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Tax avoider criticises tax avoidance

September 16th, 2010 Posted in Liberal Democrats, Policy, UK Politics by

Tax avoidance is the legal means by which people minimise the amount of money they pay to the government each year by taking advantage of opportunities not to pay. Tax avoidance for example includes paying money into a pension scheme, buying second hand goods, shopping on holiday in lower tax countries, utilising tax-free saving schemes, the capital gains allowance on shares, and charitable donations utilising gift aid. Very few of us are not tax avoiders.

At the conference next week our Treasury spokesperson in the Lords, Matthew Oakeshott, intends to attack tax avoidance as anti-social and poisonous to the concept of the Big Society. This attack is primarily aimed at those individuals wealthy enough to manage their tax affairs in ways the rest of cannot, through non-domicile and non-residency arrangements; but as a general principle it suggests there is a moral element to paying tax that goes beyond the legal and civic duty to make a contribution and requires us to arrange our affairs to maximise that contribution.

I find this puzzling, voluntarily paying more than you must for something is not very rational behaviour, particularly not for something for which your contribution will make little difference to you, and it is not as if the target of his ire is a drain on the public purse, quite the reverse. Even for generous collectivists it makes more sense to give away money to your own choice of charities and trusts than it does to the black hole of government spending, particularly if it’s just going on repaying past waste. Further whether the left like it or not there is a competition between nations for international wealth and talent and the reality of the tax system at that level is that it is a negotiation and balancing act.

I find it particularly puzzling from a representative of an institution that is one big tax avoidance scheme. Their Lordships do not pay tax on their allowances and have voted to keep it that way, even after last year’s scandals. Lord Oakeshott himself was a vocal opponent of the worst abuses, but as a well off champion of the morals of paying more tax than one legally needs to in order to show solidarity and civic duty one assumes that he has been voluntarily surrendering the 31-51% of his allowance that the rest of us would pay on income for a similar part-time job… and urging the same of his colleagues… perhaps he could clarify in his speech?

That aside though I would rather the Government focused on making the tax system simple and low enough that avoidance is less likely, and we are a more attractive destination for international investment. Perhaps they should also follow the logical corollary of  Oakeshott’s argument by thanking the humble tax payer for their contribution occasionally, particularly those who contribute most.

2 Responses to “Tax avoider criticises tax avoidance”

  1. Mike Jecks Says:

    What I find more reprehensible is the fool in charge of the Revenue allowing firms like Vodaphone to evade 6 billion in taxes, yes, 6 billion in taxes, because they tried a scam when they got Mannesmann in Germany. All detailed in Private Eye, and since there’s no sniff of a lawsuit, I rather assume Hislop’s got them bang to rights again.

    But the Revenue’s chief has said they can evade that chunk, and meanwhile is trying to recover 2 billion which was caused by the REvenue’s incompetent business partners developing software for them. Which sort of implies incompetence on the part of those specifying the software and writing the contracts’ penalty clauses.

  2. Joe Fox Says:

    “I GENERALLY ENJOY reading The Guardian and it has been my newspaper of choice for more than 35 years but, as a tax advisor, I do find it tiresome reading articles in it – and the rest of the press – which get the wrong end of the stick on tax matters so spectacularly.

    This week’s report that Starbucks has paid just £8.6m in taxes on a reported £3bn in UK sales since 1998 is a classic example of the nonsense that is becoming all too familiar. It really is tax analysis straight from the kindergarten.” AccountancyAge