Nizar Manek is a writer and law student at the London School of Economics. He’s bright. He’s also willing to take risk by expressing opinion. I admire that. And I suspect he’ll go far – not least because he’s already got a piece in Reuters on what I called General Anti-Avoidance Principles but which he calls General Anti-Avoidance Rules (GAARs). As he says in a well reasoned article:
If properly crafted (with an adequate clearance mechanism and appeals procedure), the GAAR could give the courts clear constitutional authority to strike down unacceptable tax avoidance schemes – conferring upon judges a necessary interpretative power, beyond mere formalism in statutory interpretation. Such a principles-based tax regime could reconfigure the rules of ‚Äòcorporate morality’, and lessen chances for the tax planning industry to exploit imperfections in tax law’s spider web.
And yes, that is exactly why we want them.
The obstacles? Twofold, I think. The first is getting this past the lobby that’s now captured parliament that thinks abuse is just fine. the second getting it past judges. As he notes, Ian Roxan, Senior Lecturer in Tax Law at the LSE has said:
If Parliament wants to use a GAAR to define a greater range of schemes as unacceptable, the GAAR also has to persuade the courts to adopt that standard. That is much harder to achieve, as many countries have found. That is the challenge that faces the Office of Tax Simplification.
Which is why any GANTIP / GAAR must direct judges in how they are to interpret the law, as I’ve argued here.
And as I’ve also argued, that is possible.