Tax avoidance – the posturing continues

People who pay cash in hand to tradesmen are “morally wrong”, damaging the economy and helping tax evaders, Treasury Minister David Gauke has warned. The report, in the Daily Telegraph, has produced over three thousand comments, nearly all of them hostile. Meanwhile, over at the Guardian, veteran warhorse Polly Toynbee has been sounding off about changes to the Council Tax benefit arrangements, but “forgot” to mention that the Council Tax is already heavily loaded against those who live in lower band accommodation, is based on hopelessly out of date valuations and in need of reform. At least it helps to support our case that the tax system is rotten through-and-through, but it is all posturing.

Commentators on the left, such as Toynbee and Will Hutton, now Principal of Hertford College, Oxford, are well aware that LVT is an essential part of the solution but do not have the courage or gumption to say so. This is a dereliction of the fundamental duty of opinion-formers to act in a responsible way.

The handful of responses in support of Gauke are from people who think they have a vested interest, like directors of building companies. This has touched a sensitive nerve. It seems as if we need a radical public debate on taxation and the function of government. The danger for the UK is that it will drift into the same state as those southern European countries where nobody believes in paying tax at all. That is a recipe for chronically unsound government finance and squalor in the public realm.