Tax avoidance and development just do not mix (someone please tell Bon0)

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I've been called by quite a lot of news agencies about the Bono story, which has not hit the New York Times. This is what I've told them, the 'we' referring to TJN UK:

"It's anyone's right to arrange their tax affairs within the law - assuming they can work out what it is. No one is suggesting that anyone who has moved part of their tax affairs to the Netherlands has broken the law. But, and this is the key issue, complying with the law is not the same as being ethical.

The game these people are playing is tax avoidance. That's very different from tax compliance, which is what we promote, and I'd stress from tax evasion, which is illegal. Tax compliance is working within the rules of the game; that is paying the right amount of tax but no more, in the right place, at the right time. In contrast, tax avoidance is trying to work around the rules of the game and tax evasion is trying to break the rules of the game.

The questions we ask are simple. First of all, is working around the rules ethical? Everyone has to answer for themselves, but we doubt it.

Second, we'd ask anyone to consider the consequences of doing this. The existence of free, independent, democratic states depends upon the existence of effective government and the rule of law. Governments can't survive without taxes: that's a fact, and the rule of law cannot survive successive abuse. When those with wealth show contempt for government by not wanting to pay their taxes by working around the rules of law, what impression does that give? It undermines government in wealthy economies. In developing countries it just about destroys it.

Developing countries need stable, free governments more than anyone, but the mechanisms for corruption that are undermining that possibility and are damning billions to poverty are exactly the same ones used for a great deal of tax planning, including the use of secrecy, low tax states and tax havens . That's why we can't reconcile an interest in development with anyone pursuing tax avoidance: the two just do not mix.

In fact, tax avoidance does not mix with a lot of things. It undermines democracy because it denies governments the funds they need to fulfil the mandate they've been given. It undermines effective operation of the market and free competition because it gives some people (usually multinational companies or itinerant people) an unfair advantage over local, small business and those who stay put in a place. And it shifts the burden of tax to the poor, whether that be the poorest countries or the poorest members of any society, who almost always pay higher overall tax rates than the wealthy.

If you believe in democracy, markets, the rule of law and any form of fairness then tax avoidance is wrong. That's about as simple as it gets. Our campaign challenges those who haven't realised that what they're doing undermines all these things that are the basis of our freedom."


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