Taxing Times

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Monday, 25 June 2012

Written by Jo Pickard (Brighton)

When the British comedian Jimmy Carr recently became the focal point of a media storm around the issue of income tax avoidance by the rich via overseas investment, he was nothing more than a scapegoat for right-wing monetarists within the Conservative Party who still believe themselves exempt from legal and financial obligation. David Cameron referred to Carr’s tax avoidance as ‘morally wrong’, but this is sheer hypocrisy as his own family fortune and the wealth of fellow Conservative supporters have prospered from tax avoidance.

Amidst jaunty columnists’ puns about fellow tax-avoider and Tory-supporter Gary Barlow being from the band Take That, there is something much less humorous and, actually downright sinister, about Cameron’s refusal to comment on Barlow’s own tax avoidance. Conservative supporters and party members David Rowland, Lord Astor, Lord Ashcroft and George Osborne are also facing speculation regarding their income tax avoidance, but it seems that these individuals are absolved of the same moral codes and obligations as everybody else. Downing Street has also suggested that it “may now abandon plans for David Cameron and senior ministers to disclose their tax returns” (Guardian 21/06/12) which had previously been part of a plan to redeem the cabinet in the eyes of the electorate. However, this backpedaling clearly illustrates the uncooperative and conceited nature of the Tory party and the like-minded super-rich in Britain; defending each other’s immoral practices in order to protect their own interests. This entire scandal has revealed to the public just how fickle politicians can be when they too get caught red-handed.

These revelations have political implications, they have also raised questions about Britain’s entire financial system of tax ‘loopholes’, ‘havens’ and overseas ‘investment schemes’, also ambiguously referred to as ‘profit-extraction techniques’ and ‘income-sheltering solutions’, essentially providing the super-rich with the ability to reduce their income tax rate to as little as one per cent.

The Jersey-based ‘K2’ Scheme, in which Carr and Barlow were both implicated, is just one example of such an overseas scheme, but numerous others exist elsewhere in the world. Investigation into the Cameron family has revealed that the late Ian Cameron founded his family’s wealth upon the establishment of such schemes in both Panama-City and Geneva. The schemes themselves allow financiers to invest money in off-shore companies without taxation (thanks to the 1979 abolition of exchange control), which they can retrieve at any time through ‘company loans’, none of which they need to pay back if – like the late Ian Cameron – they hold a directorship or chair position in said off-shore company.(Guardian 20.04.12)

This method, according to numerous news reports, has lost the UK Treasury an estimated £4.5 billion a year, the K2 scheme alone sheltering £168m a year. While this may equate to very little in relation to the size of the current UK national debt, this does highlight the disgraceful hypocrisy of politicians hell-bent on squeezing every penny out of supposed ‘benefits scroungers’, slandering strikers and protesters whilst pursuing ferocious cuts to the NHS, to education, to public-sector pensions and – just recently – threatening to cut housing benefits to under 25s.

Nevertheless, slandering one comedian or attacking one politician, or even an entire political party, holds no solutions. As Marx said succinctly in Das Capital (Volume II, Ch. 18) “every individual capitalist is but an individual element of the capitalist class”, the problem therefore does not exist among individual capitalists but is inherent in the entire capitalist system.  As this particular income tax avoidance issue demonstrates, capitalists will continually find the means to exploit the state and the working class in the interests of profit. Unless the working class are able to seize control of financial law, not just nationally, but internationally, then financial law will always be dominated by capitalists and the super-rich and dictated by the interests of capitalism.The best way to achieve this - in truth the only way - is the expropiation of the wealth of the rich and the nationalisation of the monopolies and banks. This would be the one thing they couldn't avoid through any fancy scheme.