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.
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.
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So if the rules are changed to make avoidance more difficult then people will be criminalised by The State as they will simply HAVE to engage in avoidance instead?
There’s another option of just not trying to wriggle out of ones responsibilities. This clearly hasn’t occurred to this bloke, has it?
Or it probably has, but if he’s one of those tax advisors who see avoidance as a lucrative business opportunity then he probably doesn’t want other people to consider just paying what they’re supposed to.
All very sordid and lacking in moral fibre if you ask me.
Deary, deary me…
Previous post amendment – “…will simply HAVE to engage in evasion instead?”
(Sorry – was too outraged to proofread!!)
Scandalous, appalling and pure sophistry.
Render unto Caesar as Christ said.
All I know is Christ would have sued
[…] have already referred to the quite extraordinary article by Simon McKie in the Church Times last week, and its absurd endorsement of tax avoidance – […]
These idiots don’t seem to realise that if all the tax avoided and evaded could be collected, the government could bring down the basic rate of income tax to 12-15% or better take millions out of tax altogether.
What economically would it be better to do, allow the evasion/avoidance to continue or to reduce the income tax permanently?
It’s a no-brainer.
I’m afraid I don’t agree with this recent obsession with “taking people out of tax altogether”; paying tax is part of contributing to society. By relieving the poorer in society of their responsiblity to pay tax we not only disenfranchise them from society but increase the contempt that the more fortunate individuals feel towards them.
One of the biggest mistakes Mr Brown made was removing the 10% tax level.
Surely it would make more sense to invest the increased tax revenue in paying off loans, building schools and improving healthcare?
You are right
But the tax has to be matched with higher benefits
Tax avoidance is not “the sign of a morally healthy tax system’, rather it is a sign of an overly complicated tax system. Provisions that are relied on in avoidance structures were invariably inserted into the tax code with particular circumstances in mind without considering how they might be applied more widely.
Which is precisely why we need the GAAR McKie opposes
You can’t have it both ways
Except that a GAAR gives the courts the arbitrary power to disapply or ignore the application of provisions that have been poorly drafted or considered when the better solution is simply to draft better laws.
Respectfully – your arfument is circular and so ridiculous
I am an economist and a Church leader in Portugal.
The Bible has an economic model that condemns lying and defrauding our neighbor. Tax avoidance is more than an immoral system. It’s a sin system.
I agree
As a Quaker, former Anglican and Christian
[…] gather that those who have asked the Church Times for a right to reply to the extraordinary article they published last week endorsing tax avoidance have been told that won’t be allowed. I’m not surprised. The […]
“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.” “Those who have asked the Church Times for a right to reply to the extraordinary article they published last week endorsing tax avoidance have been told that won’t be allowed. I’m not surprised.”
You’ll be pleased to know that I’m in a reasonably good position to know the Church Times’s policy on all this. I’ve just brought the McKie piece out from behind the subscription window, so anyone can read the whole thing who wants to (http://www.churchtimes.co.uk/content.asp?id=127656). The clue to why we’ve said no to a right-of-reply article is in the third paragraph. The McKie piece is itself in response to an earlier piece subtly entitled ‘why tax avoidance is wrong’ (also free to view). At the Church Times, after airing both sides (note which one came first), we generally allow debates to slide on to our robust letters pages. Isn’t that what other papers do? If that degree of balance troubles anyone, maybe they could just enjoy the cartoons.
Paul
Respectfully, the tone of your reply does you no credit at all. It’s bad enough you publishing yet another article supporting privilege and abuse at cost to the poor without lacing your reply with sarcasm.It does not help either that your claim that the original article is free to view does not seem, despite my best efforts, to be true.
I am afraid all you do is confirm what I learned from exposure to the Church of England hierarchy in a cathedral environment – which is that keeping money happy is its number one priority.
Even your final sentence confirms your elitist and condescending view. The taste is thoroughtly sour – and if I might say so profoundly unChristian.
No wonder so many flee a church for which you are a mouthpiece. I did.
Richard
Richard,
Not directly relevant to this article but have you seen this article on Yves Smith’s Naked Capitalism.
http://www.nakedcapitalism.com/2012/05/big-employers-extorting-states-pocketing-employee-income-tax-withholding.html
A egregious example of what you complain of.
Keep up the good work
Michael
Missed it – thanks
Good stuff!
I wonder if this is the future. Not only will companies no longer pay taxes to support the society in which they operate, but society will collect taxes and pay them to the companies
[…] 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 […]