Uncategorized » Tax Research UK

Paradigms can shift

Secrecy jurisdictions, Uncategorized 4 Responses »

May 072012

There was an article in the New York Times this weekend that showed that paradigms can shift.

As I’ve just noted – the OECD’s attack on tax havens is not, unfortunately, working. That’s because it is working in an old paradigm. It’s the paradigm of tax havens. But the OECD needs to move on. Only then can it beat this curse.

That shift is possible. I’ll give an example. In 2008 I, and colleagues in the Tax Justice Network, were starting work on the first Financial Secrecy Index. I was at the same time working with Ronen Palan and Christian Chavagneux on our book ’Tax Havens: How Globalization Really Works‘. We struggled with the tax haven problem – and just what it was. In the end I gave up with defining a tax haven and the book (without using the term secrecy jurisdiction) and the TJN (by explicitly using the term) moved towards redefining the language of offshore. My exploration of that issue, written in 2009, is here. I’d venture to suggest you really won’t understand what the offshore issue is really all about unless you read it.

The important point was that we pretty much gave up on the term ‘tax haven’ that no one could adequately define and replaced it in most of our work with the term secrecy jurisdiction. I offered then what I’m told by others is now pretty much the standard definition of the term which is:

Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

Notice how often tax is mentioned? Not once.

Low tax is offered by these places but is just another regulation that can only be used if secrecy permits it. The point is a critical one: secrecy is key.

Now in 2008 we began to say that, but had no idea if the world would respond as we wanted it to, but that response was critical if we were to explain it was not low tax per se that we objected to in the places often called tax avens; it was the fact that the secrecy they created permitted criminal use of those low tax rates that we objected to in the main (but not solely: corporates abuse these places legitimately, albeit secretly).

In 2012 I can confidently say the world has responded. That NYT article was by a friend of tax justice, Robert Morgenthau, but that’s not the sole point. He said:

[S]ecrecy makes offshore tax fraud almost impossible for law enforcement to detect. When I was the Manhattan district attorney, we learned of offshore accounts only through whistle-blowers, cooperators and serendipity.

That’s the point we’ve made key. And as he added:

Offshore secrecy jurisdictions provide the perfect cover to funnel money and arms to rogue states and non-state actors.

There’s that phrase, now in common use. Pascal St Amans of the OECD used it last week.

We’ve changed the language for a reason. It’s not tax information exchange that we need to crack offshore abuse. It’s shattering secrecy that is key to that. And only automatic information exchange will do that job. The OECD haven’t shifted paradigms yet although even some in Switzerland have.

The OECD will catch up with us. Then we’ll see the consequence of the paradigm shift. And given what UBS now know that may take less time than many think.

Have no doubt: paradigms can be shifted.

In the aftermath of Thursday Labour councils have to be different

Uncategorized 11 Responses »

May 052012

Were Thursday’s results just mid-term blues? Of course that’s possible. But I don’t think so.

Parties that reached the low Labour did in 2010 don’t recover that quickly on the basis of mid-term blues.

And parties that see their support collapse as badly as the Lib Dems did aren’t seeing a mild shift – it’s seismic.

The rejection of the Tories in so many Cities – Manchester, Newcastle, Oxford and Norwich have no Tory councillors at all all – is not chance. People have realised by just how much the Tories threaten their well-being.

The idea that people like coalitions is shattered.

The idea that the Lib Dems could gain by being in government has gone.

Any remaining belief that people think Cameron charming or Osborne competent can be laid aside.

People want Labour (and Greens – as the London election showed) to set the agenda, unless they’re frightened when they turned to UKIP, worryingly.

And Labour has no choice but respond. It can’t overyurn cuts from local authorities. Most of the councils that were elected have very limited powers, let’s be honest. But they could do three things.

First they could shout about NHS reform and the decline in social services. This will be in thei remits – and they have to make maximum, coordinated noise.

Second, they can deliver a Green New Deal – and if any want to know how to start look to the example my colleague Colin Hines has been working on in Birmingham.

Third, and I think most important, they can tackle the issue of social housing. They have to act individually and collectively to address the massive shortage in social housing, without action in which the lives of millions will still be blighted. We need to build housing where people need it – in towns, cities and as importantly, villages. These authorities need to demand the right to raise the money to build this housing and to do so, now.

Do this and these Labour authorities can show they can make a difference.

Don’t do this and people will wonder why they voted for them.

