new welfare chief Rachel Reeves Posted on October 14, 2013

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Scotland can do better on Welfare and Pensions Posted by Peter Dempsie 31st July 2013 

WATCH Disabled People and Scottish Independence: Black Triangle Question to DFM Nicola Sturgeon, Margo McDonald, Chas Booth and Aamer Anwar Posted on October 9, 2013

 

Comments
  • Ian October 14, 2013 at 10:09 am

    vote ukip,hopefully that would give the other 3 parties the kick in the arse they rightfully deserve and maybe shake up the political system at long last.

  • jed goodright October 14, 2013 at 11:58 am

    Rachel Reeves’s website is … down!!!!

    funny that!

  • George October 14, 2013 at 12:30 pm

    It’s taken me a long time in life but I have to admit,I am now one of the “they are all the same,whoever you vote for”
    No one for the working class,the disabled hung out to dry,the poor given no hope,what we want are,working class people to truly represent the working class of this country.

  • Humanity2012 October 14, 2013 at 12:58 pm

    Tax the Rich Hands Off the Poor

    People Need to Bloody Wake Up and Demand a BetterPrest

  • Humanity2012 October 14, 2013 at 2:28 pm

    The Numbskulls who Cannot See how Bloody Diabolical Things are under this Lousy Capitalist Slavery State System are Part of the Problem , Those who Think it is Fine for People to be Trapped in Abomination Slum Areas and be Second Class Citizens or that having a Roof over One’s Head should be a Matter of Wealth and Not a Basic Right are Evil Scum Pure and Simple and Should be Despised just like Vichy Collaborators with the Nazi Regime in Occupied France

    Down with Nazi Britain and System Collaborators get Stuffed

    • jed goodright October 14, 2013 at 8:23 pm

      Quite right too.
      The number of appeasers in the labour party is unbelievable. They haven’t a clue. Even though people are dying as a direct result of ideological driven policies, the labour party think it will all be okay. What is it going to take to get people off their arses …. notice how quiet the unions are ….

  • Serenity October 15, 2013 at 3:27 pm

    Not only do these companies pay no tax but they don’t even have to pay a living wage to those who are employed on subsistent wages having to claim benefits just too survive. So the ordinary workers tax is paying most of their wage bill as well and with all the free labour provided by workfare the multinationals pay nothing.

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