Tax-dodging? We're not even trying to stop it

Parliament debated corporate tax avoidance on Monday.

The charitable view is that the government does the best it can but is outmanoeuvered and outgunned by all those smart tycoons and multinationals who employ an army of accountants and lawyers to run rings round flat-footed regulators and tax inspectors, who are always behind the curve.

This is a pastiche of the truth.

The reality is that government - far from cracking down on tax-dodgers - not only turns a blind eye to all but the most egregious examples of tax malfeasance but actually promotes some of the most brazen examples of tax scamming itself.

This is scarcely surprising since the whole apparatus of tax policy has been captured by corporate interests.

The so-called crackdown will be run by the former City corporate tax lawyer and ex-Tory special adviser Edward Troup, who now heads up tax at HMRC.

It will be overseen by HMRC chairman Ian Barlow, who ran the most aggressive tax avoidance schemes for KPMG.

Even HMRC's "ethics" committee is chaired by Phil Hodkinson, the director of Resolution insurance company, which is based in a tax haven.

Both parties have been at it to assist tax-dodging.

New Labour removed the tax on dividends, which provided Philip Green's wife in Monaco with a £300 million gift she would otherwise have had to pay on a £1.2 billion payment from her husband's Oxford Street retail empire.

Gordon Brown as chancellor in 2000 cut capital gains tax for private equity from 40 per cent to just 10 per cent, which enabled the super-rich through financial engineering to transform income into capital gains, thus famously paying tax at a lower rate than their cleaners.

This process turned much of the City of London into a tax haven.

New Labour also exempted from tax the profits returned to Britain from overseas subsidiary companies, thus encouraging industrial-scale tax avoidance by sending income offshore.

The present Tory government has taken this further still. Osborne was lobbied in opposition by Lord Fink, then Tory Party treasurer, to provide a "level playing field" for British companies with competitors in tax havens. He promptly followed this through in government with tax exemptions for companies' tax-haven branches.

In 2011-12 he went even further, staggeringly cutting corporation tax for companies that opened a financial subsidiary in a tax haven from 23 per cent to just 5 per cent.

The latest tax wheeze is the so-called patent box, which will allow companies with a product that contains even just a small patented component to qualify for a new, much lower rate of corporation tax (10 per cent by 2017) on all of its profits.

So the next time you hear the government making noises about "immoral" tax-evaders you can be sure it doesn't mean it.

They're all in it together.

• Michael Meacher is Labour MP for Oldham West and Royton. Read his blog at www.michaelmeacher.info.