Mary Dejevsky: Tax avoidance - it's not what you earn that counts, it's what you pay

The Chancellor said he was shocked. I doubt that rank-and-file taxpayers would have been surprised

Share

If there is one topic Britons like to talk about even less than their income, it is how much they pay in tax. It is this culture of discretion – secrecy by any other name – that fosters the illusion of decent pay rates at the bottom and allows the really rich to get away with paying disproportionately little tax. Now, though, there are hints, just the barest hints, this could change.

In an interview yesterday, no less a figure than the Chancellor said he was shocked by the propensity of the super-rich to avoid tax. Having asked to see the (anonymised) tax returns of top earners, he had found they were paying, quite legally, an average rate of 10 per cent. Here was confirmation, were it needed, of the claim that many City bosses pay a lower rate of tax than their office cleaners. It was also proof of how much the Exchequer is losing.

While George Osborne may have been shocked, however – less, perhaps, by his discovery than by the patent laxity of the system he presides over – I doubt that rank-and-file taxpayers would have been so surprised. The range of loopholes available to the seriously well-off remains impressive. As Mr Osborne might have said to justify his lowering of the top rate of income tax, if you are a high earner and can award yourself an optional rate of 10 per cent, then it is immaterial whether the top rate is 50, 45, or even the basic rate of 20 per cent. The number is entirely academic.

Something else should be made clear as well. Charities may be squealing about the new limit on tax breaks for donations, but they would do better to campaign against the sudden rule changes that frustrate planning than against the substance of what the Chancellor did. That so many givers have (reportedly) withdrawn or reined back donations only shows how far selfish tax calculations, quite as much as benevolence, underlay their generosity. It is also worth noting that the good causes that will suffer include well-endowed Oxbridge colleges and public schools. Should not some of the money such privileged institutions received in tax-efficient donations have gone to the Exchequer to help our notoriously "bog-standard" comprehensives? If that is what the Chancellor (St Paul's, Oxford, and a £4m trust fund) thinks, maybe quite a lot of other people do, too.

There are not many ways of extracting more tax from the rich, but there are two. The first is the once-modish "flat tax" – which, contrary to common belief, threatens the rich more than the poor, as it removes opportunities for playing off one tax category against another. The second, more realistic perhaps for a country with an advanced tax system, is for the Chancellor to set a minimum portion of income that any individual is liable for in tax. Mr Osborne went part of the way towards this in the Budget by limiting the concessions, including for charitable donations, that any one person may claim. But his latest reading may convince him to go the whole way and introduce a version of the US "alternative minimum tax". That, at least, should raise a bit more for the national coffers than the self-selected rate of 10 per cent.

But there is a third way, which is public shame. And the other recent straw in the wind of tax disclosure was the four-letter slanging match between London's two main mayoral candidates, and even more than the slanging match, its outcome. Within 24 hours of being challenged by the Green candidate, Jenny Jones, to publish their tax returns, this is pretty much what all the mayoral candidates had done. London voters and, more to the point, the British public, now know what Boris Johnson is paid – between his mayoral salary and his writing – what Ken Livingstone earns, with some residual muddle about his company, and how much Brian Paddick (at 53) relies on a generous police pension.

This is more than voters have ever known about the finances of electoral candidates, and it is hard to see how there can be any going back. Ms Jones may not make it to London mayor, but she deserves a small place in history. For while this is just another step in the slow march towards transparency in British politics, it is a key one. The register of MPs' interests shows how our elected representatives top up their salaries; the expenses scandal forced them to be more accountable with taxpayers' money, and for two years now, members of both Houses of Parliament have had to pay tax in the UK. Tax arrangements for top civil servants are also being reviewed.

Until last week, however, even the idea that British politicians would be expected, as their American counterparts are, to publish their tax returns would have been inconceivable. And even now, it seems, many observers have qualms, arguing that some things ought still to be private and discretion is the really British way. MPs, on the other hand, have been unusually quiet. And George Osborne – not a bad spotter of trends – has said, citing the US example, that "We (ie the Government) are very happy to consider publishing tax returns for people seeking the highest offices in the land." With a new opinion poll showing Livingstone's support on the slide following the tax row, budding MPs might be well advised to regularise their tax position in good time for the next election. Paying one's taxes – and being seen to do so – looks set to be the new gauge of electability.

m.dejevsky@independent.co.uk

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: SAGE Bookkeeper & PA to Directors

£18000 - £24000 per annum: Recruitment Genius: An exciting opportunity has ari...

Recruitment Genius: Online Sales and Customer Services Executive

£15000 - £18000 per annum: Recruitment Genius: An On-line Sales & Customer Ser...

Recruitment Genius: Accounts Assistant - Fixed Term Contract - 6 Months

£15000 per annum: Recruitment Genius: One of the largest hospitality companies...

Day In a Page

Read Next
Neo-Nazis march in London  

I'm taking my Jewish kids to a vile neo-Nazi rally in London this weekend – because I want them to learn about free speech

Richard Ferrer
A police officer carries a casualty to safety  

Tunisia attack proves we cannot stop terrorists carrying out operations against Britons in Muslim countries

Robert Verkaik
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map