Who is really ripping us off?

A discussion with two friends on the back of my post about the cuts agenda brought up some interesting figures about benefit and tax fraud.

There’s nothing the Tories and right-wing media pundits like more than a good old attack on benefit fraud. Lazy good-for-nothings scamming our taxes! Get ’em! But how big a problem is benefit fraud, and how does it compare to the rich ripping us off with offshore tax havens and the like?

Benefit fraud in 07-08 cost us around £800m out of a budget totalling £125bn. Tax evasio by the rich cost us around £18.5bn and a tax avoidance is estimated at around £100bn compared to a government budget totalling £589bn.

Tax evasion  is harder to tackle, involving international negotiations, but it says a lot about your priorities. Tory plans to bail out a few thousand rich families through inheritance tax changes would cost considerably more than benefit fraud. Are they cutting public finances to help the country, or to help their wealthy mates?

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  1. vicky said:

    It is true, but at the same time both are wrong and should be tackled. They both show the same characteristics, ie. greed, arrogance and selfishness.

    4th October 2009
  2. weggis said:

    you missed out VAT fraud and Carousel fraud and the like. These are currently costing far more than tax avoidance. C&E are no longer allowed to stamp down on these things courtesy of Tony Blair.

    4th October 2009
  3. Chris said:

    Tax avoidance is perfectly legal. Arranging one’s financial affairs to legally minimise the tax owed is justified and entirely legal. Tax evasion is not paying taxes through illegal means. Tax avoidance is made possible by stupid rules and laws which cost a lot of money to implement and police. A single flat rate of tax on ALL income would eliminate this (no separate NI, no separate capital gains, no separate inheritance tax, no tax breaks for this that and the other). It would also put many in HMRC out of work, and put many tax advisors (former HMRC employees?) out of work too.

    12th October 2009
  4. Tom Chance said:


    Thanks for the thoughts, I’ve edited the post to clarify the avoidance/evasion distinction!

    The trouble with flattening out the tax system is you can end up with a very inequitable system. It’s important to maintain a progressive, redistributive system that tackles poverty, carbon emissions, inherited wealth/power and the like.

    Can’t say I have a clear alternative mix of taxes in mind, though I’ve always liked the Green Party policy on the other side – radically simplifying the benefits system to introduce a single, unconditional citizens income payment received by every citizen.

    12th October 2009

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