We come back to the subject of legalised tax avoidance, almost as if we were talking about what it must have been like living under Prohibition in the US. We are so unable to resist the temptation to avoid taxes – especially those of us who command those corporations out there – that we just about appear to be addicts to a game: this is a game we cannot avoid; a challenge we cannot ignore; a process we must implement; a procedure we must action.
Don’t believe me? Read this detailed report by Reuters, published a couple of days ago, on Amazon’s $2 billion surplus – built up it would seem through plenty of totally legal tax engineering.
Not the most unhappy example, I am sure. Just one more example, I guess. But in that $2 billion surplus there are surely many nursing, teaching and lawyerly jobs which have gone down the drain, as our welfare state is trimmed, cut and finally slashed with the excuse that there is no resource left to fund it.
The Spectator, meanwhile, attributes the blame to the politicians who passed the laws which made such addictions legal:
[...] The people power that drove Starbucks to make its announcements should now turn its attention to political power pushing for reform of the whole tax system, not a make-do-and-mend policy where a loophole is sewn up here, and another avoidance scheme darned away there. Fraser outlined what that reform would look like in a recent column, arguing that a flat tax would remove the hiding places for tax dodgers, and remove the incentive to avoid tax, too.
I’m afraid I disagree. For a publication which tends to find itself on the right of our political spectrum, the Spectator ought surely to be thundering on about the lack of personal responsibility in our systemic failures, instead of blaming the pork-barrel politicians owned to the hilt by their business sponsors and fund-raisers galore.
In my humble opinion, and this perhaps puts me to the right of Fraser Nelson’s own editorial line, it’s not our tax laws which need changing but our immoral addiction to finding ways of getting them round them. Any and every system will be open to abuse: just take the sexual shenanigans which are unspooling before our very eyes. You’re not going to tell me that because people abuse hundreds of young girls and boys, we should change the laws to make it more difficult to criminalise. And yet Nelson does say (see the last link above), in relation to our tax system, that (the bold is mine):
Britain now has a tax code so monstrously complex that no one single person can understand more than a fraction of it. Avoiding tax was always possible in Britain, but for many years the rich did not really do so, and paid up in full. The mistake was to push the tax rate to the point where, the world over, widespread avoidance is the inevitable result. [...]
He then goes on to conclude (again, the bold is mine):
This is why higher tax rates end up with lower tax yields. Architects, software engineers and entrepreneurs will all have taken such decisions to lower their British tax bill, perhaps by leaving the country. [...]
So here we have the moral – or perhaps immoral – underpinning of everything people on the right of politics want to do with the British tax system. Because rich people avoid it, because they are almost physically addicted to getting round what they should pay, we should reduce the burden on them in order that they may happily cough up more of what they are less liable for.
To return to the sexual shenanigans for a moment, if we applied the same principle it is clear what would happen: a quick feel up the skirt would lead to a simple caution from the friendly neighbourhood bobby and even abuse of a fairly disgraceful kind could mean little more than a small fine.
No. We cannot run the justice system – our sense-of-justice system – only on the basis of how many people are prepared to easily run with and abide by a law. And tax is nothing if not a sense-of-justice system. We aim with our tax laws to ensure that society takes care of everyone’s needs. Those needs do not disappear simply because the rich find it difficult not to get involved in legal but immoral tax scams.
And we shouldn’t make it easier for them to choose not to do so by taking down the moral barricades that bolster our sense of societal propriety.
Whether you work as a sole trader or you work in the accounting office of a large corporation, every decision you take is steeped in both its legal and moral implications. That we choose to go with the first and ignore the second is surely more significant – more worrying – than the technical nature of our state.
Where the second continues to be something we refuse to occupy ourselves with, no tinkering, no reform, no widespread re-evaluation of the first will ever take us to any better place. For a left-wing blogger – and this may sound a strange thing to say – I’m convinced that before we can tinker with the state, we must tinker with the individual.
And in order to do so, we need a new sense-of-justice system in place: a system which conceptualises our key, dearest and nearest principles in one space. Perhaps a virtual online constitutional space where everyone can input and everyone can access. Where everyone can be that citizen which democracy should help to create and sustain.
We can’t improve the moral workings of our systems through processes and procedures alone. There must come a time when how we behave is just as important as what we do.
No doubt about it.
No doubt at all.