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What goes around

I had things to do yesterday morning but, despite this, fortunately found myself back home in time to settle in for Prime Minister’s Question Time as broadcast by the Daily Politics show on BBC2.

We are of course now in General Election campaigning mode and it was perhaps inevitable that the recent media storm over the HSBC ‘Swiss bank accounts’ scandal would feature in Ed Miliband’s attack upon David Cameron.

At one point during his allotted six questions the Labour leader – in an outburst that I understand was protected by Parliamentary privilege – accused the Prime Minister of being ‘bang to rights … He can’t get away with it, he’s a dodgy Prime Minister surrounded by dodgy donors!”

I’m stating the obvious here, but it’s as plain as a pikestaff that the Tory versus Labour battle-lines for the nation’s choice in May are going to be between “Our sound and proven long-term economic plan and the incompetent financial incontinent chaos that Labour would inevitably take us back to” on the one hand … and “Ideological austerity for the rest of us whilst the ‘fat cat’ Tories and their banker chums make hay …” on the other.

Elsewhere, of course, over the past three or four years the Parliamentary Public Accounts Committee, chaired by Margaret Hodge, has made great strides in hounding those international business and businessmen who some feel – on the face of it – have failed to pay sufficient tax upon their UK earnings or profits.

Never minds the legalities of the circumstances, Hodge and her cohorts have been thumping their collective desk about the supposed ‘immorality’ of global businesses such as Google, Amazon, Starbuck and eBay [I’m naming these as types of examples, not necessarily a definitive list] earning huge sums in the UK and yet, via clever structural/legal arrangements, being able to pay little or no UK tax upon them. Some might say the thrust of this campaign is unchallengeable and it has certainly gained a swathe of public support.

Its bottom line is “What’s wrong with the concept that if you make profits in the UK, you should pay UK tax on them?”

The complication is that – in geopolitical practice (some might argue ‘real life as it is lived’) – principles sometimes have to be compromised to a degree. Not that our statesmen and politicians would like to be reminded of this too often, of course.

Whether it’s being nice to mega-oil-rich Middle Eastern states which have distinctly dodgy attitudes to human rights and terrorism (by us selling them arms etc. and thereby preserving jobs at home), or playing footsy with odious African dictators, there are occasions when ‘needs must’ it seems.

The same seems to apply to vast international businesses and wealthy entrepreneurs.

All the above said, when it comes to people and businesses ‘paying their whack’ of taxes, I find myself broadly agreeing with my father – which is not something that happens very often, I can promise you.

taxThere is a small but very significant difference between ‘tax avoidance’ and ‘tax evasion’.

The former is legal and the latter is not.

The UK Parliament not only has the power to make any tax laws it wishes, it does so annually. Its tax laws are published. Every business and every individual then has to account for their income and/or profits and then pay any and all taxes deemed due.

That said, every business and every individual also has the right to arrange their affairs in such a way as to pay as little tax as possible.

Why should anyone pay more tax than they legally have to?

If clever individuals – with their clever tax advisers – can work out ways of arranging their affairs to minimise what they legally have to pay in tax, so what?

The taxman can get its ‘pound of flesh’ by pursuing people and organisations that it suspects may have evaded paying their due taxes – if HMRC gets it right, it can recover all evaded taxes … if it gets it wrong, it cannot because ‘avoided taxes’ are not illegal.

If it wished to do so, the UK Parliament could pass laws tomorrow that would effectively ‘kill’ all tax avoidance at a stroke.

So why doesn’t it?

I’ll tell you why. Because it suits it not to do so, for any of one hundred or more reasons, one of which is the very real fear that – if a country’s tax regime becomes particularly unfriendly – some very wealthy, important and influential people will take their huge wealth, importance and influence elsewhere.

So it irritates me when Ed Miliband makes a blanket accusation that an unspecified number of wealthy individuals are ‘dodgy’ – thus implying that tax avoidance is tantamount to tax evasion.

Just as it irritates me when – as he did yesterday – the Prime Minister trumpets the Coalition Government’s record in reducing tax evasion and “aggressive tax avoidance”.

I’m sorry, gentleman, in my view this is a case of something that is fundamentally black and white.

Something is either illegal or it’s not. When it comes to taxes – to repeat myself – tax avoidance is okay, tax evasion is not. Morality has nothing, effectively, to do with it. For David Cameron to describe something as ‘aggressive tax avoidance’ is like something being ‘a little bit criminal’.

Wrong, Prime Minister.

It’s either illegal or it’s not. And you – the Government, the UK Parliament – decide which. As you well know.

Get a grip!

 

 

About Simon Campion-Brown

A former lecturer in politics at Keele University, Simon now lives in Oxfordshire. Married with two children, in 2007 he decided to monitor the Westminster village via newspaper and television and has never looked back. More Posts