We need tax justice on and off our shores

16th March 2012 at 00:00

We all recall, I'm sure, the note left by Liam Byrne for the incoming government to let ministers know that there was no money left. Since the coalition has been in office, it has made much of this and used to great effect the idea that the country has "maxed out the credit card". It is a phrase we hear all the time from the government and the strategy of repeating it has clearly worked. Many members of the public who understand about credit cards and domestic budgeting have, at least in part, gone along with the credit card analogy and accepted that previous, profligate overspending has to be matched by austerity now, or so the story goes.

However, the real truth is that there is plenty of money to be had for education and other public services, but those who ought to be paying it into the Exchequer have many ways of avoiding so doing.

Last year, the Trades Union Congress produced a readable and accurate picture of how many billions of pounds are lost to the Exchequer through tax avoidance, which can be within the law but is in many cases of very questionable morality or illegal. It amounts in total to some #163;25 billion per year.

Now we find that even senior civil servants have found ways of being paid that avoid proper tax. Many an ordinary worker who pays everything they owe through the PAYE system week in, week out contributes proportionately far more than those with incredibly high salaries and clever accountants who make sure they hold on to every penny they can.

A recent report by Education International (EI), the global federation of teaching unions, showed that these systems of avoiding and evading tax operate globally to the serious detriment of the funds available for public services - and education in particular. The report, entitled Global Corporate Taxation and Resources for Quality Public Services, took as its starting point that governments, and not just in Britain, are pushing the line that there is "no option but austerity" while knowing full well that there are other options.

In their comments in the foreword to the report, Fred van Leeuwen, EI general secretary, and Peter Waldorff, his counterpart at Public Services International, both make the case that funding is being denied to public services by the "tax avoidance industry" and that, when the global economic crisis has moved huge amounts from private debt to public debt, still governments hesitate to put fair taxation on the political agenda.

Their contention is that, if global corporations paid fair and reasonable taxes, the debt crisis in Organisation for Economic Cooperation and Development countries could be overcome and we could close the Millennium Development funding gap in developing countries.

Tax shouldn't be this taxing

In March 2010, Global Financial Integrity estimated that current total deposits held by non-residents' offshore accounts and tax havens was close to $10 trillion. That would pay for a lot of teachers, classrooms and educational resources in any country. Interestingly, according to EI's later research, holdings of this type have expanded at an average of 9 per cent per annum, outpacing by a huge margin the increase in public sector pay and indeed the rise in world wealth in the past decade.

An estimated 60 per cent of all global trade is routed through tax havens. From the mid-1980s, while corporate income tax has fallen from 4.2 per cent of gross domestic product, profits have risen from 25 per cent to 35 per cent.

What does all this mean to teachers in their classrooms? It means that governments are looking in the wrong place to deal with the current financial situation. As EI president Susan Hopgood said on the launch of the report: "Closing loopholes in international tax legislation will require changing attitudes and calls for political will.

"The widespread acceptance of tax avoidance as a legitimate goal of large corporations must change. Unless this appalling and unjustified practice is stopped, quality public education and other services will continue to be put at risk."

Hitherto, the coalition has managed to speak with one voice on the maxed-out credit card mantra. Those of us who seek to support and advance the cause of public services, and education in particular, must be just as single minded in rebutting this. We need to be saying that austerity is not the way. It damps down and then freezes economic activity. What we need is tax justice nationally and internationally. We need tax avoidance and tax evasion to have the same profile as Fred Goodwin's knighthood and Stephen Hester's bonus and attract the same opprobrium. We need to keep up the already considerable campaigning for a financial transaction tax, the so-called Robin Hood tax. We need to change the narrative so that it is not the public provision of free state education and public sector pensions that are under pressure but greed and failure to play fair on tax.

Christine Blower is general secretary of the National Union of Teachers. The EI Report is available at http:bit.lywCZCq0.

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