Some of the richest people in the UK are getting lucrative hidden tax breaks that cost ordinary taxpayers dear.
Initial estimates suggest that tax perks for top rate taxpayers are worth at least £29 Billion.
Respected tax researcher Richard Murphy shared on his blog today that tax breaks for higher rate taxpayers add up to an average relief of £6,700 per person per annum.
Richard is at the start of this much needed area of research and the final figure may be higher – but for now, his breakdown is reproduced below.
Perhaps these figures provide part of the explanation for why the the poorest 40 per cent of Britons share a lower proportion of the national wealth – 14.6 per cent – than in any other Western country.
Or why the UK is bottom of league tables for child welfare.
How extraordinary that while the oft mentioned ‘hard working families’ are struggling to pay their taxes, the rich can claim back an average of £6,700 via their accountant.
The scorn and abuse hurled at the unemployed about getting as little as £56.80 a week on jobseekers allowance is thrown into sharp relief when measured against £29 billion of tax breaks.
There is a clear link between inequality and why the basics of a civilised society like a free health service, social security, a living wage and affordable housing are apparently beyond our collective purchasing power.
Some very significant sums of money go missing from the public purse every year. For example:
The restoration of the 50p rate would get us a cool £6.7 billion.
If the HMRC was more proactive and effective at collecting the taxes we are legally owed by wealthy people and large corporations, then the resulting windfall – estimated to be at least £100 billion could fund many socially useful things.
In fact if we add up the tax perks, the tax dodges and the tax cuts for the rich – we get a figure of £135.7 billion pounds.
and that doesn’t include the subsidies and tax breaks showered on bankers and the financial services sector .
Lets share this information widely and reframe the debate on the deficit, the unemployed and austerity.
I was thinking about all of this yesterday when, on the bus into town, the driver stopped at one stop to let a passenger off.
The AdShel advert was another from guess who, DWP; an image of a woman peering through a cracked board over the caption “We’re closing in on unclaimed income.’
Of course the message is not targeted to the already-wealthy who may, just may, have dollops of dosh languishing in offshore accounts. It was crystal clear who it was intended for, as the bus stop was at the local Job Centre Plus office.
People do know what is happening; they are now logging on to British newspaper websites and complaining about the government, DWP, and the media ceaselessly and wrongly vilifying the poor, the unemployed, the disabled and the ill. And readers of those papers are now commenting on the unrealistic and unearned benefits that the wealthy are unfairly entitled to simply because of their wealth and their social class. Mr Smith’s underpants and Eric’s (40K/y) snacks, Chilean wine for ‘distinguished’ guests of the MP crowd at the taxpayers expense, indeed! But the commentators are rarely middle class, more often they are those whose lives are effected by the growing disparities between wealthy elite and the working or non-working poor.
Caught in the middle are the middle class, numbers of which are shrinking and sliding into lower middle class status (eek!), but who have the largest voice and are the demographic whose support is most needed in election years and who keep much of the capitalistic circus performing. They cannot be relied upon to turn their backs on, rise up against, or acknowledge the unjust economic privileges of that which they aspire to become: the wealthy elite. They will not see dismantled or threatened that exclusive club which they dream of joining.
So, it seems that the voice of the unemployed, the ill and disabled and those who care for them, the under-employed, and youth who see little future ahead with no work and a tsunami of education debt, must be the loudest and most vociferous to speak this truth. But the middle class will not hear it until their footing on the economic ladder becomes precarious enough to draw their attention to the causes of their slide downward.
The ECSR Report:
I read through the European Committee of Social Rights report recently. I also had an ah ha! moment when reading the statement that the United Kingdom is not in conformity with Article 12§1 of the Charter on the ground[s] that: the minimum levels of short-term and long-term incapacity benefit is manifestly inadequate; the minimum level of state pension is manifestly inadequate; and the minimum level of job seeker’s allowance is manifestly inadequate. (They got no argument from me on these points.)
Succinctly, the Committee states that these benefits “fall below 40% OF the Eurostat median equivalised income;” –which translates to mean that in order to be equivalent, they need to be increased by 60%, rather than 40% as some are interpreting.
But my brow quickly furrowed as I read the next section, regards Article 13 -Right to social and medical assistance.
The Committee listed the following UK benefits under that category: JSA, Housing Benefit, Income Support, Pension Credit, ESA, Council Tax Benefit, NHS services, Winter Fuel Payment, Cold Weather Payment, Family and Pensioner Couple Premiums, and Social Fund components (some of which no longer exist), and so on.
However, the Committee concluded that when considering the average amount of housing benefit (€416 monthly) and Council Tax Benefit (€76 monthly), the overall amount of assistance IS compatible
with the poverty threshold for the definition of it as per Article 13. Accordingly, the Committee holds that the situation is in conformity with the 1961 Charter.
I acknowledge that Articles 12§1 and 13 represent different rights, Adequacy of Social Security Benefits and Right to social and medical assistance respectively. But I am also aware that in most EU countries, those in receipt of Social Security benefits must pay their rent and local taxes from their SS benefit amount; I think that the UK is unique in providing housing and council tax benefits separate from Social Security benefit. And here, in this small difference of definition, may hide a wrinkle that prevents the improvement of the lives of millions living in poverty in the UK.
It would only take a different method of accounting to bring the current palette of UK benefits into compliance with the poverty thresholds listed in section 12§1. Since most HB is paid directly to the recipient, this amount (reclassified and) added to the meager level of Social Security benefit would bring the total amount closer to compliance. If CT were also paid directly, that compliance gulf would likewise decrease. Of course, there would be many administrative jobs lost and this would increase the unemployment figures. None of this would improve the plight of the poor or unemployed, nor diminish their need for food assistance, nor would it keep them from living in substandard housing, or able to clothe their children or allow them to keep warm during winter.
Does this sound familiar? Universal Credit: does that ring any bells?
In the finish neither the ECSR nor Ms Coe have any jurisdiction or leverage to enforce UK compliance with these Articles. Or the remainder of them, either. And that is another injustice; we are members of the EU, but have no protection under the Charters that give it meaning.