in which something doesn’t add up

I was excited to have a piece published in Discover Society, in which I tried to disentangle some of the gordian knot of neoliberal policy and point to where I think the sword should strike.

My starting point was Thatcher’s declaration that there is no such thing as public money, but only ‘taxpayers’ money’; and that the nation-state was totally dependent on taking or borrowing money from every citizen (subject, in our case) to pay for whatever politicians wanted to do.

If we accept for the moment that this is the case (it most certainly isn’t) and that Thatcher’s heirs actually believe it, then you would expect such governments to be obsessive not just about controlling spending, but about collecting every penny of tax due: especially as they were (and are) determined to cut taxation.

Imagine my bemusement then, to read a report published by Richard J Murphy and others this week which catalogues the horrendous volume of taxes due but uncollected, the complete inadequacy of the HMRC in gathering taxes, and the parlous state of company records in the UK.  Just look through the 10 minute summary of the findings: they are a national scandal, an absolute outrage.

What clearly doesn’t add up is that a government which is – to phrase it very generously – parsimonious with government spending (except, it seems, where private corporations are the direct recipients) simultaneously permits wholesale tax avoidance and, by implication, evasion. Why is it not chasing down every last penny with even a fraction of the resource it is putting into the relatively trivial level of benefit fraud?

The focus of the Coalition in particular, as per my Discover Society article, is on cutting expenditure: while maximising what is supposed to be the government’s income, the equivalent of business invoices out, is being neglected. No business could run like that, for long.

So is this simply inattention, or is it incompetence, or is it actually something even worse? Could it possibly be that the same politicians who echo Thatcher’s ‘taxpayers money” dictum are not ignorant about what money is, and how it works in a modern economy in a nation-state with its own sovereign currency, but that they know perfectly well that such a state does not have to collect taxes – or borrow – in order to spend?

By publicly pretending that there is such a thing as “taxpayers’ money”, is the Coalition perpetrating on the subjects of her majesty a massive lie, a multi-trillion £ fraud?

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