The Guardian has mean a major critic of tax abuse in the UK.
And it's own tax affairs have been criticised, sometimes by me, but again, not always.
Alan Rusbridger, the editor of the Guardian, explains how he views them in a timely piece, here.
Like all those who accept that life is complex he has to accept that this involves compromises, choices and issues where compromise between objectives arises. He's right to do so.
This is a complex world. Only economists and those of simplistic libertarian mind sets seem to think otherwise - and they only achieve the goal by assuming anything but greed is irrational, and therefore wrong. That's not true - as all people of sound mind know. So compromise happens. Which is why intent is so important in tax. And why the spirit of the law is also important.
Anyone of sound mind can identify intent. And the spirit of most law is usually readily discernible (but there are exceptions, I know). It is precisely why I made the point - that Alan referred to - that when the Guardian was not required to pay tax on a capital gain it not only did not do so because it was not due, it did not do so because it also did what the law intended - it reinvested the proceeds in new activities. Pedants will say (and have said) that my comment is technically wrong - the reinvestment was not needed. And they're right. But that misses the point, entirely. It is intention, and active compliance with the spirit and purpose of the law that lets right behaviour be identified, even if in this case I think it was poor law (and yes, it wads Gordon Brown's fault we got it).
Or to put it another way - there is a morality in tax that is readily discernible and is the criteria for acceptability. Which is why this, which Alan Rusbridger has written, is true:
If the argument is that no one should write critically about tax avoidance unless they can show total purity in all their dealings and investments, both personal and corporately, then the probable blunt truth is that not a single journalist would be able to write on the subject.
But that's a false criteria for comment, and only those who do not comply with it, claiming their own preference for abuse as justification, promote it as a criteria, with the precise intention of suppressing opposition.
So I agree, flawed as it is, the Guardian has the right to comment. As have al the rest of us, flawed as we are.
NB: The comments policy of this blog will be strictly applied when moderating comments on this post. I haven't got time to do otherwise
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It is a classic right wing tactic to dismiss any critical comment from anyone who is not a recognised saint as “hypocrisy”.
Anyone that can state within the opening paragraphs ‘This is a complex world. Only economists and those of simplistic libertarian mind sets seem to think otherwise’ is deserving of credit. The disease of the simplistic solution seems to be spreading with rapidity. It is easy to understand the desire for a one size fits all arguments, but it is beholden upon us to challenge simplistic notions such as ‘tax incidence states that any increase in tax will result in a lower take’. As you refreshingly state intent is discernible, as are the ethical arguments.
@James from Durham
I recognise I’m a sinner – but then I also profess to be a Christian and it goes with the territory!
I’m sorry, I can’t work out the point about reinvestment being in the spirit of the law.
Reinvestment is not mentioned anywhere in the substantial shareholding exemption. There is another relief, rollover relief, where proceeds DO have to be reinvested. But this is a completely different relief.
You have added “reinvestment” to give the Guardian’s actions added credibility, for no other reason.
I’m sorry to say this, but you are being dishonest here.
@Ray Harris
Look at the purpose of the law – it was passed (albeit I think in error) to ensure companies could divest and reinvest without tax being an impediment to what was seen as an ongoing business process by a holding company
It wasn’t done to pass on low tax profits to shareholders
The clear desire was to encourage active reinvestment
So I’m not being in the slightest bit dishonest
But you are applying artificially false criteria for judgement – as I predicted in my blog
@James from Durham
I think where the charge of hypocrisy is legitimate is where the paper criticises Barclays for taking advantage of the SSE, with a clear view to propogating what may lazily be called the “look at these tax avoiding parasitic bastards” line, when it itself has done the same thing. It is clearly reported with the intention of making Barclays go down in the public’s estimation. Fine, but when someone mundanely points out that the Guardian did exactly the same thing, people like Richard and yourself say all such criticism is out of court. I fail to understand the logic. What I find even more odd is that Richard will frequently defend the Guardian against charges of tax avoidance despite making the same accusations of tax avoidance against others.
There is another point, which I don’t think anyone at the Guardian has addressed which is that, although use of the SSE is legitimate since it is laid down by Parliament, a more interesting point is whether the G converted the Scott Trust from a charity to a company in order to benefit from the SSE (which is not available on sale of charities). This would usually fall under Richard’s label of unacceptable tax planning – i.e. avoidance.
In his last paragrah Richard says the Guardian have the right to comment. Of course the Guardian has the right to comment, we have freedom of the press after all. But then, in turn, the Guardian’s critics also have a right to comment on the Guardian’s tax affairs.
@Richard Murphy
Unbelievable response – you are the one who is artificially drawing false criteria by introducing the reinvestment concept!
How have you found out the purpose of the law? Have you just made it up?
If companies wanted to pass on low tax profits to shareholders they could have just taken dividends, which as you must know are tax free in the hands of corporate shareholders (because the profits have already been taxed). Therefore the reinvestment criteria is a red herring.
Virtually every other European country has an equivalent of an SSE (usually called “partcipating exemptions”). So it was clearly to encourage investment in UK companies.
@Ray Harris
Actually – we don’t have participation exemptions, and for good reason
So it is you who is making things up
I agree that this rule could be and no doubt has been abused
But as I make clear that’s because it is poor law – on which I am abundantly clear
That does not change the appropriateness of my conclusion or the reason for stating it
@Luca Garratt
I dio not think the Guardian has criticised Barlcays on this issue – although others have, and I have sought to draw to their attention that this is inappropriate. The BGI profit was tax free – although the use of funds was somewhat different and therefore open to more potential criticism
I am being utterly consistent
I think the Guardian is too
And I did give you the right to comment – but I do wonder why as it is clear you are not seeking to contribute to debate
@Ray Harris
I didn’t say we had a “participcation exemption”, I said that the SSE is our equivalent of the kind we see on the continent. And since 1 July 2009 we have had an effective participating exemption in relation to dividends (including overseas dividends) which are now, broadly, tax free for corporate shareholders. Please at least read my post properly and get your facts right.
And can you also reply to the point that the passing on of low tax profits was not of concern to legislators given that companies could already do this by dividend stripping.
@Ray Harris
And I was assessing tax compliance
Avoidance is legal – your criteria
It is not the one I was using
Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
And I say the Guardian was that – in this regard
But I still criticise its use of offshore on EMAP