Herald columnist Damien Grant has really outdone himself with his latest column. He think that people convicted of beneficiary fraud should be treated more severely than tax cheats.
Why? I am not sure. His column is rather brief at less than 350 words but basically I think he is saying that the rich are good people and the poor should be despised so a difference in treatment is justified.
He starts off by presenting data which suggests that those convicted of tax evasion have been treated far more leniently than those convicted of benefit fraud.
Victoria University lecturer Lisa Marriott last year researched the difference in sentencing outcomes for tax cheats and beneficiary fraudsters.
Tax offenders are less likely to go to prison than benefit scammers. Of those who were sent to prison the average tax fraud was $800,000 and they enjoyed a 25-month sojourn, compared to an average benefit scam of $130,000 in return for a paltry 17-month stint.
Of those the IRD prosecuted between 2009 and 2011, only 39 went away compared with 48 for benefit fraud. Most convicted tax evaders were rorting the system, usually by getting false GST refunds. However, the real cost to the system is evasions that are civil in nature, such as the famous South Island surgeons Ian Penny and Gary Hooper whose creative accounting structures were unwound by the Supreme Court; or Andrew Krukziener who took $5 million from his company as a loan, and not as income.
I had some trouble reconciling this passage with Marriott’s research. In a Victoria University description of her work the following is stated:
Her analysis of court data on the most serious offending from 2008–2011 shows that 22 percent of people found guilty of tax offences received a custodial sentence while 60 percent of benefit fraudsters were imprisoned.
Dr Marriott’s investigation also shows tax crimes are more costly, with those given custodial sentences committing offences valued at just over $800,000. Benefit fraud averaged $67,000 per offender.
Benefit fraud cost New Zealand $22 million in 2010, or around $5 for each New Zealander. While it is difficult to get accurate figures for tax evasion, the Tax Justice Network estimates New Zealand missed out on more than $7.4 billion of tax revenue in 2011, or around $1,500 per New Zealander.
Grant has apparently chosen to compare the number of people who went to jail, 39 (tax fraud) compared to 48 (benefit fraud), whereas the difference in proportions is far more stark, 22% (tax fraud) compared to 60% (benefit fraud). The statement also refers to a figure of $67,000 being the average for a benefit fraud offender and it is not clear if this is the average for all offenders or just for those who are incarcerated. Grant says this figure is $130,000.
Grant reaches his conclusion by comparing his view of the morality of underpaying tax with the morality of defrauding the benefit system.
He reasons that since only 380,000 individuals pay half of all income tax then they should be treated differently. People earning more than $80,000 are in that group. He also states that most tax is paid by businesses through corporate tax or receipted GST payments. This shows an interesting mindset in that businesses paying GST are not paying money out of their own pockets but paying money they collected from their customers on behalf of the Crown.
He then says that since this group are “net contributors” to society and beneficiaries are not then tax dodgers should be shown more leniency. Of course this ignores a rather large hole in the logic in that if your average tax fraudster is engaging in $800,000 worth of tax fraud it is very unlikely that they are anything close to being a “net contributor”. It is much more likely they are living it up on money that should have been spent on schools and hospitals.
His analysis also assumes that all wealthy people are in the top tax bracket. The Herald’s own research suggests that two thirds of the country’s richest people are through tax avoidance measures not in the top tax bracket.
Finally he obviously sees nothing useful coming from those forced to survive on a benefit. With barely disguised bile he says:
Beneficiary cheats, by contrast, are providing nothing to start with and seek to enrich themselves further by deception and dishonesty.
Judges understand this, which is why beneficiary cheats go to jail for longer, as they should.
The complete lack of understanding of humanity and of the difficulties that beneficiaries face as well as an obsequious worshiping of the rich is strong in this column.
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