If Labour is not different it has no point. Will it rise to the challenge?

It’s true, I upset people. So does the Tax Justice Network. And we do so for good reason and without apology

Tax Justice Network, Uncategorized 28 Responses »

May 032012

I think it’s time to talk about something that’s happening quite a lot at present. Messages are being sent to me through various messengers from the great and good in tax saying “if only you were more reasonable Richard you’d be so much more acceptable.” They even go so far as to say I’d be more successful. The message is always subtle but is that I’m upsetting people and they really don’t like it.

I’m not surprised that the message is being sent. Tax justice is on the national agenda now, in a way that the great and good of the tax world don’t like. That’s why we get absurd articles of the sort published in the Church Times earlier this week.

They could live with us when the Tax Justice Network and I were talking about tax havens. That was, after all “over there” and they could pretend they’d got nothing to do with that rather nasty evasion stuff. But now the issues are tax avoidance, transfer pricing and accountability and this very definitely affects the great and good. The result is that they’re going through what Schopenhauer described as the three phases an emerging truth. In the first stage, it is ridiculed. In the second stage, it is violently opposed. And in the third stage it is accepted as self-evident. I’d actually add a fourth stage: first of all it’s ignored.

We’ve been through being ignored and ridicule. Both have failed. And now we’re moving towards violent opposition – not physical of course, bit highly stressed reaction none the less. And what characterises this reaction is fear on the part of those suffering the reaction. Right now I don’t think they know what is creating that fear. So let me offer an explanation.

As the Tax Justice Network entry in the Joseph Rowntree Charitable Trust Triennial Report says:

The Tax Justice Network is an ex- pert-led group that aims to defend democracy and tackle poverty and inequality by challenging tax abuse and offshore tax havens.

We are addressing what may be the greatest faultline in the global economy. We are creating a new, coherent narrative to explain how the offshore system has channelled wealth and economic and political power upwards, at the expense of ordinary people across the world. We are interested not only in tax – but also in other escape routes that tax havens provide: lax financial regulation and criminal laws; secrecy, and more.

The economist J.K. Galbraith said all successful revolutions involve kicking in a rotten door. We have identified the door and we’re kicking – hard. We believe we have helped ignite a genuine revolution in modern economic thinking.

I think that’s fair. But what it means is we’re not tinkering at the edges of tax. We’re saying the whole economic system is wrong. And the great and good of tax and accountancy do, of course, have a great deal invested in that current economic system.

The result is they say we’re arrogant. Well, to some extent we are by their definition. You’ve got to have a certain degree of self confidence that can easily be misunderstood as arrogance to say most people – or at least most people in power – have got things wrong. And that’s what we’re doing.

And that’s what the messages being sent to me are about too. They’re saying “come back into the fold, join the cocktail party circuit, and things will be all right”.

I’ve got news for those sending the messages. First, we’re not rejoining the fold. Second, things aren’t going to be all right for them. Third, I’m quite sure the change we’re demanding is going to happen now – and that we will reach the point where it is self evident that it was going to happen all along. But of course the great and good are frightened as a result – their power and cash is under threat.

No wonder they want us to become nice compliant people. They want to stop us challenging their failed world view.

But most of all they’re angry because they just don’t get why people like John Christensen and I do this sort of thing. They don’t realise that principles matter more to us than playing the games of the power elite – and that we really do this because we want to defend democracy from these people and we do believe that we will help relieve poverty by creating reform. And that belief in place of the self interest that is all they understand is what makes those sending the messages most baffled of all.

My suggestion to them? Engage with the issue and stop trying to shoot the messenger. Most of all – telling us we’re arrogant really won’t work – not when our arrogance is simply having the impertinence to be winning the argument. Argue back, or give up. But stop calling names now, please.

There’s a debate to be had on transfer pricing – but the private sector need to raise their game to be in it

Transfer Pricing, Uncategorized Comments Off

May 022012

As those who follow Twitter will know, I spent today at the International Tax Review Tax and Transparency Forum, at which I spoke this morning until exhaustion got the better of me and I headed for a train home and some sleep.

For me a number of very striking messages emerged at this conference.

The first is that TJN and the combined NGOs campaigning on tax transparency are more than capable of now delivering clear, consistent, logical and economically coherent messages on this issue. Indeed, we delivered the narrative of the day.

