Ken Livingstone tax avoidance: is lying pulling it back for him?

It’s starting to look like Ken’s dodgy postal votes in Tower Hamlets (more on this story to follow) might come in handy after all. A new YouGov poll in today’s Standard has Boris Johnson’s lead over Livingstone down to only two points – within the margin of error.

Ken’s own first-preference score has risen by only 1 per cent since the last poll and his ratings on qualities such as “in touch” and “sticking to what he believes in” have actually dropped. His rating for “honesty”  has hit 12 per cent – the lowest it’s ever been, possibly the lowest ever scored by a competitive candidate in any election.

So the movement is clearly very little to do with Ken and mostly to do with the national Government’s brilliantly successful efforts to lose as many votes as possible. For Westminster elections, according to the poll, Labour in London is now 19 points ahead of the Tories.

Yet I do also wonder whether Ken’s dishonesty has helped dull the edge of an issue, his tax avoidance, which has been causing him serious damage. YouGov found that by a 21-point margin – 39-18 – voters believe that Livingstone “has not paid as much tax as he should.” But 43 per cent don’t know. By contrast, voters do believe that Boris has paid his share, but only by a 3 per cent margin, 27-24, with 49 per cent don’t knows.

Ken’s repeated lying over his taxes – and the way the lies have been repeated unchallenged in much of the media coverage – has helped to muddy the waters on the issue. So here is a little guide for my colleagues to the main porkies.

Ken has not “published his tax return.”

Strictly speaking, of course, nobody has published their tax returns, the actual forms you send to the Revenue. But all the other candidates have published their full earnings and tax paid, allowing us to say what their effective tax rate is. Only Ken has refused to do so, despite explicitly promising on 4 April to “publish details of everything I’ve earned in the last four years.” All he has published is the earnings taken out of his personal company, not the (far larger) earnings put into it.

Ken is not “quite happy” to allow access to his books.  

On March 26, Ken said on BBC London: “No journalist has contacted my accountant to ask anything about my tax arrangements. I’d be quite happy for them to do so.” Over the last four weeks numerous journalists, including from the Evening Standard and the BBC itself, have contacted Ken’s campaign (I have made almost 20 separate requests) asking him to honour this promise. He has refused all comers. Nor has his accountant signed off on even the figures he has provided, again unlike the others.

Ken has not “paid 35 per cent tax.”

This is the claim Ken has taken to making in debates (at last night’s BBC one, he tried the even more brazen line that he paid three times the average rate!) As I’ve explained before, we can’t say precisely what rate Ken has paid – because he won’t tell us what he earned. But even on the figures he’s published himself, and even after he quietly adjusted them upwards, he hasn’t paid 35 per cent since he established his personal company, Silveta Ltd.

Over the three years 2008/9 to 2010/11 he claims to have paid £83,658 in tax on claimed earnings of £252,740 – a rate of 33 per cent. And we know from Silveta’s accounts that he in fact earned almost as much as that – £232,550 – in just one of those three years, 2008/9, alone. Over the three years as a whole, the accounts show, more than £750,000 has passed through Silveta. My best estimate of Livingstone’s real tax rate is in the low to mid twenties.

Ken does not face “allegations” of tax avoidance.  He admits it.

This line is a particular favourite of the BBC, perhaps because so many of its own senior people use the same dodge as Ken. But in fact Ken has explicitly admitted using Silveta for a tax-avoidance practice known as “income-spreading,” where a large sum of money earned in one year is held as a cash pile in the company and taken out in smaller chunks over several years to avoid higher-rate tax.

In a taped interview with me, he said:

“We had a big influx of money in the year after I left [the mayoralty] because there were a load of people outstanding wanting me to go and advise them in various parts of the world, and then the money tailed off. So we spread it over the three years.”

In 2000, he also described the practice of holding a cash pile in a personal company as a “tax avoidance option.” As of the last accounts, Livingstone held a cash pile of £250,000 in Silveta.

He has also admitted setting the salaries of staff on his election campaign against tax – not an allowable expense.

It’s not a “row over the candidates’ tax affairs”. It’s a row over one of the candidates’ tax affairs.

Ken’s claim that Boris Johnson avoided tax was blown out of the water within 36 hours, when Boris published full figures showing that he has, if anything, overpaid. But in the desire for “balance,” some media reports have balanced a lie with the truth, or left the impression that both are up to something. It’s my favorite example from this campaign of how misleading hamster-wheel journalism can be.

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