What did David Cameron do by saying Jimmy Carr's tax arrangements were immoral? I suggest there were two things that changed, maybe for good.
First, he made clear what I have known and argued for a very long time, which is that tax is not a simple mechanical process where the application of rote rules, such as the pinstripe mafias "less is best" work. Tax is a complex ethical issue where sophisticated decision making is required to balance objectives - including the obligation to settle the dues to the society of which you are a part. I don't think anyone can now seriously deny that in future.
Second, Cameron exposed the massive hypocrisy that exists on this issue. First, his own on his refusal to condemn others having condemned Carr. Second, his governments in offering massive new offshore tax advantages to large companies right now whilst at the same time criticising Carr. Third, the Tories simply not telling the truth about the general anti-avoidance rule they propose, which even it's author says is n such thing.
But most of all by the tax profession and the absurd right wing think tanks with their crass argument that "it's legal so it's 0K". This is nonsense. Apartheid was legal in South Africa for a long time and it was not OK. Legality cannot be confused with morality. And most of all an ability to get round the law - which is what tax avoidance is - can't even be described as legal.
I think these people - and those not far behind them in the big firms of accountants and lawyers, in the CBI, the IoD and others - all realise the game is changing. That's why big business is organising a fight back - but the ground is now being pulled from under them.
I am well aware that the Times is expsoing all these issues to argue for flat tax - of that I'm sure. But candidly, that will also be rumbled for the morally bankrupt system it really is too.
The winners from all this are the tax justice campaign.
And I admit to be quite enjoying that. Cameron, unwittingly, has helped us no end. It would be churlish not to say thank you.
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Richard. This may be a game changer indeed (and we have Gary Gibbon of C4 News to thank for that as it was he who got Cameron to utter the now (in)famous line). It has certainly put Cameron on the ropes, as having been happy to comment on the personal tax affairs of one person (perhaps because he is perceived as a bit of a lefty o rmaybe becasue he’s a normal bloke who made it to Cambridge) he promoptly refuses to do the same for other cases (Bono would be one). But anyway, that’s by way of saying have you read Simon Jenkins’ piece in The Guardian http://www.guardian.co.uk/commentisfree/2012/jun/21/tax-scams-legal-repugnant-jimmy-carr
As is often the case these days, Jenkins cuts right through the deliberately contrived fog and diversionary tactics of those who support avoidance/evasion. This is just a taster:
‘Modern tax theory is rooted in more than revenue raising. It adheres to fairness, redistribution and incentive. For most people, paying taxes defines their citizenship. Whether or not avoiders are in the same class as “benefit cheats” is moot: most cheats have legal “sickies” as most film companies have brass plates in the Caymans. What is surely beyond dispute is that refusing to pay taxes in a shared community is anti-social, unfair and infuriating.’
It is a first rate article
But was blogging from an iphone earlier – hard to do
May pick up soon – if there’s time
The media are allowing me precious little of that right now….
I expected as much, Richard, as soon as I saw Gary Gibbon’s report earlier in the week. Indeed, my wife (who knows I’m a regular reader of your blog) said to me, ‘That tax research man your read every morning will be busy now.’ To which I think I replied, ‘My impression is he always is.’
Anyway, have as restful a weekend as you can.
I’m going to try
Only one talk, one television gig and a concert rehearsal….
10 broadcasts since Tuesday…
No problem
Best
Richard
“What is surely beyond dispute is that refusing to pay taxes in a shared community is anti-social, unfair and infuriating” I agree and would further add that the individuals and corporations that reside in the UK rely on the civil infrastructure to not only live their everyday lives but also to operate their businesses. There are very few business models that do not rely on societal interaction and the protection offered by the state.
There are also perils in arguments only phrased in the language of morality, see Krugman blog September 28, 2010 ‘Economics Is not a Morality Play’. Of course, the US is a country where Sarah Palin can first be revealed as John McCain’s running mate to the Van Halen song ‘Right Now’, taken from the album For Unlawful Carnal Knowledge (you do the acronym). Faustian.
There was a pretty good discussion of this issue in the first fifteen minutes or so of Question Time last night. Unite’s Len McCluskey was superb — informed, articulate and seemingly familiar with the TJN. Ken Clarke was surly, evasive and clearly uncomfortable with the subject matter. His strategy was simply to avoid the question and dismiss, for instance, the slashing of HMRC budgets as unimportant. Against McCluskey’s facts, figures and evidence (for example, that tax collectors bring in far more money than they cost to employ) he just turned his nose up and snorted. I think the audience noticed the difference.
