We Spoke to Low-Level Tax-Dodgers About the Super-Rich Using Tax Havens
Is not declaring a bit of cash-in-hand pay as bad as hiding millions in offshore accounts?
If you're not simmering with rage at the Panama Papers revelations, you probably should be. The Mossack Fonseca leak has laid bare how the rich operate with impunity when it comes to taxation. David Cameron has admitted to benefitting from his dad's tax-avoiding offshore fund, while the papers revealed that six members of the House of Lords, three former Conservative MPs and several donors to British political parties have all avoided tax via offshore funds. Confirmation that the world of the super-rich is, if you ever doubted it, a festering abyss of hypocrisy and greed.
But what about your mate who does a bit of painting and decorating for cash-in-hand and doesn't declare it to Her Majesty's Revenue and Customs? Isn't that the same thing, albeit on a smaller scale? Or is the fact that we live in a time of record-level wealth disparity – a time when 8.1 million people in the UK live below an income level regarded as the minimum needed to participate in society – license for those at the economic bottom to even things out a bit?
Aaron from Watford does ground work on building sites. "Last summer I was earning, like, £120 a day, and that was all going through the books," he says. "But then I started working for myself, and people were chatting to me saying, 'How shall I pay you?' So, for the first few months, I was like, 'Cash is king,' which was obviously really handy because I didn't have to pay 20 percent on it.
"But there's another reason – it was also because it's so competitive in the building game, so instead of saying to someone, 'The job's going to be £1,400 because I have to include VAT,' you'll just say, '£1200 cash.'"
Aaron thinks the focus should be on corporate tax avoidance: "If you take Starbucks, for example, what they do is fucking bang out of order. If those big firms were to put money in the pot, you might find that our 20 percent VAT went down. You've got all these bigwigs all doing it, but I think if you're earning your money in the UK, you shouldn't be able to send it here, there and everywhere."
Chris from Bristol is an artist and photographer, and works at festivals in the summer. "I've scribbled an income out of what I've been doing for years," he says. "I earn £50 here and £50 there. It just wouldn't be worth it if I had to pay tax on it. I don't make the minimum threshold anyway, so paying tax just to claim it back is pointless."
The Panama Papers, Chris says, are probably the tip of the iceberg: "We're not getting the full picture. My point of view is that austerity is an excuse to disempower people and put in place power systems to extort money from people. The destruction of the social contract is quite unbelievable. You pay tax to fund healthcare, education, legal advice – all things that are being taken away from the people who pay for them.
"Listening to Cameron say he's not benefitting from [tax evasion] now is pretty fucking irrelevant because he wouldn't have gone to Eton if his dad wasn't running an offshore company."
Luke is a relief chef and event worker. Last year, he made around 30 percent of his income in cash. Of this, he says he'll declare a third. This is justified, Luke says, by the fact that he worked a PAYE job for 10 years previously and paid over the odds in tax.
"I'm still declaring more than I've earned in a PAYE job. I've been in position where I'm paying £500 a week income tax, and what do you get out of it?" he asks. "I've never been in a position where I can sign on, as I've always left jobs, and you can't sign on unless you've been fired or made redundant."
Luke says he's made extra money through doing lots of overtime: "In the ten weeks leading up to Christmas I was working 120 hours a week. No one expects you to do that, no one allows you to do that, so if I take it upon myself to ruin myself by working that damn hard, why should I just hand 40 percent of it to the government?"
What's different about those whose offshore assets were uncovered in the leak is the scale, Luke believes: "It's just another whole level of people doing what we all know is happening. The question is: are they going to prosecute people and dissuade people from doing it in the future? If they recovered the tax avoided by the largest companies, it would offset all the benefit cuts. That's ridiculous."
Rich earned extra money on the side while he was a student last year. "When I was studying I did a cash-in-hand job delivering junk mail," he says. "I wasn't getting enough money otherwise to live on. I didn't declare it, because if I had declared it, it wouldn't have been worth doing it.
"While I was delivering I'd see these posters up everywhere saying, 'If you're working and not declaring, we're onto you'. It seems unfair to target the people who are most in need. They should be going after the people with lots of surplus wealth who can afford to pay taxes."
None of the people I spoke to for this feature have savings, none of them own property, Rich still lives with his parents. None of them went to Eton, none of them are going on holiday this year. So yes, from a coldly analytical point of view, avoiding tax is avoiding tax, but when one in five millennials lives in poverty and when the share of income going to the 1 percent is rising, it's not hard to make a distinction between making a bit of cash-in-hand and creating an offshore fund in the Virgin Islands.
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