Fox (n): carnivore of genus vulpes; crafty person; scavenger; (vb) to confuse; -ed (adj): to be drunk.
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Tuesday 19 June 2012

Missed the taxman.

SET a speed limit, and most people will break it.

Tell us booze is bad, and we'll drink it anyway. Tax our pay, cars, fuel, heat, clothes, food, feet and pensions and most of us will wriggle as much as we can by dabbling in the black market and paying tradesmen in cash to keep things off the books.

And despite the fact Jimmy Carr's not very funny, enough of us want to see him that he earns £4million a year from us. As a result, and in much the same way I would if I had £4m a year, he asked an old school friend who's now an accountant to look after it as well as he could.

The net result was that £4m a year turned into a £100,000 salary and the rest of it became a 'loan' from a Jersey company on which he did not have to pay tax. Niiiiice.

There are two problems with this which raise it above what any of us would do given the chance. Firstly it's not the first time Mr Carr's done it - a previous tax avoidance scheme he invested in was shut down by ministers who denounced it as "highly abusive and completely contrived". And secondly he earned some of that money for lampooning bankers who did much the same thing.

Seeing as Jimmy 'Didn't Think It Through' Carr performed the above sketch two years after that first "abusive and contrived" scheme was shut down, his hypocrisy is nearly as breathtaking as the fact he gets £4m a year for such limp gags.

It is also inevitable. If you're in the public eye and you do something on the edge of legality - and tax lawyers reckon those 'loans' border on evasion - then you're bound to be found out eventually. It's a fact of life, and one which no doubt Mr Carr is hoping Brian Leveson will find a way to stamp out and most of us hope he won't.

But then tax is something that only seems to apply to most of us. There are some for whom it barely exists at all.

If you are in a job earning £25,000 a year you're taxed at source and end up with £19,176. Your employer has to pay some National Insurance and your take-home is further whittled away by VAT, a tax from your local authority, tax from the police, from the road agencies, excise man, and so on.

If you have a few million a year, you wouldn't want to see it cut by half and would probably ask an accountant to help you pay as little tax as possible. If you have a few billion, then tax is something that happens to other people.

If it were possible to be an ordinary employee and be paid via dodgy loans from the Channel Islands we didn't get taxed on, we'd all do it. The fact is that we can't, and because we can't we're just about keeping our heads above water as a nation with government debt reaching almost 70 per cent of GDP.

Greece, by comparison, has 150 per cent debt, about the same as Britain had after the First World War. And just like Britain its biggest firms are granted special exemptions from the taxman which save them billions.

So their shipping magnates are still rolling around in tax-free dividends while ordinary Athenians are eating in soup kitchens. Meanwhile British businesses like Vodafone and Barclays, and foreign firms which do business here like Google and Amazon, get a handshake and a wink from the taxman while special needs teachers are being laid off, respite care for the disabled is being cut, and unemployment has risen 42 per cent in a decade.

'Sir' Philip Green, the man who runs TopShop and a string of other firms, on paper works for his wife who owns everything and lives in Monaco where there's less tax. He's been working since he was 15 and created thousands of jobs, but he ought to be paying more than he does and didn't ought to be telling the government how to save money when he is so good at not giving it his.

None of us like being taxed but if the workers didn't pay it no-one else would do it for them. We'd be just like Greece, without the sunshine and with no-one left to bail us out.

Which is why the taxman comes after the humble drones and taxes them at source - it's easier. It's why Gideon Osborne denounces tax avoidance as "morally repugnant" on Budget Day and a day later Jimmy Carr's accountant announces: "We're delighted to inform you that most of the powerful tax-saving opportunities survived unscathed."

It's why official figures show individuals avoid £4.5bn of tax out of an annual £7bn missing from the Treasury, when campaigners say the real hole is nearer £25bn deep. Tackling all of that will cost time, effort, money, staff, and those nice big donations which political parties get from big business, so let's not do it.

The true hypocrisy is not to be found in unimportant, unfunny Jimmy Carr and his couple of mill. It's sitting behind a desk in the Treasury, pilfering the pockets of the lower orders and stroking the egos of big, fat men with big, fat bank accounts.

It is the rules that are at fault, and therefore the people who write them. MPs claimed expenses 'within the rules' and it was a scandal. Bankers gambled with more money than they had 'within the rules' and now everyone else is paying them back. If Her Majesty's Revenue and Customs are "fully aware" of all "legal tax avoidance vehicles" then it's HMRC that are the real tax dodgers.

No-one will sort them out, of course, and they'll say it's all very complex and how can poor little worker bees understand it. But in truth the solution is ridiculously simple, and that is to get rid of most of our taxes altogether.

Scrap VAT. Bin stamp duty. End the raids on pensions. Most of them are only there to fill up the coffers because rich people are busy avoiding tax anyway. Lower income tax to something low and inoffensive and make sure everyone pays exactly the same - billionaire or worker you pay, say, 10 per cent on your earnings and that's that. Everyone will, when the rate's so low.

And instead introduce the only tax which is fair - a tax on consumption. A sales tax is something no-one can avoid. Jimmy Carr has to eat and buy petrol, same as the rest of us. If he drives a rich man's car with a rich man's fuel consumption he pays more. A sales tax gets Philip Green every time he eats a steak dinner, it gets drug dealers and criminals and people who operate off the books. Everyone has to buy and spend, and if you tax at the point of sale everyone pays their share. The exchequer's big hole would start to fill up, the housing market would improve, and there would finally be a point to buying the same frock as Kate Middleton wore.

It would mean a little old lady buying a can of beans for her supper doesn't pay any more than she has to, and that Gideon would have nothing left to say.

Everyone's a winner, frankly.