We should follow the Norwegians and publish all tax returns. Doing so will help transform tax payments into a status symbol, says Richard Heller.
Like most of his modern predecessors, this week’s Chancellor of the Exchequer, Philip Hammond, is desperate for money.
I offer him a simple Budget suggestion which should raise billions equitably and painlessly. That is to publish all tax returns.
I know that his rival, the Shadow Chancellor John McDonnell floated this idea some time ago, but only for annual incomes over £1 million. The Chancellor should outflank him by publishing them all as they have done in Norway since the early nineteenth century. They do lots of things very well in Norway, especially education. Could we ask the Norwegians to take us over lock, stock and barrels of oil after Brexit? It has not stopped people making money in Norway. Until Trump, it was semi-compulsory for US Presidential candidates to publish their tax returns and it has not stopped them either.
For many years, the super-rich have not paid taxes to the Exchequer but left tips. They have exploited their bargaining power in a British economy dependent on being a car park for money. (Unfortunately, it is usually a short-term car park, although some customers take advantage of the washing service and even have their money fitted with new number plates.) The super-rich have terrorised one Chancellor after another into preserving or even creating all manner of loopholes, and a new culture of accommodation has taken over the tax authorities.
But once tax returns were published, tax paid would become a status symbol, as much as yachts and mansions. Billionaires would pay their full whack of tax to keep their place in the Rich List. Some might well pay more than they need, to avoid the humiliation of a sharp fall, especially tottering business leaders who need to maintain investor confidence. Lower down the scale people would start paying tax to keep up with the Joneses next door.
If the Chancellor wants evidence that this scheme would work, he should ask his VAT people to tell him how many small businesses, particularly sole traders, register voluntarily to conceal the fact that their annual turnover is below the VAT threshold of £85,000. If he reads any literature from small business advice services, he will find that this is a prime reason for voluntary VAT registration. Here is a random example from www.simplybusiness.co.uk: “Some firms choose to register for VAT in order to appear larger than they are. Your clients will probably be aware of the threshold and if you are not registered they will know that your turnover is lower than this. You may therefore consider registration as a way of increasing your standing amongst competitors and in the eyes of clients.”
This is especially true of my own category, 0534 authors miscellaneous. A recent survey put our average annual earnings at around £12,000 – considerably less than we could get from a full-time job on the minimum wage. There are very few us up there with J K Rowling or Jeffrey Archer pulling in £85,000 and more and forced to register. I am fortunate enough to be in this category myself, although most of the output which puts me there is actually written for other people. I will not name the Celebrities concerned, but I am responsible for almost everything stylish or even coherent that they have ever uttered, including the supposedly unscripted impromptus. If I relied on my own published output I would live like so many others in a permanent state of mendicant obscurity.
But even in this state, I would join them in registering voluntarily, to avoid the stigma. One could almost be the subject of an HM Bateman cartoon: the Writer Who Was Not Registered For VAT. Without a VAT number, a writer is helpless against ruthless publishers and commissioners. He or she is marked is marked as a pitiful drudge, who will crank out copy for a crust and forget any hope of rights from secondary publication or the bumper edition in Albania.
Beyond writers, the Chancellor should look at the “consultants” of all kinds who have elected to register for VAT voluntarily, and for good reason. Who would consult anyone whose advice is worth less than £85,000 a year?
If he wants to test this scheme first, the Chancellor should start with the House of Lords. There are good grounds of principle for this, and total tax transparency would be a fair exchange for being an unelected legislator. They are trying to cull its numbers below the ridiculous current total of 800+ and published tax returns might achieve this in short order, with the departure of peers too embarrassed to reveal that they have parked their money in Paradise. But among the remainder one could predict a lively competition to stay at the summit of the Lords top-tax list. (One could develop a productive betting market on this which would yield still more revenue for the Chancellor).
If tax became a status symbol, the Exchequer could expect an immediate windfall in the repatriation of money from airy entities offshore and the declaration of assets now hidden behind shell companies and stooges. It would also transform the accountancy profession. Instead of assisting tax avoidance, the most sought-after firms would find ever-more ingenious methods of claiming the right to pay more. Negotiations with HM Revenue and Customs would take an interesting turn, as tear-stained billionaires pleaded against potential tax demotion against their peers. If HMRC saw them in groups, it could engage them in a profitable tax poker game: “see you and raise a million.”
The beauty of this scheme is its equity: those most in thrall to status pay the most tax.