Zahawi Tax – Cabinet Defence

Mr Gove was interviewed by Nic Robinson this morning on the Today Programme about the tax affairs of Mr Zahawi. Mr Gove’s characteristically carefully worded response was clear, stating his “firm understanding” was that Mr Zahawi had “paid all his taxes”. He went on to say”People paying their tax is not a story. People not paying their tax is a story.” This soundbite has all the marks of an agreed cabinet line on the issue. We will see in the course of the next few days.

Nic’s original question was about whether the public have a right to know if senior cabinet members are not paying their taxes? Mr Gove’s response begs a couple of questions.

Firstly, if Mr Zahawi has made a payment to resolve a dispute with HMRC then he clearly had not paid all his taxes at the appropriate time. Should the public have had a right to know at that point? And was this the case when he was appointed to the post of Chancellor

Secondly, there is a matter of intent. We can agree that people paying their taxes is not a story, and, that people not paying their taxes is a story. However, what about people trying not to pay their taxes but being found out? Is that a story? Particularly if the people involved are senior members of the cabinet, indeed have been, albeit briefly, Chancellor of the Exchequer. Should they not be like Ceasar’s wife, above suspicion.

This has real real political jeopardy for the government. Public sector workers up and down the country are being told one of the reasons their pay demands cannot be met is because the public finances are so weak. In other words the level of income from taxes is not meeting the levels of public expenditure. This position would be much less the case if there were not all manner of techniques whereby those on the largest incomes were able to manipulate their liabilities through opaque tax regimes.

At the very least this story undermines the moral authority of the government’s arguments with public sector workers whose tax affairs are dealt with via Pay as You Earn (PAYE) where the scope for getting into dispute with HMRC is very limited.