25/09/2010 – Are they really going to bite the hand that feeds them?

LAST WEEK saw the Liberal Democrats hold their annual conference in Liverpool.


The centre piece of the first day was a speech by Lib Dem Treasury Chief Secretary Danny Alexander. 


He declared that tax evasion, avoidance and criminal abuse costs the Treasury between £14 - £19 billion every year.  Thus, the Con-Dem Government would institute measures in a bid to recoup some of this.  (This new operation would cost £1billion – although it is hoped that £7billion will be recouped for the public coffers.)


The Con-Dem plan includes ploughing £900million into a specialist unit in HM Revenue and Customs (HMRC). 


According to the Scottish Daily Record (20/09/2010) this “will pay for a team of investigators to track down money hidden in offshore accounts and to run more thorough checks on tax returns put in by people making more than £150,000.


There will also be investment in cyber crime specialists to protect the taxman's electronic systems from attack and more detection technology designed to prevent alcohol and tobacco smuggling.”


Another Scottish paper - the Herald - also reported that private debt collection agencies would be also be paid to recover billions of pounds in unpaid tax.

The Record noted that Mr. Alexander also criticised those who use legal tax dodges to cut their tax bills.”


Naively he appealed to the better nature of capitalists when he said:-

"To those who hire accountants to dream up a clever new tax dodge, I say this, Think again. We are all in this together - and that means you, too."

According to the Herald, Mr. Alexander was backed up by Lib Dem leader – and Deputy Prime Minister – Nick Clegg.  He declared that the Government would be "as hard on tax cheats as on benefits cheats".


Solidarity Trade Union welcomes the news that all cheats will be targeted. 


However, we’re somewhat skeptical that this will really happen.  We feel that, when push comes to shove, only working-class benefit cheats will have their collars felt.


We’re doubtful that the proposed specialist HMRC unit will be fully resourced.  After all, where is the money going to come from to do this? 

And as MoneyWeek estimates, around 75,000 in Britain earn £150,000 or more.  Are they all going to be investigated?  We doubt it.

(MoneyWeek - “The UK’s best-selling financial magazine” - also raises the valid point that the plans to investigate anyone earning over £150,000 - simply because they earn over £150,000 – effectively criminalizes them.  They are “suddenly guilty until proven innocent, and raises the prospect of perfectly innocent people being forced to take lie detector tests simply because they are high earners.”)


We feel that with an under-resourced HMRC, the private debt collectors will target the easy option. 


This will mean that the really wealthy – who are able to employ expensive and effective accountants and lawyers – will still be able to squirrel away their cash.  Even if the HMRC was fully resourced, it would take it years to trace anything.


It should also be remembered that both the Tories and the Lib-Dems rely on hand-outs from the super-rich to keep them afloat. 


The Tories are in total debt to the tune of 13m and the Lib Dems to £1.6m.  (According to John Prescott, the former Labour deputy prime minister, Labour is up to its neck in around £20m of debt).  With these levels of debt, it’s easy to see that the Tories and Lib Dems couldn’t really function without these large donations. 


Are they really going to bite that hand that feeds them?