The public is way ahead of politicians when it comes to paying more tax

The NHS is broken, the army is out of bullets and there’s sewage in the Thames. And as it turns out, the man on the street has a better solution to our national crisis than your local MP

April 05, 2024
Image: Alamy / Prospect
Image: Alamy / Prospect

Very few of us think the NHS is working. The army can’t afford enough ammunition to protect Britain. There were 4m hours of sewage spills in England in 2023. The backlog in our courts is so serious our top judge is thinking of scrapping jury trials in some cases. There are “shocking” gaps in national security at airports. The BBC is desperately looking for new ways to fund existing services.

A single edition of the Times last week contained all these troubling stories. They made for sober reading.

Some pages later in the same issue we learned that a man called Alex Beard, the former head of oil at Glencore, the giant mining fuel and extraction company, had lost his battle to pay less tax on payments of £150m that he had been fortune enough to receive over a period of five years—on top of his salary. That case hinged on whether the payments were subject to UK income tax or capital gains tax. Mr Beard, the FT has told us, had been running a 5m-barrels-a-day operation from London’s Mayfair district rather than Zug, a sleepy Swiss town where the company is actually headquartered.

Who does not have some sneaking sympathy for Mr Beard who, despite being worth a reported $2.1bn, wishes to reduce the amount of tax payable on his hard-earned dividends to the grasping hands of the UK taxman? If there’s one article of faith in British political life over the past 40 years it is that we should pay less in tax. As individuals, we spend our money more wisely than the profligate state, you see. You’ll notice that neither of the main parties is going into the next election offering to raise more tax.

All the same, it would be nice, wouldn’t it, to have a properly funded and functioning health service? And maybe we’d sleep more soundly in our beds if the army got the ammo it needs? And it is rather shocking that there are more than 66,000 cases stacked up in the crown courts, which hear only the most serious offences. You can’t help feeling the Border Force might do a better job of monitoring incoming flights if they had a bit more money. A properly funded Ofwat, anyone? And maybe the 30 per cent cut in the BBC’s revenues over 10 years seems, in retrospect, a bit steep?

But back to Mr Beard, affectionately known as “the king of oil.” A 2011 Times profile of him—for it is said he does not love publicity—celebrated his “stealth approach to wealth” which had enabled him to splash out the best part of £10m on a London house with a swimming pool, steam room and cinema in the basement.

I was trying to imagine why he would choose to work from nearby Mayfair rather than the company’s HQ in Zug. And then I remembered I once sent a reporter, John Hooper, to Zug, since it is—in its own way—a rather remarkable place.

Hooper discovered a curious thing—that this sleepy Swiss town (pop. 27,000) had a staggering 27,000 companies on its commercial register—one for every man, woman and child. 

In 2008, around three per cent of the world’s petrol was traded through Zug and the neighbouring town of Baar.

The town’s most notorious resident had been Marc Rich, founder of the company that would be known as Glencore, who fled to Zug after being indicted for tax evasion, wire fraud and racketeering in what was then the biggest tax-dodging case in US history.

To paraphrase Mrs Merton, what was it that first attracted Glencore to Zug? Could it have been its 8.5 per cent tax rate? Well, if so, who would blame them? Last year the Zug-based company made a profit of $34bn, managing a payout of $7bn to investors. Why shell out more to the taxman than you need to, especially if you don’t actually have to, you know, live and work in Zug? Which sounds a very nice place, but still.

A recent edition of the New Yorker magazine contains a rather stark picture of Britain over the past 14 years by the writer Sam Knight. George Osborne, who preferred to slash public spending rather than raise taxes from 2010 onwards, tells Knight that austerity was “devastatingly politically effective.”

Knights observes: “It’s just that the effects were so horrendous. Between 2010 and 2018, funding for police forces in England fell by up to a quarter. Officers stopped investigating burglaries. Only four per cent now end in prosecution. In 2021, the median time between a rape offence and the completion of a trial reached more than two and a half years. Last fall, hundreds of school buildings had to be closed for emergency repairs, because the country’s school-construction budget had been cut by 46 per cent between 2009 and 2022.” And so on.

And then there’s the NHS. The Times report that only a quarter of us think the NHS is working was based on a British Social Attitudes survey, which revealed that the British public has a clear idea why not. The top three reasons: waiting times, not enough staff, and not enough investment.

The survey also found that nearly half of us would support increasing taxes to pay for the NHS—a 42 per cent gap over those who wanted lower taxes and lower spending.

Is it just possible that the public is ahead of the politicians?

The veteran tax campaigner Richard Murphy today publishes a report, the “Taxing Wealth Report 2024”, which claims to show that by making up to 30 relatively simple changes to existing UK taxes a new government could raise up to £90bn—entirely from those who are well-off or straightforwardly wealthy.

His first suggestion is changing capital gains to the same rate as income tax—the very thing that our friend Alex Beard was arguing about in relation to his £150m dividend. That, says Murphy, would raise £12bn of extra tax per annum: enough to help quite a few struggling hospitals, buy our troops more ammo or fund a proper water regulator.

Another £12bn, he calculates, could be raised by investing £1bn in HMRC, which would enable it to track down the estimated 30 per cent of taxes that currently go unpaid.

Is he right? I’m no tax expert, but at least he’s starting a discussion which the public may well be ready for.

And for those who want to opt out? Zug is said to be very pleasant. No reported court backlog or sewage spills. And you can reflect on your good fortune over a lovely pint of Fuller’s London Pride at the Mr Pickwick Pub. Who needs Mayfair?