Let’s crack down on the real welfare cheats: wealthy tax evaders
August 9th, 2010 by Katherine Trebeck Posted in Attitudes, Welfare reform
Benefit cheats are held up as scroungers – with BBC even running a story about a man in a jive-dancing competition who was claiming disability benefits for an arthritic hip.
But for each of these very public cases of benefit fraud (reported with great vitriol), there are many, many more of fraud and evasion by companies, business owners and wealthy individuals against the tax system. We just don’t hear about it – it seems to be ‘don’t know, don’t care’.
But we should care about corporate welfare cheats, and they should be treated with the same public humiliation we reserve for benefit cheats. We should care because it is estimated that the total tax gap is about £120 billion. Admittedly, maybe predictably, the government’s figure is closer to £40 billion. Just think where that could be spent in these straightened times. This £120 billion would be a nice chunk out of the public debt wouldn’t it?
In contrast, benefit fraud and official error combined cost £3.1 billion last year. That is, not benefit fraud alone, but also official error – the presence of which demonstrates the complexity of the system that keeps many from claiming their entitlements.
Yet, the government hardly pursues this £120 billion, while it harangues, stigmatises and condemns so-called benefit cheats. A recent answer to a Parliamentary Question (from Katy Clark MP) revealed that:
‘HM Revenue and Customs spent £633,284 (excluding VAT) on advertising for the purposes of preventing tax evasion last year. There was no expenditure in the previous two years’.
In the same period, £17.5 million was devoted to tackling benefit fraud. That’s more than a thousand times as much spent for every pound we stand to gain.
To me, this skewed government effort in enforcing the two different types of cheating, despite their seriously different magnitudes, is made worse because it comes at a time of public sector cuts. It angers me that the media chastise individuals caught committing benefit fraud, while portraying those who escape paying their full tax obligations as either efficient businesses or akin to a naughty younger brother who got caught raiding Dad’s drinks cabinet…Surely it is time we re-think who we are chasing and calling names?
Incidently, Schweppes have a lovely take on the hypocrisy of the state’s disproportionate efforts in catching benefit cheats:
6 Responses to “Let’s crack down on the real welfare cheats: wealthy tax evaders”
By Anna on Aug 9, 2010
Yes, there are big cheats and little cheats, but the little ones are still cheats.
By Brian on Aug 10, 2010
The present state of the world economy is a direct result of deliberate fraud by the world’s richest people (Wall st, and The City)The enormous debts incurred have been neatly passed on to Governments and thus Wage earning tax payers. President Obama has made indicated that he wanted to go after the World tax avoidence industry, however nothing has been really attempted or achieved. Once again the man in the street will foot the bill while the rich will laugh, all the way to the Bank. Freedom and Democracy is not what it is cracked up to be, is it ?
By Al on Aug 10, 2010
Anna,
Of course – but I think Katherine’s point is that the government spends a disproportionate amount trying to catch the little cheats. To summarise, last year:
£17.5m was spent on a problem that costs us £3.1bn
while
£633.3k was spent on a problem that costs us £120bn.
By Sarah on Aug 10, 2010
I woke up this morning to the sound of a radio 4 journalist (possibly John Humphreys) interviewing Chris Grayling on his so called campaign to crack down on benefit cheats.
It made my day as the journalist was really cracking down on Chris Grayling by pinning him with the fact that the 5 billion figure which he so likes to bandy about so easily was in fact a huge misrepresentation of what actually lies behind the figures.
The majority of this 5 billion is on error with a tiny fraction on fraud but by lumping this all together the media has an absolute field day with stigmitising and blaming those who are in need of it most. The majority of whom are struggling to make ends meet, having to make impossible choices between heating their home and putting food on the table whilst the public enjoy being fooled into misplaced anger.
Can I remind everyone that none of us are far away from needing that safety net with jobs disappearing at an ever faster rate and if indeed, you do find yourself in need you will find yourself being blamed and chastised for that ‘generous’ £64 a week that you are put through hoops to get. Not so cushy a life after all…
Yes there may be a few people out there who are playing the system, however we should not allow the media to tar every single person on benefits with the same brush.
I would like to see more public outrage at tax evaders who cost our society an extortionate amount of money which make benefit cheats pale into insignificance. I feel ashamed to be from a country that prefers to focus negative attitudes on the most vulnerable whilst letting the real criminals not only get away with their fraud but as Katherine points out are even applauded on it! Who was it after all, that put us into the present situation where even more of us are in need of benefits?
Anyway, to finish this off – I want to go back to the original point – bravo to that journalist this morning who made my day – There is very little defending of the innocent who get blamed so easily and this was a very rare occurence. We need to encourage more balanced media reporting and get real stories out there to show people what life is really like on benefits – I guarantee if everyone knew, they would feel as ashamed as I do that a country as rich as this have people living in such conditions.
It is very well hidden, precisely because of the stigma and blame attached to surviving on a low income but don’t let the media treat us like idiots and find out the facts and the realities before casting the blame so easily…
By Sarah on Aug 10, 2010
Oh and just one thing if i may, I think Chris Grayling should try cracking down on himself and his expenses. I don’t think tax payers are too happy about funding his mortage for a house and several new kitchens etc.