Treasury officials, in line with the rhetoric of their boss, are intent on blurring the line between tax evasion (illegal) and tax avoidance (legal). There is no question that some avoidance schemes offend one's sense of equity, something available only to the rich and their well-paid advisors. And the Chancellor's proposal to collect £1 billion per year by eliminating the routes to avoidance seems unexceptionable. But make no mistake, this is different from raising money by catching crooks. This is money gotten by raising taxes. Gordon Brown always seemed to feel that the nation's income was the government's for the taking, and that it was generous of him to return half of it to the people who earned it. Osborne feels that those who legally avoid taxes are somehow helping themselves to his money, and he plans to put a stop to it. As well he should. But don't fool yourself: this is a tax increase on high earners. HM Revenue & Customs lists ten avoidance "schemes" that "people should be wary of", and claims that "there are always new schemes being concocted." Any businessman knows what that means: the Chancellor will get the schemes he has noticed eliminated, but his army of collectors will reserve the right to decide whether an entrepreneur can keep what the law seems to say he can, and if he doesn't like this government of men, not laws, he can hire expensive lawyers and accountants to contest the tax collector's ex post view of things. What the Chancellor did not say was that, with the £1 billion of tax heretofore avoided now safely in the Treasury's coffers, the hunt for new avoidance schemes will come to a halt for the balance of Parliament. Certainty matters, uncertainty reduces business investment and the number of the mobile rich who choose to call Britain home. 

There is worse, at least from the point of view of small entrepreneurs. Tax simplification is not a project to be pursued at a slow pace. Big businesses have the staffs to cope with the taxman. Not for the chairman of the board of a CBI member any concern if the taxman cometh — his army of lawyers and accountants will deal with it while he goes about the business of advising the government how to make the economy grow, even if he cannot do that for his own company. That's why so little was heard from the businessmen with ready access to the government when HM Revenue & Customs announced it would send inspectors into 50,000 small businesses every year as part of a policy to get tough on these struggling entrepreneurs, and to make sure that these small businesses are keeping proper records. Each of these "odious visits and examination[s] of the tax-gatherer", to borrow from Adam Smith, is expected to last four hours, and taken together will impose an unconscionable cost on those businesses. But it is a good investment for the owners of these firms, say the bureaucrats at HM Revenue & Customs, since the inspections will produce better record-keeping, which will enhance profitability and "ensure survival and success". It seems not to have occurred to these bureaucratic bean-counters that small businessmen know better the information they need to "ensure survival and success" than someone who has never taken the risk of starting a business. Or the contribution that such inspections, all 50,000 of them every year, make to the notion that starting a small business is going to be difficult, the uncertainties higher than they need to be, because a government that can't frame a law to distinguish illegal evasion from legal avoidance decides to leave it to the tax collector to decide which small businessman to pounce on, and which to allow to survive a four-hour inspection unscathed. It will be interesting to see if the Chancellor is able and willing to rein in his minions before they do serious damage to the small business sector on which he is counting so heavily to propel the economy.