A taxing question

Tax - from being the subject sure to send the most intellectual of us to sleep, it has now become the hot topic of discussion and inspires grass-roots political activism on Britain's streets.

In particular it is the tax-dodging rich elite who have been exposed for avoiding and evading their responsibilities, costing the Treasury around £120 billion annually, according to Civil Service union PCS.

So when news broke this week that one in 10 people earning more than £10 million a year are paying less than the 20 per cent basic rate of income tax - less than low-paid workers such as cleaners - not many were gasping with shock.

UK Uncut, tax justice campaigners and unions have successfully forced the issue onto the news agenda with high-profile grassroots campaigns.

Ministers have been forced by Treasury embarrassment over tax-dodging by their mates in the City to throw their hands up and insist that rich people pay tax on charitable donations.

This has prompted a storm of criticism, whipped up by right-wing Tories and so-called philanthropists. They claim that taxing such generosity will end up penalising those who most need help.

It's true that on the back of the worst austerity drive in recent history lots of ordinary people need help.

But the assistance they need is called the welfare state - which is being cut and privatised to create pathways for private contractors and the "philanthropists" to come in and take advantage of.

Professor Roger Seifert of Wolverhampton University points out that today the debate on tax has shifted.

"Today we still debate the first question of revenue use, and the second question - who pays and how much.

"In general fairness, namely proportionality, was the test of the second question and prevention of harm was the answer to the first.

"The third question was the mechanism by which tax was collected, and this raised issues of both state power to take income from citizens and the ability of the rich to corrupt the system.

"The present debates reflect a crisis of all three elements - corrupt collection, unfair burden and uncertain benefit.

"Tax was always first and last a political and social activity rather than an economic one. Indeed, the economics of taxation and the over-hyping of fiscal policy measures are partly aimed at disguising the social and political relations that underpin the tax regime.

"So we should always search out political gain and social inequality ahead of economic righteousness."

Tax Justice Network director John Christensen condemns the tax system in Britain, arguing that the government is right to go after charitable donations but needs to go further.

"The current situation allows rich people to give to their pet projects and to claim the donation against tax.

"This deprives our government of much-needed revenue and also undermines the social contract whereby we all pay the state to provide services on our collective behalf.

"Rich people should not be able to opt out of this. The Chancellor is right to want to close this loophole but he needs to go far, far further.

"Successive governments have been outrageously generous in their tax treatment of rich people - not least those who live in Britain as so-called "non-domiciles" and pay little or no tax whatsoever. Now is the time to sweep all these dodgy avoidance techniques into oblivion.

"Britain's tax system is a mess and the current furore over the special tax breaks for rich philanthropists is just one example of how deep the mess has become.

"At face value it might seem like a good idea to encourage rich people to give to charitable causes - but not when it comes at the expense of public services like health, education and policing."

The saying "giving with one hand and taking away with the other" springs to mind.

Only activism on the ground and popular anger generated towards tax avoiders will change the situation. This has happened successfully with Vodaphone and others.

But rather than just targeting companies that transgress the law, a focus on the monopoly profits of oil and energy companies would be a good next step.

These companies, including the likes of BP, are amassing huge amounts of private wealth for their shareholders.

A windfall tax on these monopoly profits would fill the Treasury coffers, keep big business in check and provide an economic platform for the "no cuts" argument being advocated by militant sections of the trade union movement.