Besides a handful of steam-eared reactionaries the mood was very much suggesting that the Carr case has been overblown, that the government was massively hypocritical and that they should be doing more to enforce the law with regard to tax rather than just complaining about particular cases. In fact, that last point was agreed on fairly unanimously, across the benches, as it were. For that reason it was unfortunate that no one really challenged Clarke’s claim that the Tories are implementing a general anti-avoidance rule because, as we know, it is that in name only. They’re making noises about cracking down on tax cheats precisely so that they can let ever more of them off the hook.
Andy Burnham came across very well generally, although he had very little to say about the tax issue. It continues to puzzle me why Labour are so reluctant to pile in on this issue more seriously as it’s clearly a significant Tory weakness.
I know Len McCluskey and yes, he is familiar with my work.
I think he’s internalised it
I’ll watch again later – was on a train at the time!
Shame Burnham couldn’t have put in a plug for land value taxation (totally unavoidable) since we know he supports it. But it’s not his brief so no chance.
Oh and yes, on topic, while Cameron’s sincerity about the morality of tax avoidance can be doubted he has surely created a rod for his own back. Let’s not let him forget it!
If its legal its ok. I think we are missing an essential point here. The problem is no one knows if what Jimmy Carr did/or what many tax avoiders do is illegal or not. Carr hopes its legal and so does his accountant. The guy who dreamt it up and the counsel who advised on it will probably hold a much more cynical view.
If a counsel says it legal, its legal. Therein lies the rub. Lets face it you can find a counsel to say anything is legal as long as you shop around and pay the right fee. Tony Blair proved that with the Iraq war. This is no different. The recent Vantis convictions had a legal opinion which confered a patina of legality on the arrangements but they were criminal. The punters don’t find that out until the arrangements go pear shaped and HMRC put the boot in, in that case in the criminal court.
This opacity of our tax system which is not resolved until a tax tribunal or ultimately the house of lords gives a decision about whats legal or not, (which can confusingly for most punters be cut through by a criminal court) is corrupting our national finances and morals…study Hartnett and Goldman Sachs, Barclays, Vodfone et al for additional evidence.
People peddling these schemes operate right on the edge, some of them are honest but many are not, some of them are complete fraudsters. The problem is they don’t really know where the edge is and it can move like a mirage.
The best way out of this is to make the law clearer and prosecute as many of the peddlars as warrant it and lean on the professional and regulatory bodies for accountants/tax advisers/financial advisers/bankers/ solicitors and barristers to tighten up their acts. When we see a few of these firms stand up and say sorry we were wrong we’re not doing it any more we will know there has been progress. I’m afraid the mixture of sophistry and fraud across a whole range of areas of law is now the British way and leads us down the Greek slope. Once it permeates the tax paying community more widely, which it will if taxpayers have it continually rubbed into their noses how unfair the system is, then we are definitely finished.
By the way has there ever been a more whining, hypocritical toady than David Cameron has now fully come out of the closet as being. I wish I could enjoy it like you Richard but it just makes me sick to my stomach.
I enjoy it?
I’m angry!
That’s where my energy comes from
Wholeheartedly agreed
“Lets face it you can find a counsel to say anything is legal as long as you shop around and pay the right fee. Tony Blair proved that with the Iraq war.”
Have I got you right here? Are you suggesting Tony Blair found the legal right to invade Iraq?
I think you’ll find otherwise! Apologies in advance if I have misunderstood you!
Indeed he did from Peter Goldsmith QC : see the following links:
http://en.wikipedia.org/wiki/Peter_Goldsmith,_Baron_Goldsmith/10463844
http://www.bbc.co.uk/news/10463844
His draft advice was that it was illegal but following further deliberation the final advice was ” its legal, go for it” (I paraphrase).
If tax is a moral issue, would you also accept that government also has a moral duty to spend the money collected as frugally as possible?
No
Frugality need not be wise
Wisely: yes, I do
And for that reason I wish they’d account a darned sight better than they do
UK government accounting is an exercise in obfuscation; our national statistics are a disgrace
I guess you think we should be frugal with the NHS, our children’s education, the state pension, infrastructure (so it doesn’t last)…
I didn’t think the Times was motivated by the common good in exposing tax avoidance. Particularly as its parent company is one of the biggest tax dodgers in the world. I hate the union busting rag in any case.