The second message was that whilst there remain big differences of emphasis between us, and clear conceptual issues of difference in some areas, such as the economics of arm’s length transfer pricing (of which more, anon) there was a welcome new candour about the OECD presence at this conference that was not there when Jeffrey Owens headed the organisation. For example, the suggestion that it is, as we have candidly suspected, still the case that multinational companies are often less than candid with tax authorities about the true nature of their transfer pricing arrangements was a welcome and honest assessment which indicated a clear understanding of the problems that still exist in this area and which you would never appreciate from listening to the private sector. In addition, Pascal St Amans was willing to say, and did so quite explicitly that hiding behind Swiss banking secrecy to evade tax – as the Rubik deals will allow – is tax fraud what sophistry the Swiss use to excuse the abuse. He could not have been clearer about that. In the process he could not, of course, have been clearer about his condemnation of Dave Hartnett, HMRC and the current UK government for entering into such an abusive arrangement. All of that I welcome.

Third, what was astonishing was how incoherent the private sector were at this conference. Many had not prepared – and as I expected some, such as Colin Garwood of Intercontinental Hotels completely misrepresented what country-by-country reporting was and showed as a result they candidly had no idea what they were talking about. Others, such as Bao Ho of TP Analytics offered an analysis of the economics of transfer pricing which was so staggeringly inaccurate it was hard to believe. In the meantime Chris Lennon of RTZ was aggressive and rude to at least one person in the audience who offered evidence backed analysis that did not accord with his worldview. The signs of desperation were apparent for all to see.

There is a big debate to be had on country-by-country reporting, transfer pricing and related issues – but the private sector need to raise their game considerably if they’re going to be in it was my conclusion. Which made for an interesting day.

Why you have to support country-by-country reporting now – my speech this morning

Country-by-country, Uncategorized 5 Responses »

May 022012

I’ve spoken at the International Tax review Tax and Transparency Forum in London this morning on country-by-country reporting. This is, near enough, what I said:

When, almost ten years ago I wrote the first ever version of country-by-country reporting in response to one of the first ever questions John Christensen asked of me I thought the entire audience for the idea would amount to just two people – John and Prof Prem Sikka, who had just introduced us. How wrong I was! It seems a good idea has a life all of its own.

What I did not know then was just how many misunderstandings would arise over country-by-country reporting over the subsequent decade. That’s the reason why I want to do three things this morning.

The first is to say what country-by-country reporting is. In the process I’ll tell you what it is not, because that’s important.

The second is to explain what country-by-country reporting tells us.

Thirdly I’ll explain why on the balance of its strengths and omissions you have to support it.

Country-by-country reporting is, and was always intended to be, a full blown and completely new view of the trading of a multinational corporation, ideally required by an International Financial Reporting Standard, but failing that by international regulation.

What that accounting standard would demand is a full consolidated profit and loss account for each and every jurisdiction in which a multinational company trades.

And when I say full I mean ‘full’, including sales, costs, an analysis of labour costs and head count and full tax notes – including a deferred tax analysis.

And in some ways I mean more than full when it comes to this profit and loss account – because country-by-country reporting would also require disclosure of all intra-group sales and purchases, all intra-group hedging and derivative trading and the disclosure of all intra-group financing activity too.

Let’s be clear about why country-by-country reporting does this. It’s based on a series of solid assumptions. The first is that multinational corporations might act globally but they do not float above the global economy. Their actions are all ultimately geographically located. Country-by-country reporting recognises that. It makes globalisation accountable locally.

Second country-by-country reporting recognises that it is impossible to say that existing accounts for multinational corporations can possibly give a true and fair view of business when up to 60% of world trade – the part that takes place on intra-group basis – is totally lost to view in existing financial statements. It is ludicrous that we don’t account for that trade in a globalised world.

Third, as John Cridland of the CBI agreed a couple of weeks ago, this standard recognises that tax is the fee paid by a company for its licence to operate in each and every country where it works and in that case it has to be accountable for paying it.

That’s why, in essence, we want the data country-by-country reporting supplies.

But I’d add, we’d also want, for full measure, limited cash flow information on tax paid and investing – except in the case of the extractive industries where we’d want everything required to complete the standard Extractive Industries Transparency Initiative pro forma disclosed on a cash basis. For the elimination of doubt – a universal standard for EITI disclosure to host countries is built into country-by-country reporting so that in future consistency in standards and duplication of costs can be eliminated for all engaged with the EITI.

And we’d want some balance sheet data too – which is vital accounting information on the ties between a company and the jurisdiction that hosts it.

