The Hero
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- Jun 29, 2008
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Paying a cleaner in cash 'is morally wrong': Minister says families who settle bills cash-in-hand are as bad as tax avoiders
Tory minister David Gauke said he disapproves of the practice
He said non-taxed house services such as plumbing, cleaning and gardening is 'a large part of the hidden economy'
Labour MP John Mann, accused the Treasury of operating double standards by threatening ordinary people while they let corporate tax-dodgers slip through the net
Paying cleaners and tradesmen cash-in-hand is morally wrong, a minister said yesterday.
David Gauke claimed that making small cash payments was as bad as tax avoidance, which ministers have already called morally repugnant.
The Exchequer Secretary spoke out as he gave a speech outlining plans to name and shame those who engage in aggressive tax avoidance schemes to avoid paying their fair share.
Under new rules, celebrities and millionaires who use tax avoidance schemes will see their details passed to HM Revenue and Customs.
But Mr Gauke raised eyebrows by suggesting that pensioners and families who pay cash to a cleaner, plumber or gardener are just as bad.
He said: Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others must pay more in tax.
Asked explicitly if he disapproves of the practice, he said: Yes, I think its morally wrong.
He added: It is illegal for the plumber but it is pretty implicit in these circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy.
The Treasury calculates that the tax gap in Britain - the difference between what is owed and what is collected - is about £35 billion each year.
Hidden economy: A woman pays a workman, handing over cash (posed by models)
Tax avoidance accounts for around £5 billion of the missing cash.
A European Union study earlier this year estimated the size of the black economy at £160 billion a year, more than 10 per cent of the entire economy and larger than the size of the deficit.
It would be ridiculous if a pensioner paying a fiver cash in hand to someone to prune their roses was put through the tax system.
At the same time there are huge numbers of rich people and major companies who are not paying anything like the tax they should be doing. Its double standards.
Mr Gauke published a consultation document yesterday spelling out ways to crack down on cowboy accountants who run rogue tax avoidance schemes.
In future, they will have to give up their client lists and will remain liable even if they close the schemes or move companies.
The announcement came after comedian Jimmy Carr admitted to making a terrible error of judgment when it emerged he used a complex scheme to reduce his tax bill.
The K2 tax-avoidance scheme Carr is said to have used enables members to pay income tax rates as low as 1 per cent.
Retort: A Labour MP said it was 'ridiculous' to put small payments such as five pounds for cleaning and gardening through the tax system
Mr Gauke said: These schemes damage our ability to fund public services and provide support to those who need it. They undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.
Union leaders said the Government would be better off closing the loopholes used by avoidance schemes.
Brendan Barber, TUC general secretary, said: Successive governments have run shy of reforms to ensure the very wealthiest pay their fair share of tax.
But with countries around the world under pressure to reduce deficits, fair tax is an economic necessity. The TaxPayers Alliance said ministers needed to concentrate on reforming the complex tax system.
Matthew Sinclair, director of the TPA, said: The Government is right to act to ensure that everyone pays their fair share of tax, but new powers to uncover specific abuses are a poor substitute for serious reform of the tax system so that there are fewer loopholes.
Ministers need to be more realistic about HMRCs ability to clamp down when its resources are so stretched simply administering our hideously complicated taxes, let alone chasing those finding creative and legally dubious ways around them.
With a better tax system, HMRC staff can focus their attention on tackling those who are abusing the system. Proper reforms can ensure that everyone pays no more, and no less, than their fair share.
Tory minister David Gauke said he disapproves of the practice
He said non-taxed house services such as plumbing, cleaning and gardening is 'a large part of the hidden economy'
Labour MP John Mann, accused the Treasury of operating double standards by threatening ordinary people while they let corporate tax-dodgers slip through the net
Paying cleaners and tradesmen cash-in-hand is morally wrong, a minister said yesterday.
David Gauke claimed that making small cash payments was as bad as tax avoidance, which ministers have already called morally repugnant.
The Exchequer Secretary spoke out as he gave a speech outlining plans to name and shame those who engage in aggressive tax avoidance schemes to avoid paying their fair share.
Under new rules, celebrities and millionaires who use tax avoidance schemes will see their details passed to HM Revenue and Customs.
But Mr Gauke raised eyebrows by suggesting that pensioners and families who pay cash to a cleaner, plumber or gardener are just as bad.
He said: Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others must pay more in tax.
Asked explicitly if he disapproves of the practice, he said: Yes, I think its morally wrong.
He added: It is illegal for the plumber but it is pretty implicit in these circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy.
The Treasury calculates that the tax gap in Britain - the difference between what is owed and what is collected - is about £35 billion each year.
Hidden economy: A woman pays a workman, handing over cash (posed by models)
Tax avoidance accounts for around £5 billion of the missing cash.
A European Union study earlier this year estimated the size of the black economy at £160 billion a year, more than 10 per cent of the entire economy and larger than the size of the deficit.
It would be ridiculous if a pensioner paying a fiver cash in hand to someone to prune their roses was put through the tax system.
At the same time there are huge numbers of rich people and major companies who are not paying anything like the tax they should be doing. Its double standards.
Mr Gauke published a consultation document yesterday spelling out ways to crack down on cowboy accountants who run rogue tax avoidance schemes.
In future, they will have to give up their client lists and will remain liable even if they close the schemes or move companies.
The announcement came after comedian Jimmy Carr admitted to making a terrible error of judgment when it emerged he used a complex scheme to reduce his tax bill.
The K2 tax-avoidance scheme Carr is said to have used enables members to pay income tax rates as low as 1 per cent.
Mr Gauke said: These schemes damage our ability to fund public services and provide support to those who need it. They undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.
Union leaders said the Government would be better off closing the loopholes used by avoidance schemes.
Brendan Barber, TUC general secretary, said: Successive governments have run shy of reforms to ensure the very wealthiest pay their fair share of tax.
But with countries around the world under pressure to reduce deficits, fair tax is an economic necessity. The TaxPayers Alliance said ministers needed to concentrate on reforming the complex tax system.
Matthew Sinclair, director of the TPA, said: The Government is right to act to ensure that everyone pays their fair share of tax, but new powers to uncover specific abuses are a poor substitute for serious reform of the tax system so that there are fewer loopholes.
Ministers need to be more realistic about HMRCs ability to clamp down when its resources are so stretched simply administering our hideously complicated taxes, let alone chasing those finding creative and legally dubious ways around them.
With a better tax system, HMRC staff can focus their attention on tackling those who are abusing the system. Proper reforms can ensure that everyone pays no more, and no less, than their fair share.