On Work Avoidance And Tax Evasion


In November Ian Duncan Smith announced welfare reforms that are part of the ConDem policy of delivering an £18 billion cut to welfare spending.

It all sounded soooooo reasonable. He claimed that during the expansion of Brown’s Boom Eastern Europeans took 80% of the new jobs created while 4.5 million British workers remained on benefit because they were better off on benefit than working.

The obvious question no one ever asks is why are these jobs paying such low wages that you can get more on benefit? The assumption is always that the wages are at a reasonable level and it is the benefits that are too high. It could of course be the other way round; that the benefits are set at a reasonable and humane level but that the wages offered at the bottom of the market are simply not sustainable for a working family with children.

One also has to question the efficacy of chasing fraudulent benefit claimants against tax avoiders. Tax Evasion (illegal) costs the UK Treasury £15.2 billion. Tax Avoidance (legal) costs £25 million. This gives us a total tax gap of £40.2 billion per year. Or £201 billion over this 5 year parliament.

The governments target for spending cuts over this parliament is £85 billion. This could be met by collecting only 43% of the legitimate tax that is not being paid by large corporations and wealthy individuals

Benefit fraud costs £1.1 billion. If such fraud was completely, 100%, eradicated it would take 77 years to pay off the governments target.

Yet as in Thatcher’s ‘80’s the Tory government relentlessly pursues the benefit fraudsters while leaving the tax gap untouched.

The situation is exacerbated by the fact that many multi-nationals were given hundreds of millions of pounds in grants and other benefits by our government to encourage them to set up business here; these grants being largely justified on the basis of the return we will get from taxing the profit generated by these companies.

So we the taxpayers get hit twice; we pay for the “privilege “of having these businesses set up here and then we stand by as they systematically avoid and evade paying UK taxes.

The response of our government is to largely ignore this issue and instead of seriously trying to recover the ten’s of billions of tax avoided and evaded by wealthy institutions and individuals whose lives and prosperity would barely be effected by paying these takes, instead they concentrate on vilifying and hounding a few hundred thousand of the most financially and spiritually impoverished citizens of this country.

Even by the managerialist and instrumentalist logic of this ConDem government the policy simply doesn’t make sense.

That being said there is no social justice in allowing able men and women to consciously avoid working for a living by living on benefits provided by working tax payers. But two questions arise from that statement (i) How many are we talking about? (ii) To what extent are they “avoiding” work and to what extent are they unemployable.

In the media Ian Duncan Smith implied that all of the 4.5 million on benefits were capable of work. He later acknowledged that there are many disabled and long-term sick claimants who will never be able to work but nonetheless he gave the impression that there were millions of work-shy Brits who the ConDems would force back to work.

Thatcher’s government made similar claims in the ‘80’s but in reality all the effort that went into her campaign against “scroungers” had a negligible effect on the benefit budget, which perhaps exposes the rhetorical nature of this latest attack on scroungers. I would argue that this is simply the political use of the prejudice against a so-called “Chav” underclass to divert attention from the self-serving economic policies of the Conservatives – the aim of which is to remove the protection of the Welfare State from workers in order to make workers more “flexible” in the market place i.e. to do what they are told and thus force wages down.

Many jobs are so unpleasant and alienating that people will only do them if there is no other choice. The Welfare state gives them that choice. The free-marketeers believe that by providing a “safety net” the Welfare State intervenes in the market place and undermines the assertive power of business over the workforce and that is why it has to be destroyed – while leaving the rich free to avoid and evade tax to their hearts content.

This latest attack on the poorest of the poor is just another example of how the Western world is almost entirely organised to the benefit of the capital owning classes and their managerial apparatchiks. Instead of chasing the financial scraps of benefit fraud we need to go after the real big-time criminals – the tax avoiding rich.

I Am Not A Number

Political and Philosophical Dispatches From An Individual Living In A Society

corporate democracy economics freedom left-wing libertarian managerialism moral philosophy politics radical socialist society

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