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Zahawi’s resignation won’t be enough. The entire UK tax system needs fixing [1]
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Date: 2023-02
Nadhim Zahawi’s tax position is not inherently very important. His presumably imminent resignation as a cabinet minister and chair of the Conservative Party even less so. But what this scandal tells us about the state of UK governance should worry us all.
The reported £3.7m that Zahawi failed to pay in tax is immaterial – a drop in the ocean when compared with the hundreds of millions in public funds that the government has distributed to insiders during the Covid pandemic and through the pork barrel politics of ‘levelling up’.
But tax matters for much more than just revenues. Tax is the glue in the social contract, the price we pay for civilisation. It’s a social act – a reflection of our belief in a better society, and a contribution to it. Tax is paying it forward.
If we weighed up only the penalties and the chances of being caught not paying tax, it might be ‘rational’ to be much complaint. But a good deal of tax-paying depends on two things. First, our perception that tax revenues support redistribution to those with greater need – which means we need to be able to trust the state is working as it should – and second, our perception that other people are also compliant (because nobody wants to be the only mug).
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These are compromised when governments start to undermine their own tax authorities, and the rot sets in quickly. The UK government may have already crossed a crucial tipping point.
Consider that Zahawi’s apparent tax abuse was entirely visible from documents in the public domain. Kudos to tax lawyer Dan Neidle for putting the pieces together. But this raises questions over where HMRC was – why, given the department had all the relevant tax returns, didn’t it spot the mispayment?
Then there’s the genuinely shocking fact that Nadhim Zahawi reportedly negotiated a deal with his own civil servants while he was chancellor. In this case, we know exactly where HMRC was. Imagine the internalised fear and failure in that once-proud organisation, for them to have gone ahead and settled with the law team of their boss.
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[1] Url:
https://www.opendemocracy.net/en/nadhim-zahawi-tax-system-reform-resignation-rishi-sunak/
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