My nephew receives disability benefit for severe Cerebal Palsy (which was reduced recently, thank you Mr Cameron). That doesn't stop me getting pissed when I see people walking around on two legs carrying their completely un-necessary crutches for example. I recognise there are scroungers in the benefit pool, so yes it's not on an untouchable pedestal to me, but target it appropriately rather than cut arbitrarily across the board.
When there is a much, MUCH larger pool of tax avoidance loopholes which could be closed it seems like they need to take a step back. 80/20 rule guys. What's going to reduce that defecit faster?
Well yeah, but I think what a lot of people either don't know or don't appreciate is that tax loopholes don't just appear out of thin air. It's actually super complicated but...
... Firstly, there's no obvious definition of reasonable expenses. I have a friend who occasionally employs me on a freelance basis to produce work for his business. He owns the business, and he has no actual employees except himself. Literally every time we go for a drink or a meal, he expenses it. Because he solely works from home, he claims a huge chunk of his rent and bills as expenses. He drives around a lot for work so his entire car was expenses etc. As a result, he hardly makes a profit, yet has a pretty "rich" lifestyle. Many would suggest he's avoiding tax. But then, I get taken to the pub by my boss (at my actual job) basically once a week. I get sent of work trips which are basically boozy jollies abroad with a bit of work in the middle. These are all considered (rightly, I think) as part of engendering team spirit in the company, and thus an important aspect of the business succeeding. It all gets expenses off of the company profits, though, and it's basically the same as my mate with his own business. So what bits of that count as avoidance? What bits don't. There is no clear cut answer.
Secondly, there's the tax code. Even if we left all our tax arrangements and replaced our 11,500 page long tax code with the sentence "You pay X percent of your income in tax (graduated, whatever). Businesses pay Y percent of their profits in income. Goods have a Z percent VAT added." with no loop holes, you'd still have the problem above. BUT there's a reason our tax code is 11,500 pages long. Let's say Osborne replaced the tax code with the above and looks at the figures and thinks "Hmmm, the North East isn't doing so good. What can we do to help?" and he decides to designate it a low-tax area, and the whole region has a Corp tax and small business tax rate of 15% rather than the national 20%. OK, so there's an extra line we need to add to our new slimmed down tax code. Everything's going well, a few more businesses start there (At the expense of the surrounding areas, naturally, who complain, but never mind). But someone complains and says that the low corporation tax rate isn't encouraging good jobs to form there - there are more endemic problems to that, involving infrastructure, lack of existing industry etc - and that all that's being created are low quality, menial jobs that pay the minimum wage. So George intervenes again and adds another line to the tax code that says that Businesses where the average hourly pay is less than £7.00 have to pay a tax rate of 18%, with a sliding linear scale all the way up to £12ph who only pay 12%. This would encourage higher paying companies to set up there without just being a giveaway to low paying companies. Yay! Everyone's happy, and there's a statue made in George's honour.
But, lo, what is this? The increased business activity is good for jobs, but bad for the environment - some industrial companies have returned to the area, but they're producing a quite significant chunk of pollution. We want those companies because they help to rebalance the economy, but we want them away from population centers. OK, so now we need to change the tax code again - if you're within 10km of a town of over 100,000 people, or within 5km of a town of between 50,000 and 99,999 people, and you emit more than 120T of Co2 p/a, your tax rate gets increased by 3% above whatever it was after the per hour calculations. This keeps most Co2 emitting companies away from towns. But now the roads in these rural areas are being pounded by heavy trucks and vehicles that weren't meant to be supported by such humble road infrastructure. These roads are the responsibility of the local council, but they can't afford this sudden new expense, and they can't increase business rates because it would affect too many other businesses that haven't caused any trouble, so now what's George going to do? Well he could bolt on an extra percent to the rural companies in the areas whrere the road costs are increasing. But now you have a situation where there's about 12 different tax rates within a 20 square km area.
This is obviously a simplified example, but this is how most "loopholes" come about - by the government intervening in markets to encourage this, discourage that, promote this industry or move that one. It's not all "Give rich bastards 15% off if they pay their accountants enough".
THEN you have our international tax agreements and, well, the EU. People, goods and money can move about pretty freely in the EU, which is why you have things with whacky names like "Double Irish Arrangement" or "Dutch Sandwich" - because tax rates might work in the favour of individual member states but against the interests of everyone else. There are some things you can do to avoid this, but it's obviously going to be limited whilst we're in the free maket (note: This isn't an appeal for us to leave).
All this is to say that it's very easy to point at the 120bn figure of "tax avoidance" (which is basically an invented number - one based on solid data I;m sure, but one man's "evasion" is another man's "sound practice" - by the standards used by some, even things like ISAs count as the utilisation of a tax loophole. As long as loopholes are there to prod and cajole, we'll have people benefitting from them because
that's exactly what they're designed to do. It's worth remembering, I think, that these loopholes exist for a reason, they were created where they did not exist before for a specific purpose. Closing them isn't as simple as tearing out pages, unless the cause which inspired their creation is no longer relevant.