Tuesday, 14 December 2010

Tax: We're all in this together (except those that know the loopholes)

Artful Dodger: George Osborne Picture: 38 Degrees
By Dan Morris

I've lived a very naive 21-year existence as far as tax is concerned. Ducking and diving my way out of paying any by holding down a weekend job and squeezing every last ounce out of the education system. 

To me tax was something the general public, with proper jobs paid to fund my student alcohol addiction and fetish for dressing up as a smurf. 

I thought the day I'd actually have to contribute my bit to the economy would never come and until the summer I thought base rate was a psychological study, not some sort of code that roughly translates to a 20 per cent deduction in my wages. How wrong was I.

Every month my pitiful wage is slashed by a man as mysterious as Santa Clause - the taxman. I have no say in the matter and it's very quickly become a fact of life.

Tax is actually quite an important economic factor, even I know that. And now my time has come, I don’t like paying it, but it’s just something I have to do. I’m playing my part – the last thing I’d want to be known as is a tax dodger. No one likes a tax dodger.

It was recently brought to my attention, by a certain Duncan Bannatyne, that the owner of Harrods, avoids paying tax. Yes, that's right, the owner of the world’s most expensive department store - no wonder he's so rich. 

I believe Ken Bates, owner of Leeds United Football Club, also falls into this category along with a host of other public figures. It beggars belief that this is in fact legal, but apparently it is. 

How? Well pull up a seat and I'll tell you: 

Establishing residence in a low or nil tax jurisdiction is one of the easiest ways to substantially reduce your taxes. Basing yourself in a tax haven means that you'll get the benefit of low or reduced taxes overseas.
Located on the stunning French Riviera there is probably no tax haven more famous than Monaco and just a selection of the high profile people that reside there are: Paula Radcliffe, Richards Farleigh (Dragons Den), David Coulthard, Jenson Button, Roger Moore, Ringo Starr and Ken Bates in Monaco.
Simply; there is no income tax or capital gains tax in Monaco -- the main tax is a business profits tax that is levied on certain companies (but most expats structure their affairs so as to avoid it).
The Treasury has announced a series of measures to clamp down on tax avoidance in the UK. But I can’t help but think this will fall by the wayside. Check this.
Tax dodging costs the UK up to £120 billion every year, it comes to something when the very man that could do something about it is dodging £1.6 million of tax himself.
Now i’m in it. I can’t help but feel a little violated by the ‘we’re all in this together’ rhetoric from the coalition government. Mr Osborne really, are we?
This government has put a lot of effort into catching ‘benefits cheats’, and almost none into catching tax cheats, despite the fact that tax dodging robs the treasury of 15 times more income than false benefits claims.

I'm struggling to find why this might be the case, but perhaps it has something to do with the fact some front-benchers, including George Osborne himself, may be benefitting from tax loopholes. We certainly know that several prominent Conservative peers have off-shored their taxes – all legal of course.

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