Finally – and just in case there’s doubt – we’d want a sales analysis on a source and destination basis. We’re all familiar with the games MNCs such as Amazon, Apple and others are playing at present as a result of their ability to move where they record their sales. They have to be held accountable for that.

That, as I have already said, is a full accounting system. And from the outset it was always intended as such. Let me repeat what I’ve already said: country-by-country reporting is meant to provide an alternative view of the trading of a multinational corporation and if we had it now that is exactly what it would do.

The European Parliamentarians who demanded full country-by-country reporting two weeks ago know that. And so do the Council of Europe who demanded it last week. And let’s eliminate doubt: the country-by-country reporting they demanded is the version I have described.

So in that context of that increasing parliamentary and political pressure for this reform let me also shatter some myths about country-by-country reporting.

This is not about voluntary disclosure. It has to be mandatory. Nothing less will do.

And that means country-by-country reporting is not about corporate social responsibility – and to say so is a gross misrepresentation of the truth.

Nor is it just about the extractive industries. It just so happens that’s the sector where right now it is seen as having first potential use.

Of course the disclosure of information on payments made to governments that lets us hold those governments to account for the use of funds is vital – and, for the record, I suggested country-by-country reporting be used for this purpose. But let’s also be clear, disclosing information on payments without related accounting information that suggests the likely credibility of the sums paid such as turnover, costs, rents and profits – reduces the status of that payment data to mere disclosure information that doesn’t even qualify as accounting data as we have no objective way of knowing if it is right. I’ll be blunt on this issue, that’s nothing like good enough and it’s a travesty of justice that we may not got the information we need to really hold governments and companies to account for corruption in this sector.

Having said that – I hope that it’s very clear that important as country-by-country reporting could be as a tool for tackling corruption that is a small part of what it can do. Of course corruption is a massive issue in the extractive industries and other sectors, but we know it nothing like as important as transfer pricing abuse. Of that I am sure.

So let me talk about transfer pricing for a moment. Country-by-country reporting was never intended primarily as a transfer pricing tool either. We all know transfer pricing is too complex to be fixed by data in consolidated accounts.

But we also know that without accounting data there are no comparables to populate transfer pricing databases – and right now my experience tells me that in Africa at least those databases are useless. So CBC would provide the data we need to make arm’s length pricing work outside the OECD – which, I suggest, is meaningfully almost impossible in very many cases right now.

And by revealing intra-group and arm’s length pricing country-by-country reporting would let us tell which data from accounts is meaningful as a basis for comparison for arm’s length pricing purposes. Right now none of us ever know that because that data on intra-group trading is suppressed by International Financial Reporting Standard. Arm’s length pricing literally can’t work on that basis as a result.

In other words, if arm’s length pricing outside the OECD is ever going to work then country-by-country reporting is vital.

And it’s also vital because country-by-country reporting is a risk assessment tool. Look at what it discloses and it’s obvious that it gives the best possible chance of assessing whether accounting profit and economic profit are aligned. If they are then companies have a defence against transfer mispricing allegations. And any sensible revenue authority will not investigate them. That’s a massive win.

And if arm’s length pricing does not work then country-by-country reporting lays the foundation for a Common Consolidated Corporate Tax Base – which, with unitary apportionment, has to be the alternative to arm’s length pricing.

In other words – country-by-country reporting works, and is essential, however and whatever you think the future of transfer pricing and whether you’re a multinational corporations or tax authority. And in the process – despite what I’ve heard some say – the disclosure does undoubtedly mean we will know who pays what tax, where.

And what is also true is that this is an accounting standard we could have, and with ease and at low cost.

As Lord Browne said last week in the FT:

“In my view, the additional cost for big companies, which already spend many millions of dollars on compliance, would be negligible. In some cases it would require changing a few lines of accounting code.”

He said something I have always maintained, which is that all the data to prepare country-by-country reporting information has to exist now and the cost of extracting that information from a company’s accounting database would be minimal.

How do I know that? Because anyone who says the data does not exist is admitting they do not have the ability to allocate their transactions to a territory for tax purposes – and that means they must be failing to comply with all internationally legally required standards of internal control that as a basic minimum a multinational company must meet. In that case I hope no one tries to use that argument today.

