For A Civilised Society

Polly Toynbee writes:

What a clever, well-targeted protest. When the whistle blew and the protesters emerged from among milling shoppers perusing handbags and hats, it took just a few hundred people to shut down Philip Green's flagship branch of Topshop, in London's Oxford Street – and 22 other stores in his empire around the country. Summoned by Twitter, the UK Uncut movement brings together an instant army, peaceful, good-natured and witty in its songs and chants. For a while they stopped Green's tills ringing on the year's busiest shopping Saturday.

Police and security guards made only a token attempt at bundling out demonstrators. Though some shoppers were irritated, many were supportive and a few joined in. No surprise there: tax-dodging by the rich angers most people, more so if the law allows it while everyone else pays their PAYE. That is what makes this campaign brilliant. It is not a special interest protest – though there will be plenty of those. Everyone has an interest when corporations employ accountants like KPMG or PwC to manufacture fiendish plans for (legally) avoiding tax that could pay for the universities or Sure Starts now being savaged.

It is no coincidence that the government today hurried out a "clampdown" on tax avoidance. Would that have happened if the UK Uncut protests that have shut down Vodafone stores over the last month hadn't prodded the Lib Dems into remembering that "tackling avoidance" was written into their coalition agreement? After their disastrous student fees broken pledge, the Lib Dems are in dire need of good causes they can claim as their own. The protests have brought to public attention Vodafone's deal with HM Revenue & Customs that let them pay £6bn less in tax than some experts expected.

Philip Green, quite legally, put the ownership of his Arcadia empire into his wife's name in Monaco and paid her £1.2bn, tax free. (If only some gigolo would sweep Lady Green off her feet and so make off with all her husband's untaxed billions). Arcadia is not some flighty finance company, easy to base anywhere: its money is earned in UK high streets from British pockets and the law could make it pay British tax – as it should Cadbury, whose profits Kraft is moving to tax haven Switzerland.

The government today claimed its closure of some loopholes will raise £2bn extra for the exchequer over five years. That is less than it sounds: every year recently £1bn worth of extra tax has been reclaimed by loophole closures. More important is the setting up of a review to "study a General Anti Avoidance Rule (GAAR) that could both deter and counter tax avoidance whilst … retaining a tax regime that is attractive to businesses". An effective rule that prevented anyone taking action purely to avoid tax could rake in much of the missing £25bn that is currently avoided. For example, shares about to be sold could no longer be shifted offshore to avoid the tax due on selling them. There would be no point in new devilish wheezes if a GAAR targeted any action whose main purpose was tax avoidance.

Will it happen? Not if the CBI and finance sector can stop it: the CBI yesterday said: "We believe this would not be in the interest of the government, taxpayers or UK competitiveness." If the government gets as far as introducing a GAAR, all will depend on how it is done: a weak one in Canada was wrecked by judges who disregarded it. A strong one in Australia works well. (And no, despite the claims of the Taxpayers' Alliance, it doesn't stop ordinary people putting money into tax-saving ISAs and pensions). It would need a law that obliged judges to take account of parliament's intention when adjudicating on whether an action is taken only to avoid tax, according to Richard Murphy of Tax Research UK. So far, parliament is a long way from expressing any intention at all – but this "study" is a first tentative step. We shall see if the Lib Dems force it through, though their record is hardly encouraging.

Meanwhile, 13,000 more tax inspectors are being sacked from HMRC to join the 30,000 jobs already cut: fired instead of chasing the £70bn a year of criminally evaded tax, the £25bn avoided and the £25bn not paid.

As the Guardian's 14-part Tax Gap investigation revealed last year, respectable FTSE 100 companies and great British brands are fleecing taxpayers of billions. Even in the boom years when profits swelled, the proportion of tax paid by big companies fell: a third on the FTSE 100 paid no tax in 2005-6, with the help of byzantine avoidance practices. A great destructive industry wasting the nation's best legal and accountancy brains is pitted against HMRC.

How do you create culture change? How do you shame companies out of such practices when governments are frightened of their power? Polling evidence suggests that Vodafone has already taken a reputational hit as a result of these protests. Crashing and banging saucepan lids, whistle-blowing and rude chants against companies works where years of pamphlets, meetings and earnest debates cut no ice.

This week there are daily protests: women were outside the high court today against a budget that cuts 72% from women; tomorrow schools and sports celebrities protest against the axing of the school sports budget; Wednesday and Thursday see two days of student protest. This has hardly begun. Wait for the rest in next year's great post-April shock. The knack is for protesters to stand on principle and on the side of the public: students are protesting against cuts that hit their successors, not themselves. Everyone is affected by tax dodgers whose lost funds could cover the deficit.

Labour has a history to live down. Until last year, prodded by German action on Lichtenstein, it was pusillanimous on avoidance. Peter Mandelson's famously laconic line about being "intensely relaxed about people getting filthy rich" had a rider – "as long as people pay their taxes". But Labour didn't chase the filthy rich avoiders either: Britain is responsible for 10 tax havens that should be shut down. No official opposition can support direct action, but those close to Ed Miliband challenged the CBI view: "Tackling avoidance is not incompatible with a business friendly environment if done in the right way." Most people who ever voted Labour or Lib Dem are likely to support a crackdown: there is nothing scarily leftwing about fair tax collection. It is the price for a civilised society.