ENTREPRENEURSHIP / FEB. 07, 2014
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Benefits Scandal? Or Tax Evasion Scandal?

scandal

Every time a scandal around an issue like benefits, or tax evasion arises, it seems to spark an array of strong opinions from almost everybody. Everyone is blaming everyone for the economic deficit being faced by the country, and even the shopkeeper that has never spoken a word before suddenly gives you the full extent of his ideas on immigration.

People of all ages shout cries of corrupt multi-nationals, bankers, and Tory fatcats lining their filthy pockets. The government, meanwhile, presents statistics showing that actually, it's all bloody well your fault, you little tax dodger. Yes, even you in the wheelchair.

A Channel 4 documentary called Benefit Street recently exploded into debate at all levels. The programme claims to give an insight into life on benefits. Critics of the programme, and especially some participants like Mrs Roberts, claimed that the programme, contrary to it's outline, presented only a view of people taking drugs, cheating the system, and “dosing around all day.”

The controversy of the show, regardless of whether it portrayed an accurate picture or not, is perhaps reflective of the multitude of opinions coming from all directions at once, combined with a more than a little unbalanced media storm. The social and political landscape paints a similar picture.

Recent statistics, which were unveiled by Tory MP Andrew Rosindell, demonstrate Britain's dependency on the benefit system. According to the Office for National Statistics, 52% of households in Britain receive more in benefits than they pay out in tax.

This statistic, however, includes state services such as free education, and free health-care. Another statistic is given showing that around 37% of households receive more direct cash benefits than they pay out in tax. Direct cash benefits apparently includes state pensions, most of which are deferred wages covered by national insurance.

Mr Rosindell expressed his disgust at the new statistics; “This is a startling statistic. It highlights the major problem we have in that so many people are able to get away with contributing very little to the costs of running the country, while benefiting greatly from it.” Taken out of context one might think he was talking about the banks and multi-nationals.

It is very easy to take an issue like benefits, and allow it to become a battle of race, class, and ultimately division. The real issue is on policy reform. Like many other aspects of society and government policies, the benefits system should be constantly monitored and improved upon and should be woven as a  functional thread in society.

There is a lot of pressure on governments to tackle issues like these. They have pressure coming from many sides: On one hand they must try to create policies which create stability and a better society, to provide a better life for the individuals concerned especially for those who often are not trying to cheat anyone at all.

On the other hand they are bound by economic pressure and need to make sure they improve the deficit of the country. They must encourage growth and employment. Perhaps one day, they will find a balanced approach to this.

However, governments could be placing an overemphasis on the working class. Statistics on the amount of tax owed to the government in tax evasion gives a different perspective. In 2011-12 £70 billion of tax evasion, £25 billion in tax avoidance, and £25 billion in unpaid taxes has been reported.

The total cost of welfare from income support and unemployment benefits, is £111.7 billion. Pension costs are a further £129 billion but it is debatable as to whether they are a “benefit” for reasons stated above.

It is clear from the statistics that while the cost of providing benefits is certainly significant. However, the costs of tax avoidance or evasion, a lot of which comes from huge corporations making billions of pounds every year remains a significantly painful issue as well. The real scandal may not be from the claimants after all.

Despite these statistics, the government plans to clamp down on welfare and take immediate action on handouts. It is expected that the newly introduced welfare cap of £24,000 a year, will be lowered and universal credit introduced as a means of merging six types of benefit and tax credits into one monthly payment, thereby cutting costs.

Certainly, there are individuals and families out there of all different colours and creeds, who are using the benefits system instead of finding a job. It is therefore not unreasonable to welcome changes in the benefits system, restructuring it in areas where it discourages the individual to seek financial incentive and encourage them to seek full time work.

But one needs to be wary of attempts, either explicit or implicit, to divide and conquer, to turn the comfortable against the struggling, the old against the young, and to stir racial tension.

Are the people, most of who are in need of the benefits they claim, being victimized, whilst the interests of the very rich are guarded? What is the real scandal? Who are the real frauds? Is it you? Or is it the ones who consistently and knowingly cheat the system for billions of pounds in tax avoidance every year?

Guess, the truth will remain hidden for some more time.

 

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