Sunday, 17 October 2010

In which I explain logic to lefties (plus a little bit on taxes and benefits)

There are a lot of welfare cheats. This isn’t me being some kind of rabid, right-wing nutjob but a matter of uncontestable fact. It may be only about 3% or so out of the total budget (although how on earth this is calculated , God alone knows) but that represents a lot of people fiddling the system.

Speak with anybody who works with poor communities and they will relate stories of families taking the benefits system to the cleaners. They’ll also tell you about people who the system seems to leave high and dry for no apparent reason. Quite simply the system doesn’t work and hasn’t been working since at least the mid-1980s when Carla Lane wrote ‘Bread’.

What fascinates me in all the debate around this issue is the tendency of some observers – let’s be frank, observers who learned their logic from the Ladybird Book of Marxim-Leninism – to instantly draw a parallel with tax ‘dodging’ (this term avoids the need to make any distinction between ‘avoidance’ and ‘evasion’). Now let me try and explain how this argument is crap (a technical term for ‘without any coherent logical basis’).

Let’s start with the premise that both fiddling benefits and dodging taxes are wrong. We’ll return to the tax point in a minute but right now we’re assuming that this is the case. Surely it is right and proper for Government to take action to catch wrongdoers – whether they are welfare cheats or tax-dodging businessmen? So criticising the decision to try and reduce welfare fraud on the basis that not enough is done to reduce tax fraud is plainly an utter nonsense. It may be the case that not enough is being done to catch tax dodgers – you might me entirely right to criticise the Government for this inaction. But this debate is entirely unrelated in any way to the debate about catching people who fiddle benefits.

It is possible to scope a series of possible ‘positions’ on the two subjects but they are not connected. The Government deciding to clamp down on benefit fraud does not result in a few hundred tax dodgers elsewhere breathing a sign of relief knowing they’re now off the hook! And it is perfectly possible for Government to clamp down on both tax dodgers and welfare cheats (they may or may not be doing this but it is perfectly possible).

And just for the record the taxman’s been getting pretty good at reducing routine tax evasion (which is very different from ‘closing loopholes’, the use of which, ipso facto, isn’t tax avoidance):

“The money gleaned from reluctant taxpayers, both personal and corporate, has risen from £1.13bn in 1991-92 to a staggering £9.17bn in 2006-07. The money has come from a wide range of sources: from individuals and companies who had simply failed to fill in their forms, to investigations of outright tax dodgers.”

If you’re going to criticise the targeting of benefit fraud, can you at least do it on the basis of logic rather than just shouty prejudice?



Anonymous said...

"So criticising the decision to try and reduce welfare fraud on the basis that not enough is done to reduce tax fraud is plainly an utter nonsense." It certainly would be. But that's not the basis of the criticism. Rather, it's based on the relative quantum of tax evasion to benefit fraud; on the relative song-and-dance of publicity on the latter compared to the former; on the proportion of government effort on dealing with tax evasion compared to benefit fraud; and (perhaps fairly described as a "shouty prejudice", in which case I'm unrepentant) the fact that the hoo-ha about benefit fraud is aimed at the poorest whilst the restraint about tax evasion protects the richest.

Anonymous said...

The logical connection is simple, Simon. Two groups defraud money from the state at a time when it needs every penny. One of these groups is targeted by the government, the other (which costs the exchequer more money than the other) is not.

Simon Cooke said...

Precisely which bit of £9.17bn in money recovered from tax fraud isn't "targeting tax evasion"?