Ten years for benefits fraud, but for tax fraud…..?

The government has just announced a proposal to give benefits fraudsters a jail term of up to ten years. Now while I certainly see the need to clap down on the small number of professional criminals who do defraud the system. However I worry that it might frighten away genuine benefits claimants who need the cash but are reluctant to “make a fuss” or worry that the might get caught out (e.g. they claim for benefits, their circumstances change and they don’t inform the council quickly enough) and are forced to endure poverty as a result.

I would also put this in the context that the job seekers allowance and housing benefit (the two that the Daily Mail brigade protest the most about) is less than 3% of public spending, indeed the bulk of the benefits bill goes as working tax credits to working families…of course this means that Middle class families who’ve maybe gotten their claims wrong could go to jail (love to see Cameron try selling that on door steps in a years time!).

But what I find odd, is that the maximum penalty for tax fraud in the UK is only seven years. And while councils are spending millions trying to catch out people claiming the odd few quid a week more than they should the government is making little or no effort to catch people defrauding the exchequer out of tens of billions a year, more than the entire welfare budget!….although that might have something to do with the fact that some of them are sitting around the cabinet table!

Indeed a BBC episode of Panorama, How to Dodge Tax, showed last night that while the coalition might well talk the talk about getting tough on tax avoidance, they are not walking the walk . Indeed far from closing loop holes they’ve been opening them and advising businesses on how to take advantage of them. And the beeb even caught an advisor to the government on tax giving a £1000 a day session of tips and pointers on tax avoidance!

If the penalty for benefits fraud is going to be that severe, then judicial equality requires that anyone found guilty of tax evasion should be even more severe again, a lengthy jail term and an unlimited fine.

Certainly I would argue we could eliminate much tax evasion and avoidance by adopting two rules.
Firstly applying a fine of ten times the amount avoided (plus interest, back dated to the year that it first started) to any accounting firm and the client for any errors they made in a tax return. Secondly, apply heavier prison sentences for outright tax evasion. These would instantly make tax avoidance and evasion a fairly risky business financially (one small typo on a ledger and a billionaire is could be looking at tens of millions in fines, a spell in prison and his accountant winds up bankrupt) and my suspicion is many will decide it’s not worth it.

But clearly, this story just goes to show how out of touch the present government has become. And how beholden they are to upholding right wing myths. If the Tories keep this up, they’ll be burning benefits claimants at the stake pretty soon, or making them go around in orange jump suits.


One thought on “Ten years for benefits fraud, but for tax fraud…..?

  1. “Right-wing myths” is a most appropriate description, but then politics is largely a mythological subject. 😀

    Since it cost a lot more to keep people in gaol than to pay them a few inappropriate benefits, this would also seem to be a rather extravagant policy – where are the “savings” in that?


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