THERE’S nothing new about tax avoidance and offshore tax havens. There’s nothing new about rich people using smart accountants to “hide” assets that would otherwise be taxable. Tax avoidance is about legally using the system and its loopholes. Tax evasion is illegal.
Yet last week’s Panorama programme, The Panama Papers, was seen as a scandalous revelation. In some ways it was, because of the scale and depth of the detail contained in the data leak from Panamanian law firm Mossack Fonseca, and the suggestion that the firm might also have been involved in money laundering, including the proceeds of the Brink’s-Mat bullion robbery in 1983.
The real reason we are all so angry about it is because the government now likes to pretend that we live in an egalitarian society, we are “all in it together”, and professes to be cracking down on the fiddles of the rich to avoid paying their share.
Add to that the gaping and growing divide between the vastly wealthy and the dirt poor, the hard-hitting cuts of austerity, and that we no longer have the same forelock-tugging respect for the rich and powerful that characterised Britain for centuries, and it’s small wonder we are now raging at the wealthy dodges which leave the poor and merely modestly comfortable to pay up. As for our reliance on HMRC as the main tax gatherer? Well that’s just plain laughable. We know it has a well-oiled machine for being tough on small businesses and individuals, but it appears to be gummy, toothless and pretty useless when it comes to taking on politicians, aristocrats, the famous and the big corporations who “use” the rules.
There is however, one awkward problem. There are several everyday “dodges” employed by ordinary folks which, while legal, also amount to tax avoidance, or at least add strain on the public purse. The sums involved are tiny by comparison, and mostly earned through hard work and prudence by those who have generally paid their way.
Enter the trust fund, a legal mechanism often employed to avoid inheritance tax.
Then there’s the practise of parents gifting money or assets to their children long before they die, seven years at least, which takes it out of taxable inheritance.
Neither of these necessarily apply to people who today would be regarded as filthy rich. Count the number of fairly average houses and flats in Edinburgh worth more than £325,000, probably the biggest life asset of the inhabitant. And though that might sound like a large pot to some, it’s cheap compared with London prices and probably less than the cost of a dinner party for a Panamanian account holder. It’s also the point at which the tax man comes knocking to take a 40 per cent cut of anything above that.
Tax isn’t the only problem. Some middle-aged people prematurely sign their houses over to someone else, in an attempt to avoid any future care home costs. Since they don’t own their house, it can’t be sold to pay the home fees, which means the public purse has to foot the bill.
Everyone has their own perception of right and wrong when it comes to tax and financial planning. The moral dilemma is which loopholes we want HMRC and the government to prioritise when it comes to closing the gaps – the offshore havens for billionaires, the “unfair” tax bill on an Edinburgh semi, or all of them?
Educational inequality will remain a primary concern
THERE will always be winners and losers when it comes to money, particularly in Edinburgh where the Edinburgh Solicitors Property Centre says parents are paying a premium for homes in areas served by high performing schools such as Sciennes and Flora Stevenson.
But are prices rising because parents chase the “good” schools? Or do the schools have better results because children of parents who can afford to live in the Grange or Stockbridge (where prices rise anyway) are brought up with higher aspirations, confidence and without the deprivation and challenges faced by their peers in some other parts of the city?
It’s a sad fact that as long as primaries work on catchment areas (and how else could they reasonably operate?), educational equality will elude us.
Short care visits are nothing to write home about
PLOUGHING more resources into social care at home to avoid hospital bed-blocking might look fine on paper. But anyone who saw Channel 4’s Dispatches investigation into home care, or is aware of how overstretched the service already is everywhere in the UK, will be seriously worried if the move is likely to affect their relative.
Many home carers are short-staffed, under-trained, on poor wages and unsupervised. As I have personally experienced, some are wonderful but most are not up to the job, especially for the elderly, vulnerable and lonely. We need more nursing homes in Scotland, and though that is a more expensive solution, short and inadequate home care visits are no substitute. Closer general integration of social and health care makes good sense but the Scottish Government and the NHS will live to regret this switch to home social care.
IN the Fifties, spitting on buses and streets was a finable offence in the fight against tuberculosis. Now there are thousands of UK cases a year and this week I’ve seen three men shamelessly eject their phlegm. Time again to outlaw the filthy spitters?