I know a lot of people were getting a bit jittery about George Osborne's Swiss Tax deal, designed to puncture a hole in the super-rich's tax haven shield in Switzerland. In his own words, "We will be as tough on the richest who evade tax as on those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over." Wow, well that IS tough, seeing how much abuse they've given (and are going to give) benefit cheats - who, let's be honest, by taking £1 billion out of the budget each year compared with the £15.2 billion lost through tax-dodging, are definitely in the same ball park - I'd say there's a lot of rich people shaking in their £200 boots. Has George finally started listening to UK Uncut and taken a decidedly leftist attack?
Hmm...nope.
The Financial Times has highlighted a few problems:
“First, evaders will still pay less than if they had gone by the law. The withholding tax on investment returns is below the top rate in the UK - by a quantitatively marginal but symbolically significant difference. The one-off levy, too, is unnecessarily forgiving for principal that was not taxed when it was first earned."
So, the rich are still paying less than the rest of us. I suppose this is "better than nothing"...
“Second, this is an anti-evasion measure that seems all too easy to evade. The one-off tax will only be levied on accounts still open after May 2013. That is plenty of time for evaders and their Swiss bankers to discuss where it might make most sense to place the money next. Lichtenstein, which has a less taxing agreement with the UK, is being mentioned, but there is an abundance of other tax havens."
Ah, good. So unless any of the big tax-dodging companies have heard of any other country than Switzerland, this is a water-tight clampdown...also, assuming that they're all lazy bastards who won't get around to doing anything with their balance sheets until 2013...
“Third, though the deal is not presented as an amnesty, it is hard to spot the difference. To let account holders who can keep not declaring their accounts settle their tax liabilities by paying less than regular UK residents smacks of permitting some people to pay their way out of obeying the law.”
Well, this is of course the crux of the matter - this is one law for the rich and one for the, uh, less rich.
Basically, this is just a bone thrown to the rabid dogs (i.e. sane people) who want to see some action taken against the tax-dodgers, but without any real substance to back it up.
It all goes back to the great neo-liberal ethos which has bascially become a superstition - if you do anything overly nasty to the rich, they will bugger off. And that is, in some way, a bad thing and will be, in some way, bad for the country and economy.
But it's more than that - it's an almost childish admiration that the likes of Cameron and Osborne have for the super-rich. Its almsot like a desire to be able to say "Look! My country's got more billionaires than your country! Suck my Prince Albert!" Or something. To be honest, I don't really understand it and I know a lot of people, both on the left and right, don't. The FTSE 100 paid a total of £5 billion in corporation tax in 2010, which is less than the amount of tax taken from Tobacoo duties. Looks like they might want to back-track on all those anti-smoking ads. Afterall, big business is much worse for your health. Anyone remember that notorios statistic about Barclays paying only £113 million in corporation tax in 2009? Yet, of course, if we push these people too much and try and make them, y'know, obey the same law as the rest of us, they'll all leave and it'll be the end of the world. So every other part of the economy - even those groups that generate more tax revenue (and let's not forget not gambling away all our money resulting in us bailing them out and leaving the actual taxpayers £131 billion in debt) - are going to suffer instead. The rest of us are expendable.
Osborne's decision to scrap the 50p top rate of income tax is just typical of this - either he's a complete moron, or he's totally in thrall of the big boys. Or both. Apparently, the 50p rate of tax is only producing marginal returns...according to the Independent, the difference between a 45p tax and 50p tax might be only £750 million a year.
Ah right.
Wait, what?
£750 million?! Danny Alexander described cutting the 50p tax as "living in cloud-cuckoo land" and it's not hard to see why. For example, Osborne is planning to cut £670 million from the budget for the Department for Education. He is also planning to cut £535 million from the Department for Work and Pensions. So while these cuts are desparate and necessary, a sum of money greater than either of the budget deficit in either department is "marginal"? Like I said, either Osborne's a moron, or he's completely in the pocket of the super-rich. There's simply no other way to justify this. Even by neo-liberal standards, this is a totally irrational move, as many have been quick to point out. It's not even an ideological move - it's really just pure corruption. It's one step removed from the kind of Mafia-like oligarchy that's been ruining Russia since the collapse of the USSR.
To be honest, the reaction in the government has been so strongly negative - both from Conservatives and Lib-Dems - that I can't see it actually being pushed through. But the fact that Osborne actually saw this as a good idea is what makes it so scary. If I was in the cabinet, I'd be pushing for a vote of no-confidence. It's not like there aren't enough talented economists in the cabinet as it is - Vince Cable's proposals, such as a land tax (which would close one tax loophole - you can't exactly move a plot of land to the Caimen Islands, can you?) have been much more sensible, at the very least.
But this is missing the point really - Cameron and Osborne have not, and have never, had any intention of penalising the bankers or the super-rich for the financial crises or for engaging in even the slightest amount of Robin Hood taxation. That's just not their ethos - they are a group of fundamenalists who are going to cling to their "we need the rich" idiom and drag everyone else down with them just so they don't have to admit that it's not actually true.
It all goes back to Mervyn King's now-legendary summation of the financial crisis: "Now is the period when the cost is being paid. I'm surprised the real anger hasn't been greater than it has."
When you have a government which is protecting the people who caused the financial crisis in the first place and making the rest of suffer for it, you have to ask - is the government insane and corrupt...or are we insane and corrupt for voting them in?
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