Polly Toynbee in The Guardian
The prime minister has opened the floodgates, dragging the chancellor after him. Whatever David Cameron says, his example means all MPs will soon publish their tax returns: how dare any refuse? Feeding frenzies against politicians are not a pretty sight.
It’s a curious phenomenon that democracy is hailed as the highest human endeavour, yet its practitioners are always held in public contempt. “Elites” everywhere are in the pillory, but none more than the “elite” we elect and then despise.
Why single out politicians? The Times quotes a Conservative MP saying this will inevitably extend to “all those in public life” asking, “Where does it stop? BBC journalists, councillors, judges?” Indeed, there is no clear line between public and private people. Donors to political parties, journalists certainly, anyone in public office or with a public contract – and their partners too. There is no stopping these dominoes. Cameron in the Commons said he was against public officials having to publish tax returns, but he has broken the secrecy spell, and transparency always leads to demands for more.
Money is not a private matter. It may be almost as exciting as sex but exposing private wealth is not like publishing rude photos from private bedrooms. Who has what and from where is public because everyone must pay tax on it, even if a depleted HMRC can scrutinise very little. On death, light shines in as wills are published, but real transparency would make everyone’s tax return a public document.
The social shock would be seismic. At first people would feel as naked as if their clothes were stripped off in front of neighbours and work colleagues. Why else was Cameron so shy about revealing the scale of his wealth? He had done nothing unusual for families of his kind: it was the graphic exposure of his hundreds of thousands that made him blush. Why? Because people with inherited money know it’s not fair, they didn’t earn it and they are just lucky winners in life’s lottery.
The Daily Mail delivered a mighty full-page blast of anger against any questioning of Osborne’s £1m inheritance tax gift, which will cost the exchequer £5.8bn. Misleading as ever, they write of “most people”, and Downing Street talks of “millions of ordinary people” doing “proper tax planning” for inheritance. Yet as it is, only the super-rich pay inheritance tax, just one in 20 estates. Forget the seven-year rule, abolish this tax and instead tax recipients for all gifts they receive above a threshold over their lifetime.
The Mail warns that all this embarrassing exposure means “people with private means will no longer wish to go into public life, putting their advantages at the service of the less fortunate”. But that’s just it, these leaders with private means have harried the “less fortunate” mercilessly. They inflict billions of cuts on the poorest – in bedroom tax, benefit cap, child benefit freeze, two-child limit, and ruthless disability fit-for-work tests – while sanctions drive many into food bank destitution. The “less fortunate” may not be grateful to those with private means who rule over them. No wonder Cameron blanches at revealing his all.
Sheltering wealth, the right calls any protest against inequality “the politics of envy”. Most families still haven’t regained their pre-financial crash incomes, yet anyone with high-value property watches their assets inflate into the stratosphere. When unearned income such as Cameron’s soars but wages lag behind, anger at untaxed riches is inevitable.
Polls show people make a sharp distinction between genuine “wealth creators”, such as self-made entrepreneurs or superstars, and the trustafarians and rent-seekers who are enriched for no discernible merit. Resentment is often channelled into cynicism and sour trolling, not into political action. Will this start to change?
In Scandinavian countries, total tax transparency has helped create societies far more equal than ours. At the click of a mouse in Norway, people can find out what others own and earn, and everyone knows where they stand. Transparency stops women being paid less than men. Transparency makes employers more likely to pay themselves and their staff fairly. The culture of openness breathes an implicit belief in social justice.
But here, research from the London School of Economics’ professor John Hills shows how clueless most people are about the earnings of others, wildly underestimating British inequality. Both rich and poor delude themselves that they are far nearer the middle than they are. They know people who are better off and worse off, wrongly concluding themselves to be middling.
In my book Hard Work, I ran focus groups of the super-rich who refused to believe how much richer they were than the rest. Those with yachts envy those with a yacht and a crew, so they never feel truly rich. With the decline of unions, pay secrecy allows employers to divide and rule in the dark.
The disinfectant of sunlight makes shifty dealings and criminality much less likely, so it’s time for us to turn Norwegian. Don’t let’s strip public figures naked one by one, but let’s open the window and have every citizen’s tax return exposed. Tax works when everyone knows everyone else pays it too: I-will-if-you-will transparency is the same, all jumping in with one big splash, everyone’s income and wealth revealed together.
But don’t let gossipy obsession with personal wealth and inheritance distract from the main issue revealed in the Panama Papers. The prime task is to sweep away secrecy that allows our flotilla of tax havens to hide the world’s wealth from taxmen.
Cameron announces new rules obliging havens to answer HMRC requests for information on the beneficial owner of a company within an hour. But that’s bogus transparency, depending on occasional official requests. Tax experts say all beneficial ownership must be published openly so any investigator can check who owns what any time.
In the same way, all dealings between HMRC and companies must be published, so we can see how Google, Amazon, Facebook and myriad others escape paying what they owe. After deep cuts, HMRC needs assistance from the prying eyes of journalists, the public, company competitors and anyone who might investigate mega-avoiders.
Today Cameron’s promise fell far short of that genuine transparency. He needs to get tough with the treasure islands and follow Charles de Gaulle’s example. When Monaco refused a tax measure he requested, he forced them to surrender by surrounding the kingdom with soldiers and turning off their water supply.
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