TUC spoof magazine criticism unfair - Murphy

by Richard Murphy, Tax Research UK

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06 Sep 2012

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MILES DEAN thinks the Trade Union Congress's (TUC) spoof celebrity magazine Kerching! which highlights tax avoidance is "inflammatory, ill-informed, misleading sabre-rattling" and "tiresome old hat".

That's an interesting range of ad-hominem attacks, but the reality is that Dean is well wide of the mark on this issue.

Now I should, of course, declare an interest: I wrote Kerching! for the TUC, and as its author I'll accept that just one of Dean's accusations is accurate: Kerching! is a little on the simplistic side. But then, so is Hello!. And, as importantly, so are Dean's assertions.

That's because, while I can back up all Kerching!'s claims with reasoned tax argument, Dean has no hope of finding economic support for his claim that turning the UK into a tax haven, as he wants, would benefit our economy.

That's because it's impossible to claim, as Dean does, that non-doms who move to the UK are wealth creators as a consequence. They're not. That's firstly because they're only here to dodge their obligations to our society while living here at the expense of all the rest of us who have to pay more tax proportionately as a result.

Secondly, it's because, by creating more inequality in our society, they ring-fence privilege and destroy hope for the majority of people in the UK.

That loss of hope is now really basic. Millions of young people won't be able to afford houses because of the distortions in the property market that wealth imbalances – much of it non-dom- and tax avoidance-fuelled – have created.

Perhaps even more important, though, is the fact that tax avoidance in all its forms is massively destructive to business in the UK because it creates an unlevel playing field. So non-dom-owned businesses now have access to cheaper capital in the UK than those owned by domiciled people, putting local people at an inherent disadvantage.

And since some businesses now prosper at the expense of others because of their willingness to abuse tax rules, competition does not now take place on the basis of the value of the service a business supplies to its customers, but on the basis of the ability of the business to cheat and get away with it.

Inevitably, honest businesses, those businesses discouraged from investing in the future because they can't beat the short-term, tax-driven speculative gains of their competitors, fair employers and those who add value to communities all suffer and fail as a result of tax avoidance.

That's never going to be the basis of wealth creation. That is all about wealth destruction and that's exactly what tax avoidance leads to.

In that case, Dean's gain from selling tax avoidance is at cost to society at large, and that's exactly why I and the TUC reject it.

Richard Murphy is director of Tax Research UK and wrote Kerching! for the TUC

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