As Economia magazine, and many others, have noted:
The majority of the British public thinks it is unacceptable to avoid paying tax, according to a new poll by YouGov
In total, 59% of the UK public thinks that tax avoidance is morally wrong, making no distinction between avoidance practices and illegal tax evasion. Only 32% think that it is acceptable to avoid paying tax.
The social profiling of the opinion is interesting:
Split between different political parties, Labour, Green and UKIP voters are more likely to disagree with tax avoidance, while Conservative and Lib Dem voters support it by a small margin.
Respondents were also split by social class. Those in "upper-middle class" were much more likely to support tax avoidance than people from "working class backgrounds".
But more interesting still are two things. The first is that this means that most people in the UK are inclined to agree with tax barrister David Quentin when he argues:
Th[e] vision of tax avoidance as a dignified and cerebral difference of opinion over legal interpretation is a radical romanticisation. In an avoidance situation the propositions of fact are just as likely to be false as the propositions of law. Take for example the reliance placed by Chris Moyles, famous DJ, on the false factual proposition that he was a used car dealer for the purposes of a tax avoidance scheme. Or take the example of Amazon, whose tax avoidance relies on the factual proposition that its Luxembourg and UK entities have operations neatly split into trading on the one hand and auxiliary functions on the other, when in reality the operations of the two companies are so mixed up together that one of them has been found liable for the other one's tort.
To which he adds:
So perhaps rather than bemoaning the failure on the part of activists and journalists to distinguish between avoidance and evasion, as if it was all very clear and rational to those in the know, those who promulgate these scholastic taxonomies could try to come up with a compelling reason why there is one category of tax lie that is treated by the criminal law as fraud, and another category of tax lie which does not even attract a civil penalty.
I am sure most people would think that a very good use of the Oxford Centre for Business Taxation's time, but I don't see it happening any time soon.
Secondly, that the government has noticed that tax avoidance and tax evasion are now linked in the public mind - and rightly so for both have the sole aim of cheating it of tax - is now apparent. As they said in an announcement is made in the last few days:
Tax avoidance is bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage. It involves operating within the letter — but not the spirit — of the law. Tax evasion is when people or businesses deliberately do not pay the taxes that they owe and it is illegal.
The implication is obvious in that announcement where they say:
The vast majority of UK individuals and businesses pay the tax that is due. However, there is a small minority who don't.
This imposes an unfair burden on the honest majority and prevents money from reaching the crucial public services that need it. We want to stop people cheating the tax system and collect more of what's owed.
Note the use of the word 'cheating'. The language of the tax justice movement, which has deliberately, and correctly, linked these two actions by using common language for both is now being used by government.
But that then, to go back to another David Quentin blog, what this also means is that a new definition of tax avoidance as deliberately taking risk as to the outcome of a transaction is right and proper, and lets us dismiss, instantly, those who argue that putting money in an ISA is tax avoidance. And this has real policy implications, as David notes:
If we are going to penalise tax avoidance when it fails (& I strongly believe that we should) we should penalise all tax avoidance that fails, and not just a very narrow and wholly arbitrary subset of tax avoidance that fails for the specific reason that it meets the General Anti-Abuse Rule criteria. Indeed to my mind the stuff that requires GAAR to defeat it is less abusive than the kind that is based on a plain lie.
This is radical, but it seems to me important: we have to realise what we are up against before we can tackle it.
But in the meantime, as David notes, some tax academics would rather deny this. I wonder why?
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You are right. ‘Cheating’ is the best word to use.
Well 59% of the UK public may indeed say that they think that tax avoidance is morally wrong but how many of them would pay the tradesman less for cash, no questions asked? I’d wager it was most of them, that is the 59% who actually think it morally wrong to ‘avoid’ tax would co-operate in tax ‘evasion’ as described above. Never mind the 32% who admit it. I say this because for many years I would in my capacity as a tradesman of sorts, estimate jobs for ‘cash’ and tell the people that there would be no VAT. Now, I told no lies, since I had de-registered for VAT and I used to put the cash through the books as normal. I wanted cash because it was better than bouncing cheques but didn’t want to admit that to the customer. In any case I never remember many people objecting unless there was an insurance company involved. Most of those 59% are either liars or hypocrites. A bit like the people who are quick to damn benefit claimants whilst happily collecting their own child benefit for years on end.
I have no doubt that people are willing to pay cash
But not 100%
Not maybe 41%
I think you over make your case
Richard,
Quite frankly, this is a stunning achievement. Some in civil society may see the solutions to tax avoidance as legislation, and regulations, designed to collect, rightfully so, more tax. I rather see this as secondary, although necessary, to the prime objective, at this point, of controlling the language of the debate and framing the narrative.
By making the terms “tax avoidance” and “tax evasion” synonymous, civil society has surmounted the primary hurdle in showing our followers the way forward. By controlling the terms of debate, and defining the elements on our terms, we have, undoubtedly, won the debate. 59% is a staggering achievement.
No doubt, there will be hiccups as the details, such as GAAR, increased taxation on top earners, etc, but we also have a powerful argument in reserve, if and when such hiccups occur, the argument of social justice. There can be no doubt that civil society owns the term social justice. As such, we can brandish this idea when those who attempt to usurp this victory trot out their bankrupt ideas. Social justice is sufficiently flexible to encompass all areas of debate put forth by those seeking to deny greater tax revenue to government. Properly tailored, social justice can mean precisely what we say it means, case closed.
As has been said in the past, history is written by the victors.
Job well done Richard.
Thanks
And yes, I agree: rewriting the language is vital
Some of the arguments on this subject are interesting from both pragmatic and philosophical perspectives. There are senior sitting MPs earning north of £350k from second jobs who in their secondary role as company executives appear to have presided over the paper transfer of elements of the company from the UK to Switzerland. Not illegal but I would argue contributory to a reduction of moral values in Public Service. Is it at all surprising that Joe Bloggs feels justified in not asking too many questions when offered different prices for a service, one price for cash and another higher one for payment by cheque? It might be that Joe pays with money from the second, cash in hand job he does because his zero hours contract job is an unreliable source of income.
Are they equally culpable in the eyes of the law that one of them was partially responsible for constructing? No, the avoidance of many millions in tax via Switzerland is legal. Joe on the other hand evades a few pounds in VAT and a few more in income tax and is guilty of a crime.
There is a case to be made that Joe’s behaviour is aspirational and simply seeks to mimic the behaviour of his political masters.
Interesting that the Tory and Lib Dem supporters both think, on balance, that tax avoidance is OK. That supports my hypothesis that since the coalition, the remaining Lib Dems are closer to the Tories than Labour (which makes sense – if you were a left or centre-left voter why on earth would you have stayed with the Lib Dems after their performance in enabling and propping up a Tory-led govt?