The chancellor's surprise is about as convincing as Captain Renault's explanation for shutting down Rick's bar in Casablanca (says The Guardian Economic Blog)Has George Osborne turned into Claude Rains? I only ask because the notion that the chancellor is shocked by the tax avoidance of the rich is about as convincing as Captain Renault's explanation for shutting down Rick's American bar in Casablanca.
In one of the best scenes from the film, Rains says he is "shocked, shocked" to find gambling going on in the establishment, only to be handed his winnings by a member of Humphrey Bogart's staff.
It comes as a revelation to Osborne, apparently, that wealthy people in the UK are exploiting loopholes so that they pay little or no tax at all. Some are using especially aggressive avoidance mechanisms that mean they are paying only 10% of their income in tax, half that paid by the average Briton. Incredible. Who would have imagined that people got up to such things?
Osborne is not short of a few bob himself. He has plenty of prosperous friends and is supposed to know a thing or two about the UK economy. If he is genuinely surprised by the tax arrangements of the well-heeled in the UK, he has either been living in a cave for the past 20 years or is unfit for his current post.
In truth, though, it beggars belief that the scales have fallen from his eyes since arriving at the Treasury. One of Britain's (few) areas of comparative advantage in the global economy is the ingenuity of the big accountancy firms in finding ways round the tax system. A few years back the National Endowment for Science Technology and the Arts (NESTA) even identified aggressive tax planning as one of five examples of striking innovation. Tax avoidance is big business in the UK. We do a lot of it. We market our expertise abroad.
When Francis Maude, Osborne's cabinet colleague, said at the weekend that the coalition wanted to turn the UK into a tax haven it was a political gaffe but an accurate assessment of the state of the nation.
So stunned is Osborne by the horror stories uncovered by HM Revenue and Customs that he is now pledging action. We will see whether he really is prepared to take on the massed ranks of the UK accountancy industry, to target offshore tax havens and to arouse the ire of the donors who bankroll the Conservative party.
Perhaps this is going to be the start of a beautiful friendship between a Conservative government and the taxpayer. But don't bank on a happy ending. This is not Hollywood.
