Monday, 5 March 2012
Red Ken caught red-handed
I do not think most Londoners will have to look long and hard for a word when they hear about Ken Livingstone’s tax avoidance scheme that he set up in 2009 and has run ever since. I believe the word is ‘hypocrisy’ and, no doubt, he will be branded with it again and again throughout the electoral campaign in London. But how did we get here? Let us recap.
Ken Livingstone has been more than straightforward when it comes to say what he thinks about people who use tax avoidance schemes. He repeatedly called them ‘rich bastards’. It turns out he included himself in this description.
The easiest way to avoid taxes is of course to channel any of your income through a company over which you have complete control. You are the sole owner of that company, and the only one who brings in the income. The tax you pay on company earnings is 20% while income tax would have come in at the rate of 40% (or a whopping 50% if you earn more than £150,000). That is a pretty saving of dozens of thousands of pounds. Of course anybody can do this, but most people who do not have access to sophisticated legal advice and work as self-employed simply pay the tax on the income they declare.
Not so Ken Livingstone. As it was revealed on the weekend, Livingstone channeled his income since 2009 through a company which allowed him to save income tax to the tune of £50,000. This handsome sum neatly describes the gap between his rhetoric and his own action on tax avoidance.
While he castigated everyone who had such a tax avoidance scheme as ‘bastard’, he himself established the very same scheme, plus split the fees that he got for speeches and his own media work between himself and his wife, which again saved him a pretty buck in tax.
Very few people will be sorry for all the puns coming his way now, given that he has been caught red-handed doing exactly what he accused others of doing. Oh, and in case you wondered how his rhetoric stacks up on the 1% versus the 99% of which he so eloquently spoke, yes, you guessed right: he fairly and squarely falls into the category of the 1% top earners in this country with more than £230,000 income per annum (per company books of course). Only, so while he is one of the 1%, he chose not pay tax as many others in that group do. I guess, we can now safely label him with the word he used for others: ‘rich bastard’.