DANNY ALEXANDER’S “announcement” yesterday morning of the Lib Dems’ intention to create a new corporate offence aimed at financial institutions and organisations that assist business in avoiding paying their fair share of tax highlights just how quickly the scale of the HSBC scandal has been minimised to a minor regulatory question.

Tax avoidance and evasion is not an issue that’s confined to a single department of a single banking institution in the financial sector but is an endemic and systemic problem in Britain.

It’s been fuelled by more than three decades of policies, which have been a major contributor to the largest redistributions of wealth in human history away from working people to the richest in society.

The true scale of legal and illegal tax avoiding and evasion by businesses is estimated by tax justice specialist Richard Murphy to be at least £120 billion a year. But this is just the proverbial tip of the iceberg. Globally somewhere between $21bn and $32 trillion of unrecorded and unreported money is held in tax havens by the richest 1 per cent of the world population.

Labour’s response has unfortunately been depressingly predictable. As ever, they’ve missed a golden opportunity to put forward popular economic policies — instead turning to a media war highlighting the Tories’ reliance on tax-dodging donors, an area where Labour hardly comes out whiter than white.

But further, they’ve demonstrated they have no sense of the true scale and extent of the problem by getting distracted to an argument about collecting receipts for hedge trimming. It’s perhaps not surprising given that past new Labour governments are as guilty as the coalition government in creating this scenario.

New Labour’s economic policies didn’t just extend to the cutting of tax rates that only affect the super-rich and big business such as corporation tax or the capital gains tax but also extended into allowing them to change the way in which they classified their wealth. 

The revolving door between financial institutions, government and regulators isn’t just limited to high profile coalition spokesmen like former trade minister and HSBC chairman Stephen Green but is endemic between HMRC and the major tax accountancy firms they’re meant to be regulating. Indeed senior members of the Civil Service are even allowed to be seconded to work for the four largest private accountancy firms which would be a bit like members of the police service being allowed to hire themselves as consultants to career criminals.

In fact the line between tragedy and farce has truly been tested by HMRC’s own tax-dodging — 25 per cent of its PFI-funded headquarters are now owned by tax-dodgers-for-hire such as KPMG and PwC based in Jersey and all HMRC’s regional offices are owned by a Bermuda-based company.

The corporatised “customer relationship” culture that exists in HMRC results in a situation where disputes on outstanding tax bills with major companies are settled and hashed out over lunches in five-star restaurants.

This obviously stands in stark contrast to the way in which suspected benefit cheats are systematically hounded, investigated and vilified by right wing tabloids. And yet even the most exaggerated claims by the coalition government on the scale of benefit fraud puts the cost to the UK at less than £1.5bn a year.

What’s needed is a total shift in the culture and regulatory structure of the Treasury, a criminalisation of tax-dodging and the removal of big business interests from government.

This has to involve Britain taking unilateral action to close the use of Crown dependencies and overseas territories as international tax havens as well as the world’s second largest tax haven (after Switzerland) which lies within the heart of our capital.