War on Want Special Report: The Great Tax Dodge: Fighting Back against Corporate Greed

Wrtten by Seb Klier

Austerity or Bust?                                                                                                     

Talk of a new age of austerity, brought on by an urgent need to reduce the budget deficit, is now a familiar message for many people in Britain. Parliament has been priming the public for massive cuts to public services, benefits and education since well before the 2010 general election.

For a while, there seemed to be a consensus among many people that this painful transition to a smaller welfare state was necessary – and that people could offer no alternative. But in recent months two factors have begun to break wide open this acceptance of cuts and show that the government’s “common sense” is in fact simply ideologically-driven rhetoric.

 What has first become abundantly clear is that the pain of austerity is not being felt equally across society. The trite phrase “we’re all in this together” rang ever more hollow as the bonus culture of big business and the City returned to its normal levels at the end of 2010, while services for the disabled, children, the elderly and the poorest in society were quickly and decisively slashed.

As the final cuts are being decided in local council budgets, bankers’ bonuses have hit the headlines again. Barclays chief executive Bob Diamond recently received a £9 million bonus . And the whole bonus pot seems likely to amount to £6 billion this year, despite the massive bailout that was financed by ordinary people in Britain. The government’s reaction has been a small and derisory levy on banks that will raise no more than £2.5 billion a year.

Amid record youth unemployment, the banks are able to function as normal, despite the trillions of pounds spent bailing them out, which amount to a central part of the current deficit. It is this last fact that really
shows that we are not sharing the pain. Finance can do whatever it likes, whenever it likes, and the rest of the population must pay.

Time for Tax Justice

Even more threatening to the official government narrative calling for rapid cuts is the realisation that there is a coherent alternative to austerity that places fairness at its centre. That alternative is a long overdue reform of the tax system that properly taxes the huge wealth of corporations and private individuals. Central to this, and with a potential to bring in huge levels of revenue, is the need to clamp down on the tax dodging activities of companies and the ultra-rich. For years, campaigners and charities like War on Want have been pointing to the £120 billion black hole in the UK’s public finances - a figure only matched by the estimated £250 billion every year lost to developing countries as a direct result of corporate tax dodging.

This massive tax gap has resulted from individuals and companies using loopholes to dodge tax, breaking the law through tax evasion or simply not having their full share of tax collected by Her Majesty’s Revenue and Customs. This latter problem has been exacerbated in the last decade with cuts to the resources of HMRC across
the country, leading to thousands of tax workers losing their jobs and the closure of numerous tax offices. The financial folly of this so-called cost-saving exercise, that at the same time reduces the state’s ability to collect tax, has been highlighted time and again by the Public and Commercial Services Union, but successive governments have chosen to ignore them.

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With the global economy still in turmoil though, the unfairness of the current tax regime and the need to collect more tax in this country have been brought into sharp relief. The government recently made the permanent step of increasing the regressive tax of VAT to 20%, which hits the poorest in society hardest, not long after claims that it wrote off billions of pounds in tax that was owed by the telecommunications company Vodaphone.
What have followed have been inspiring actions against Vodaphone – often organised by the loose collective UKUncut – which has seen shops across Britain closed down by spontaneous direct action. These protests have kept the issue visible in the media and in the public discourse, and have hit Vodaphone in the pocket. But even more action is needed to get real and permanent results. Vodaphone is not one “bad apple”. The UK Uncut protests have also targeted the companies of Sir Philip Green, such as TopShop. The scandal of tax dodging is an everyday practice for corporations and wealthy individuals. The False Economy website, in conjunction with PCS, the TUC and War on Want, recently named George Osborne as its worst tax shirker. At the start of February, the PCS-called week of action against tax dodgers highlighted how widespread the practice is for the rich and big business.

We know that the various tax havens across the globe, including those with British interests such as the Cayman Islands or Jersey, are home to thousands of groups taking advantage of low or non-existent tax rates and strict secrecy laws. As long as the UK blocks the closer of these tax havens, there will be no change worldwide.

 Time for action

So what can we do to bring about tax justice? As a matter of urgency, War on Want is calling for the UK government to put a moratorium on HMRC staff cutbacks and tax office closures; abolish UK tax havens, work with other countries to eradicate trade mispricing, promote transparency through “country by country” reporting by companies, and prosecute corporate executives, lawyers and accountants for profit laundering and tax dodging.
The move against tax dodging and corporate greed requires mass action and public support for economic justice. One event on 5 March in London – called 6 Billion Ways – brought together people committed to global justice who want to look at collective solutions to the huge damage that has been inflicted upon the country by business and government. The day saw a wide variety of speakers and activists involved in sharing skills and knowledge while planning how to fight for a new economic system.

On March 26 trade unions have called a mass demonstration against cuts. The march will come two days after the latest budget from Osborne, announcing further cuts to the welfare state, just as unemployment and inflation rise. War on Want will be joining the demonstration, which should show the strength of opposition to these unjust cuts.

Tax justice can help support public services across the globe. We must now make that possibility a reality.
 

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