Life assurers have accused Gordon Brown of using the cover of a clampdown on tax avoidance to raise funds for Treasury coffers.
Although the chancellor may have a case to argue in his assault on the life assurers’ orphan funds there is a suspicion that the move is being driven as much by his need to bolster his tax take as by his distaste for what he calls “tax loopholes”.
Untaxed orphan funds may have been custom and practice in the life assurance industry, but it’s custom and practice in the Treasury to change the rules on them with no consultation when the money gets a get a bit tight.
However, there is surely bigger worry here. There is a danger that Mr Brown is coming to view anti-avoidance drives - always depicted as valiant assaults on greedy corporate fat cats depriving hard-working families of much needed cash - as the nearest the Treasury can get to free money.
Indeed it would be astonishing if, having hit the pay dirt of tax avoidance, the chancellor is not even now dreaming up new ways of selling tax rises as actually nothing more than an assault on mean-spirited tax-dodgers.
Take his plan to force banks to divest themselves of money in dormant bank accounts. A clear case of clamping down on tax avoidance. How so? Well they’ve been avoiding giving the money to the Treasury. It is a scandal. The scandal of fat cat banks.
Or the air passenger levy. Surely another rise can be justified as closing a tax loophole. After all these people are avoiding tax by going on holiday. Fat cat tourists are taking their money offshore. Some put their cash in trusts in the Cayman Islands, others are investing it in Tequila slammers at the Faliraki Bar and Grill; same thing. It is a scandal.
And surely there is now an overwhelming case for a huge rise in tobacco duties. Cigarettes can kill you; and if you’re dead you can’t pay tax. It is a scandal; a scandal of fat-cat dead people. Now, you might say it seems a bit of an extreme way to avoid tax, but surely extreme tax avoiders should be a number one target.
Now that we think of it, what about those small people who buy their clothes at children’s outfitters in order to avoid paying VAT; an open and shut case of tax avoidance if ever there was one. Not that Mr Brown would be so politically foolish ..
And all those people buying takeaway food. Why only yesterday Revenue officials saw someone at Pret a Manger escaping VAT, just by taking his sandwich outside and sitting on the grass. He was quite open about it. What is more he is encouraging others to do the same, effectively marketing a tax avoidance scheme. We should expect an announcement any day soon that from midnight tonight people will be required to inform the Treasury or the Revenue in advance about any schemes which involve takeaway food.
Oh yes, a whole new vista of opportunity is opening in front of the chancellor. Even better; unlike his early tax avoidance schemes these ones could actually be relied upon to raise what he said they would.
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