Tuesday, August 10, 2010

Anyone for maths?

I was listening to the news this morning when they were talking about David Cameron's announcement of a crackdown on benefit fraud. It is of course a very middle class thing to assume that hard working, tax payers are being fleeced by benefit cheats. In fact, according to the political correspondent on BBC Breakfast, less than 1% of benefit claims are made fraudulently. This amounts to some £1.5 billion. Another £1.6 billion is "lost" through administrative errors. Not surprising given the complexity and size of the system. Together I make that £3.1 billion.

So where does the £5.2 billion of "welfare and Tax credit fraud" come from that Mr Cameron quotes?

I just get a little bit worried when I hear this kind of rhetoric. No, it's not right that any person should use the benefits system to access money to which they are not entitled. But there are an awful lot of people that don't access money to which they are entitled.

And it does beg another question: How much money is lost to the government through the tax avoidance antics of the wealthy? According to a piece in the Independent, £13 billion of tax is legally avoided by the wealthy and another £12 billion by companies.

So, in other words, if we simplified the tax system we might easily recover more lost tax than we could get back from chasing down errors and deception in the welfare system. Of course we should do both, but it's easier and a bigger vote winner in middle England to go after the benefits system.

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