Gary Barlow raises taxing matters

If you ever find yourself engaged in a discussion with a journalist, any critique of their profession will inevitably involve a declaration of their independence. All journalists believe themselves to be clear-headed, rational, and probably more cynical than the average person. Above all, they cherish their independence of thought. Irrespective of whom they work for, journalists pride themselves on writing, whatever they want. This, of course, is downright weird. In a world where everybody else goes to work and does specific things required to earn a wage, journalists apparently take money in return for writing, ‘whatever they want’.

This whole idea is utter nonsense. Journalists write whatever their paymasters want them to write, and the most successful ones learn early that the real rewards come when you no longer even have to ask what your bosses require. As their career progresses, journalists who think the same as their paymasters, get promoted while those who dissent are gradually marginalised. This was pointed out by Noam Chomsky in an interview with the BBC’s Andrew Marr. When Marr claimed that he was not self-censoring Chomsky replied, ‘I don’t say you’re self-censoring – I’m sure you believe everything you’re saying; but what I’m saying is, if you believed something different, you wouldn’t be sitting where you’re sitting’.

However the real power of corporate journalism today, of which the BBC is a part, lies not in choosing what to write, it’s in choosing what to ignore. It’s the subjects that do not get written about and the voices that are not heard which form the real purpose of corporate journalism. In these days of 24 hours news and multiple access media, to be ignored by the media is to be condemned to almost total obscurity.

And this is why the media have trumpeted the story of Gary Barlow and his OBE. Some people might dismiss the idea of punishing a singer-songwriter by removing an honour as a trivial punishment for a trivial public figure over a relatively trivial offence. They would be right. But this story is really about misdirection.

Gary Barlow and his tiny tale of tax avoidance/evasion is irrelevant, and the media are well aware of this. The facts behind Barlow’s ‘crime’ are simple. He was a partner/investor in a company called Larkdale and it was this operation that adopted the Icebreaker tax strategy in 2009/10. A strategy whereby any losses from this particular business could be offset against taxable earnings from other businesses he might own or be involved with. This is a standard tax relief procedure and an established principle in UK tax law.

However, recently HMRC reviewed the tax affairs of several companies who were employing the Icebreaker strategy. The investigation concluded that none of these companies (including Larkdale) had actually made any losses and therefore no tax relief was due to them. So in the end this story was about a tax refund claim made through a legitimate process that was not applicable to the singer’s company at that time. Barlow’s tax advisors may have acted in good faith or not. Either way the singer is left with a significant increase in his tax bill. Case closed. But not for either our political classes or the media.

Margaret Hodge trivialised the incident by calling for a show of contrition from the singer, including the return of his gong. Other MPs queued up to support her in this fine moral stance/cheap tokenistic grandstanding. Then the Prime Minister managed to get involved by insisting that tax avoidance was both legal and at the same time morally wrong so therefore Barlow should keep his OBE, or something.

So everyone’s happy. The news media get to pick on a celebrity, middle England gets another small dose of its favourite drug (manufactured outrage), MPs get to posture and David Cameron gets to waffle on in a clueless fashion (and we know that makes him happy because he does it every chance he gets).

And meanwhile the real story gets ignored. It gets ignored because picking on a singer never got a journalist fired or even sidelined. The real story is that taxation in this country is entirely skewed in favour of big corporations. Gary Barlow doesn’t matter. The estimated 20m that he may have avoided paying doesn’t matter either.

What matters is that taxation in the UK has been getting steadily more regressive since 1973 when VAT was introduced. Originally touted as a tax on luxuries there are very few things which are now VAT exempt, so unless you spend the vast majority of your disposable income on sheet music and caravans, you can safely assume that VAT is a regular part of your weekly outgoings.

Although introduced as part of Britain’s entry into the EEC, VAT really took effect after the election of Margaret Thatcher’s government in 1979. The Tory government had campaigned on a platform of reducing taxes but they had no intention of doing so. In fact the overall tax burden on the UK increased marginally over her three terms in government. The real aim was to shift the tax burden from the wealthy to the rest of society.

This was primarily achieved by cutting the top rate of income tax while making up the shortfall in revenues by doubling VAT: something her pre-election promises had absolutely denied. Since then successive governments have increased sales taxes, green taxes and VAT rates while reducing income tax and corporation tax. Moreover, the last thirty years has seen a massive increase in so-called sin taxes on tobacco, alcohol and petrol. These have served to further increase the tax burden on the poorest members of society. By contrast, many new tax breaks for companies were introduced in the same period. This is redistribution of wealth, but towards the rich only.

The end result is that the tax burden in Britain has indeed been shifted from the rich to the poor. But for the extremely wealthy this is just not good enough. And so we end up with sweetheart deals whereby companies like Vodafone simply get let off with the miniscule taxes that they were supposed to pay in the first place.

This is not considered criminal behaviour, but it should be. For decades now the people of the UK have voted for politicians who have gently but inexorably squeezed every bit of disposable income from those at the lowest tiers of society. At the same time successive governments have defrauded the exchequer of legitimate revenues, which is called tax evasion were you or I to do it. If you are wondering why wages have stagnated, why people get into debt unheard of 40 years ago, or why a single wage earner can no longer seem to support an average family, then stop wondering.

It is because the proportion of what you earn that goes to the government has massively increased over the last three decades unless you happen to be in the very top echelons of the UK’s wealthiest people. This does not get reported in the media. There are no calls from the fifth estate to reverse, halt or even slow this process. Instead we get calls for the forcible removal of Gary Barlow’s OBE.

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