Tuesday, October 23, 2012


3 News had a fascinating piece over the weekend comparing the penalties handed out for tax evasion and welfare fraud. Unsurprisingly, it turns out that the courts show serious bias against the latter:

The numbers tell the story. For tax evaders, the average offending is $270,000, and those found guilty have only a 22 percent, or one-in-five chance, of being jailed.

For welfare fraudsters, the average offending is $70,000, and those found guilty have a 60 percent chance of being jailed.

And the reason for this is pretty obvious: judges are rich. Tax cheats are also rich. Judges therefore find it easier to empathise with them and accept their excuses when it comes to sentencing (especially if they are also playing similar games with their own taxes). Welfare fraudsters OTOH tend to be poor, and judges have a lot less in common with them. Its the same bias towards the rich observed elsewhere in the justice system - and it undermines public confidence in the entire system.

Obviously, this needs to change. Justice is not justice if it is not applied equally to all.

But the courts aren't the only thing that needs to change. Tax fraud costs us between $1 and $6 billion a year, compared with a mere $39 million for welfare fraud. Guess which one the government spends millions stigmatising and encouraging people to report? And again, the problem is that MPs are rich, and so tax fraud is a crime committed by them, their friends and families, rather than people who are alien to them. But it causes far more social harm, especially in a time of austerity. That $1 - $6 billion a year? That's why our schools and hospitals are falling down. It's why Auckland is still choked with traffic rather than having a decent commuter rail system. Its why our police aren't trained properly to deal with sex cases or young people. And its why our public servants are being sacked, why we underfund scientific research, and why we don't have decent paid parental leave. tax cheats cost us all of those things. Its time we made them obey the law, and pay what they owe.