As for the auditing cost – I well remember the reaction of a Scandinavian investor when she first realised that the operations of large parts of a multinational company had not been audited before the accounts were signed off. She was horrified. Her reaction was right: what she realised was that the risk in the reporting of those operations had been transferred to her as a result. I’ll tell anyone who raises the audit cost question that every investor I’ve spoken to who has understood this point says that the wholly immaterial audit cost of country-by-country reporting is a risk premium well worth paying.

And let’s also remember – investors will be the biggest beneficiaries by far of country-by-country reporting. They will finally have the information they need to know how and where companies use the funds that are entrusted to their care. As such they’ll make better decisions on whether to engage with them, or not. That means we’ll have more efficient markets. And because tax risk, geographic risk, governance risk and the risk from corruption will be exposed and so be reduced the cost of capital will go down too. Which means the global economy will grow faster.

In that case CBC should be seen as what it actually is – an accounting reporting system that, like all other such systems, is meant to impart meaningful information to users. It just so happens that in this case the range of potential users is vastly wider than usual.

So let me summarise.

If you want to beat corruption you have to believe in country-by-country reporting.

If you want to improve the scope, standard and efficiency of the Extractive Industries Transparency Initiative at lower cost you have to believe in country-by-country reporting.

If you want to make the arm’s length pricing system work by creating the data that makes it plausible you have to believe in country-by-country reporting.

If you want tax authorities to more effective in targeting transfer mispricing you have to believe in country-by-country reporting.

If you want to defend yourself against charges of global transfer mispricing you should believe in country-by-country reporting.

If you want tax to be paid in the right place then you have to believe in country-by-country reporting.

If you want to expose the abuse of tax havens at cost to the ordinary people of the world you have to believe in country-by-country reporting.

If you realise – as I do – that tax is the commodity in shortest supply throughout the world right now – and that the tax shortage in question is what is driving us into double dip recession with worse to come – then you have to believe in country-by-country reporting because it will help, without doubt, shift the balance of tax back to those large, but maybe few, companies that are clearly not in this with the rest of us right now.

But perhaps most of all, if you believe in free markets, where data is vital in ensuring that resources are allocated efficiently by investors and the companies in which they invest so that the well-being of the world is maximised by the effective operation of capital markets then you really have no choice but believe in country-by-country reporting.

And all that is possible now. You can decide to be with the demand or against the demand. But let’s be clear: recent votes in Europe whilst not binding show the direction of travel. Country-by-country reporting is coming. It’s time to embrace it. Now.

A tax haven called Londres

Uncategorized 29 Responses »

May 012012

Rumour reaches me that if Hollande wins in France the super rich are all threatening to leave – for a tax haven they called Londres.

Charity as tax avoidance

Uncategorized 23 Responses »

Apr 302012

I have already referred to the quite extraordinary article by Simon McKie in the Church Times last week, and its absurd endorsement of tax avoidance – using an ethic that should shame the ICAEW who he has represented. But this article has more to offer in showing the workings of the tax avoiders mind.

There has been much outrage from philanthropists about the government’s description of them as tax avoiders. McKie, however, confirms that is exactly why many of these people give to charity, saying:

Yet a country in which the citizens paid only the tax that they thought was morally correct would be bankrupt. Maintaining public life is possible only if most people recognise that they should pay the tax that the law demands, even if they regard that law as irrational and unfair.

This is not to say that we have no further duty to contribute to the public good. What we do not have is a duty so to structure our transactions as to maximise the slice of our wealth appropriated to be spent at the Government’s discretion. Having fulfilled our duty to obey the law, we must consider our duty to contribute to others’ good in the most effective way possible.

Many are deeply sceptical about the efficacy of Government spending. A wealthy man who chooses to give £1 million to a charity decides to trust the charity to spend that amount of his wealth for the good of others rather than to allow the Government to spend half of it. That does not seem to me an irrational preference.

That is tax avoidance.

And that’s also the opinion I very clearly heard John Low of the Charities Aid Foundation expressing last week – whose antagonism towards government spending could not have been clearer.

so let me reiterate – we have a welfare state because charity very clearly failed, and would fail again if it had the role these people want, at massive social cost to the people of this country.

What they are saying is charity is a way to block the role of government – that they refuse to subscribe to.

That is tax avoidance. But it’s worse than that – it’s using charitable structures to deny resources to the people of this country in pursuit of these people’s political beliefs.

If you want a reason why higher rate tax relief for charitable giving should go this is another very good one.

Victory at UNCTAD

Uncategorized 1 Response »

Apr 302012

UNCTAD has won its fight to express its own opinion on globalisation in the face of attempts by the USA and others to suppress debate.

