How to counter tax avoidance - raise VAT

Since people can't escape paying tax on the things they buy, raising VAT-levels could be a good way to cut tax avoidance and evasion - and bring in some extra money for the government too.

With all the talk about how we need to raise taxes to deal with the deficit, combined with the general upset about tax avoidance and evasion, it seems odd that we hear so little about changes to the VAT system. We know that the main tax evasion takes place at the bottom and at the top of the financial tree.

Consider the bottom. A few months ago, Alice Miles, writing in the New Statesman,pointed to a study by an anthropologist working in a deprived area. He found that while the average official family income was around £4,000, thanks to unreported, cash-in-hand work, prostitution, bartering, trade in stolen goods and the smuggling of spirits, tobacco and drugs, it was actually more like £17,000. One in four people were "informally self employed."

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.