ONE of the most depressing consequences of the current crisis has been the impact on the poorest members of our society. These are individuals and families who have already been hammered by 10 years of Tory austerity. Wages and benefits have not kept pace with the cost of living and many local authority support services have been cut back. Thousands have had to rely on food banks and clothing stores. What is particularly shocking is that so many of them are actually in work. Their plight can only worsen as the economic consequences of the virus begin to bite. Yet consider the debt that we owe to the thousands of care workers who are working selflessly on the front line and yet who are paid peanuts. How have we allowed this to happen?
Much of the blame lies with our tax regime. Successive Labour and Tory governments have allowed, or failed to tackle, the arrangements that facilitate our wealthiest citizens and their companies to effectively wave two fingers at HMRC.
HC-One is a classic case in point. This company owns 56 care homes in Scotland including the Home Farm Nursing Home in Skye. The company was formed by Dr Chai Patel, a Labour Party donor, who was awarded a CBE in 1999. As reported on BBC Radio Scotland last week, HC–One has recorded a loss for every tax year since 2011. As a consequence, it has paid no income tax nor corporation tax since then. Shockingly though, it has paid out £48.5 million in dividends in the last two years as well as £40m in rent to the territories "hosting" the company. To make matters even worse, the company has received a tax credit from HMRC of £6.5m since 2014.
Jacob Rees-Mogg is another example of a wealthy individual who benefits from the UK Government’s failure to shut down these offshore schemes. Much of his wealth, estimated to be around £150m, is located in the Cayman Islands. He recently boasted that investors in his Somerset Capital Management Company could get "super normal returns" by taking advantage of the economic crash caused by the pandemic. Many of these offshore tax havens are located in British Overseas Territories where for a "donation" of $15,000 you can gain citizenship, thus avoiding UK tax. Astonishingly Scotland is now advertised as an "offshore jurisdiction" where investors will benefit from "zero corporate taxes" and have "no obligations to file accounts with the Revenue Services".
We’re regularly told that to shut down these schemes and to increase taxes for the rich would drive them abroad. It’s obvious though that these individuals have already shunted their wealth and their residences overseas. It’s high time that their bluff was called.
Given the track records of recent Labour and Tory governments, I fear though that nothing will be done. I would like to think however that the government of an independent Scotland would see this scandal as a priority.
Eric Melvin, Edinburgh EH10.
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