There’s a full report by Deborah James in the Huffington Post, here. http://www.huffingtonpost.com/deborah-james/unctad-xiii-conference_b_1462554.html

Tax avoidance is not and never will be a sign of a healthy society

Ethics, Tax avoidance, Uncategorized 21 Responses »

Apr 302012

There was an extraordinary article in the Church Times last week. For those not familiar, this is the Church of England’s newspaper read by most priests and those involved in church politics. The article was by Simon McKie who is a Chuch of England Reader in training, a partner in McKie & Co (Advisory Services) LLP, and a former chairman of the Institute of Chartered Accountants’ Faculty of Taxation. There’s an online version - but it’s behind a paywall. I was sent it by outraged church people.

I won’t reproduce the whole article. I can’t for copyright reasons, much as I am tempted to do so. But the following edited extracts give some flavour of what Mr McKie has to say:

TAX-AVOIDANCE is news, and, it seems, almost universally condemned (Paul Vallely, 20 April). Peter Oborne, writing in The Daily Telegraph, said: “There are few more worthless specimens of humanity than tax accountants and tax lawyers.” I must be doubly worthless, being both.

Tax-avoidance is not a significant threat to government revenues, and is not immoral, but rather is the sign of a morally healthy tax system. The unthinking heat raised by the current discussion risks doing real economic and moral damage to this country.

The complexity of the modern economic system demands a complex tax system. My edition of current tax legislation has 18,591 pages. No single person can be familiar with it all — least of all the MPs who vote it into law.

There can be no moral principle that forbids one from taking legal steps to avoid taxation where the charge to tax is based on such artificial constructs.

The very term “tax-avoidance” contains a conceptual confusion. It is a fundamental principle of our law that no right to tax arises until a state of affairs exists on which Parliament has imposed a charge; so if one arranges one’s affairs so that a tax charge does not arise, one has not avoided tax: one has avoided entering into transactions that would have resulted in a tax charge.

This is not quibbling. Underlying the condemnation of tax-avoidance is an assumption that the fundamental right to property lies with the all-powerful state.

But surely, one might object, acceptable tax-planning can be distinguished from unacceptable tax-avoidance, and the latter taxed under the law. Many attempts have been made to formulate such a general anti-avoidance rule. All have failed. The last Labour Government concluded, like all previous Governments, that such a rule could not be made without creating such uncertainty in the tax system as to damage our economy.

This Government, however, is about to ignore the experience of many years in order to appease the public clamour, by introducing just such a rule. In this and other ways, the uninformed state of the public debate threatens substantial damage to our economy, undermining, in the longer term, the economic activity on which tax is levied and which pays for public services.

There is another danger. No Government department can resist the temptation to extend its power. In recent years, there has been a significant extension of HMRC’s power over the taxpayer. The febrile debate provides an excuse for HMRC to extend its powers further.

For a long time, Britain has had a tax system in which the vast majority of taxpayers make honest returns. Paradoxically, tax-avoidance is the sign of a healthy tax system because it involves working within an accepted system of law and complying with its demands. In many other countries, illegal tax evasion is rife.

Where the tax authorities exercise arbitrary discretionary power, legal tax-avoidance is replaced by widespread tax evasion. The present overheated debate threatens to allow a system to develop in which concealment and lying are an accepted part of civil life. Nothing would more surely corrupt public morality.

This, and much lese he has to say, is quite extraordinary. This article shows how corrupted (or maybe, perverted) is the thinking of the tax profession. As one cathedral Canon put it to me:

All I can think to say is that if tax-avoidance ‘is the sign of a morally healthy tax system’ then by the same standard of ethic then ‘adultery is the sign of a morally healthy social system’ since neither is unlawful in this country.

The argument is, I think you’d agree, unassailable.

McKie’s is not. First (although I don’t note it here) he argues that tax avoidance is only £5 billion a year 0 using HMRC’s now discredited data. He does not, of course, acknowledge there is other data.

Second, he implies but for tax avoidance we’d have tax evasion. He ignores the fact that we do have tax evasion – maybe £30 billion in HMRC’s discredited count and £70 billion in my estimate.

But most of all – the idea that getting round democratically endorsed law – for that is what tax avoidance is – can ever be moral is simply corrupted ethics.

I have written a reply to the Church Times but doubt they will publish it – they almost never give balance on this issue. I will publish it later.