Chancellor of the Exchequer George Osborne announces new tax avoidance opportunity!

 

For better or worse, the central theme of this blog is that we would live in a better world if the talents and skills that lie in the marketing, media and communications businesses were applied to society as a whole as well as to commercial objectives.

A core skill in the behavioural economics business is the sophisticated collection, analysis and interpretation of data.

In this light, would any self-respecting marketing company or advertising agency have endorsed the announcement of child benefit cuts this week?

As has been widely discussed: “Osborne sparked fury after admitting that a household with two people earning £43,000 each, totalling £86,000, could still receive the benefit, whereas a household where just one person was earning £45,000, would have it withdrawn. Osborne said this was because the government was trying to keep the system “as simple as possible”. He said he hoped higher-rate taxpayers would stop claiming child benefit but, if they did not, the same amount would be deducted from them through the tax system.” (http://bit.ly/a1R8Du).

It gets worse.

At best, couples will find ways to transfer their income from one to another to ensure they don’t hit the threshold.

At worst, this proposal will feed the black economy by encouraging people to work for ready cash; wheel and deal on a barter basis; establish fictitious or even dead people’s identities; set up companies to hide their real incomes by employing friends and family to ‘work’ in vital roles that, conveniently, fall just under the threshold, falsify Income Tax returns and – especially among those who used to receive these benefits – encourage more harmful crimes to make up for their lost income.

All you and your team have done, Mr Osborne, is lower the threshold of tax-avoiders from multi-millionaires to people earning just over 40 grand.

This is how it is in the real world.

And it is your actions that will provoke people to behave in this way.

And how will the HMRC police all this? How will they chase down the data required? They won’t be able to, of course.

As any grown-up manager in any agency could have told you, on a data collection basis alone, this scheme falls flat on its face.

Take it from me, you need professional help.

About Hugh Salmon

Business leader. Adman. Writer.
This entry was posted in Blog posts. Bookmark the permalink.

3 Responses to Chancellor of the Exchequer George Osborne announces new tax avoidance opportunity!

  1. Julie Tombs says:

    What a cynical opinion you have of people. Falsifying income tax returns, identity fraud, going to tremendous lengths to avoid losing child benefit is not something someone earning more than £44000 should do,whether their neighbour still receives it or not. I wonder what sort of circles you mix in to think people will go to such extremes. My husband is a higher earner and I earn a lower amount. Although we no longer receive child benefit as our children are grown up we would not stoop to such lows. It is totally unfair for people earning low incomes to subsidise higher earners regardless of the anomaly of two people still getting the benefit. This envy and resentment of other people who have something they feel entitled to is the very worst of human nature and is a growing problem in this country.

    • Hugh Salmon says:

      Hi Julie,
      I completely understand where you are coming from and agree with some of the views you have expressed, especially in the last couple of sentences. My gripe is that the Government aren’t thinking things through as rigorously as businesses would in the commercial world do as a matter of course.
      First of all, they have just announced a standard pension rate because it is cheaper to do this than means test all the pensioners regardless of National Insurance contributions. So why introduce a means tested child benefit scheme?
      In terms of not thinking things through, Simon Heffer’s point in The Telegraph about this letting every European citizen qualify for the new scheme is a further case in point.
      Secondly, why are they cutting before bringing in the savings that Sir Philip Green has identified, selling off unnecessary assets, particularly land, and a financial allow for a valuation on our interests in the Banks?
      I am writing another blog on this point now. Here is one of my points from my draft with which I think you will agree: “Someone I know has business interests in Barbados. Twice now, he has sat, in Business Class, next to a guy who holidays in Barbados six times a year but lives in a Council House back home. Now, I suspect Iain Duncan Smith spotted that there are people like this and, as I think most of us would agree, there is something about it that is not quite right”.
      The central thesis behind my blogs is that Government has become disconnected from both the electorate and the business world, especially marketing and communications, and that the skills and knowledge of clients and agencies in this sector could be deployed to unify a society which is becoming increasingly divided.
      This is also the central theme in Sebastian Faulks’s novel ‘A Week in December’, currently in the paperback charts.
      But thanks for coming to my website and expressing your views. That’s what it is all about!
      Best wishes,
      Hugh

  2. Pingback: Osborne- “I encourage corruption & deceit”. | jaydee003

Leave a Reply

Your email address will not be published. Required fields are marked *