I totally agree with you Richard; I heard you on Today on Radio4 the other day and what you said represents completely what my personal views on tax are. I also agree that Cameron was hypocritical in seeking to make political capital out of Jimmy Carr’s tax arrangements. There were 1100 other people using this scheme and none of them were mentioned; it is probable that at least one major party donor to the Tories (and LibDems and Labour) is using a similar “tax management” vehicle if they weren’t using this one.
With Osborne’s and Cameron’s comments, it can now be clearly seen that the idea that avoidance is morally OK and acceptable in our society is the province of nutjobs too extreme even for the conservative party. Of course, some will carry on doing it knowing it is morally wrong but the figleaf of respectability is gone.
Indeed. These latest comments won’t make much difference to the policy agenda — the Tories will still sail full steam ahead, dragging Britain itself ‘offshore’ — but they’ve got to do so in rather more a two-faced manner than they did previously.
for a civilised country with a strong legal tradition, how did we find ourselves in this sorry situation of a great chasm between legality and morality on tax avoidance? the legal establishment (including retired law lords like lord hoffmann, leading academics like professor freedman, both of whom assisted graham aaronson qc in cooking up his sham anti abuse rule, and top barristers like aaronson himself) should have a good look at themselves in the mirror. the big money involved in tax avoidance has spawned an extremely lucrative tax avoidance industry that captured the legal institutions and universities. i am in awe of the likes of richard that fought them to a standstill with very little resources over the years. who says the david v goliath story is fairy tale?
Well, we haven’t slayed them yet!
But we’re trying, metaphorically
‘”Apartheid was legal in South Africa for a long time and it was not OK.”
Murphy and Shaxson often use the example of Apartheid as a regime that may have been legal, but morally unacceptable. In a sense they are obviously right, but they of course completely miss the point.
The the various Apartheid laws in South Africa were passed by a legislature that did not have any representation of the majority of the population. Judges and law enforcement officials also came from the white minority.
In the UK, laws are passed in a parliament that represents all (or nearly all) citizens without discrimination for race, gender, religion or indeed wealth. The citizenry also maintains control over the judiciary. Our tax laws, and the way the the judiciary interprets them (incl. Hoffman, etc.) is the product of a democratic process in which we all take part.
If Murphy and Shaxson have a problem with that, I suggest they have a problem with democracy itself.
No – it is you who utterly miss the point.
We make the point to simply show las may not be moral
It need not matter how it was created – it is the morality of what is being called law that matters
And incidentally – it’s also wrong to claim these schemes are legal
Show me the law that created them please
‘Show me the law that created them please’
Innocent until proven guilty & all that. Maybe you should show the law they have broken?
Waits……
You forget a tax return requires the taxpayer to say the return is right – it is for them to prove it is legal – so you’re wrong
This isn’t strictly correct.
The taxpayer is declaring that the information supplied is correct to the best of their knowledge and belief.
This is quite different to warranting that their return is the same as what will eventually be assessed under the prevailing tax law. The average taxpayer is expected to supply information to the best of their ability and not dispaly knowledge of tax experts.
That is a complete and utter misrepresentation of the truth
The return is signed to be correct
Ignorance is no excuse at all
There is no duality of standard
Do you know anything about tax?
You need to be very careful about over-emphasising the morality of taxation. If we adopt a moral as opposed to legal compliance with the tax system, this offers the taxpayer the right to subjectively question the morality of government expenditure and then use this as an excuse to enter into legal but abusive tax avoidance strategy.
Quakers have tried to do so. It clearly does not work
But what you fail to appreciate is that in a democracy we do have the right to object to spending
Those who support tax abuse oppose that democracy
“The return is signed to be correct”
…to the best of their knowledge and belief.
Not the same as “signed to be correct”.
Not at all.
But negligence and lack of knowledge of the law are not excuses….
And nor is relying on someone else an excuse
Now what’s the difference?
“No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or his property as to enable the Inland Revenue to put the largest possible shovel into his stores”.
Source: Lord Clyde in his famous judgment in the case of Ayshire Pullman Motor Services V Inland Revenue Commissioners 1929
We were institutionally racist then
Sexist too
And homophobic
And more
That is sentiment from a long gone era and well overdue to be consigned to history – like the rest
Or maybe you embrace the other things too?
Has the decision you refer to ever been explicitly overruled or disapproved of?
Perhaps it has stood the test of time.
No it hasn’t been over-ruled
Which is precisely why a GAntiP is neede