The economically far-right London based Institute for Economic Affairs think-tank, that refuses to disclose its funding and whose prescriptions appear to overly appeal to the current government, seems to be continuing its assault on the work of the UK charity sector that seeks to tackle poverty.
The latest iteration is an assault on Oxfam by Bournemouth University senior lecturer Richard Teather. He makes four claims. These are, first, that Oxfam uses a trading subsidiary to raise funds which are then transferred tax free to the charity using completely legal, transparent and commonplace arrangements.
Second, that it uses a widely recognised arrangement to permit the donation of goods to the charity for onward sale that permits the claiming of gift aid by charity, which accords with the stated intention and will of successive governments.
Third, he claims that the openly declared commission rate Oxfam charges as a deduction in this process is artificially low.
His, rather odd, fourth claim is that Oxfam unreasonably promotes this scheme.
I am aware that these comments are attracting attention. I think a response is required at two levels. First I will look at the accuser, and second at the accusations.
Richard Teather has appeared on these pages before. Let's be clear about it. He is a promoter of flat taxes, whose sole purpose is to increase inequality in a society. He is a promoter of tax competition - which is a war on the taxation of capital to increase inequality worldwide. And he is a promoter of tax havens : in his 2005 book for the Institute of Economic Affairs ‘On the benefits of tax competition‘ he says (page 81) when commenting upon measures then proposed by the OECD to tackle tax haven abuse:
This is attacking a classic use of a tax haven, as explained in the previous chapter, in which a person resident in (or otherwise subject to the taxation system of) a highly taxed country places his capital in a tax haven where it can earn untaxed income. While there are many cases where the home country does not tax foreign source income (such as the UK's non-domicile exemption discussed above), most Western countries have a worldwide taxation system that seeks to tax the worldwide income of its residents (or all of its citizens in the case of the USA). This tax haven income therefore does not cease (legally) to become liable to tax merely by being earned offshore: it is still liable to tax and the investor has a duty to report it to his home tax authority. In practice, however, if the investor does not report his income, then the home country can have great difficulties in discovering and taxing it, particularly if the haven country has strong banking secrecy laws.
While I am not seeking to condone dishonesty or criminal activity, from an economic perspective this is merely another example of tax competition: indeed, it is often necessary behaviour in order to take advantage of tax havens. Without the willingness of some to engage in this sort of activity, tax competition would be much less effective and therefore reduce the benefits that flow from it for the rest of us.
Teather did, I think, come as close as he could to endorsing tax haven usage, even when that might be illicit, and did so for what are very clearly ideological reasons, stating that if illegality was a necessary condition for using tax havens on occasion that that might be worth it for what he thought were the positive economic advantages that flowed from doing so. But what was that advantage? It was what he saw as the befit of tax competition of which he said (page 10 ):
Tax competition involves allowing sovereign nations, and dependencies with tax-setting powers, to set their own tax rates and rules. Impeding tax competition, through the operation of a cartel of governments that sets tax rates and/or rules, is an abuse of power by government, much more serious than any abuse by monopolies acting in private markets. It is more serious because governments have a monopoly of coercion and, if tax competition is prevented, individuals will be unable to choose the kind of governments under which they live or the kind of countries in which they invest on the basis of their preferences for different amounts of government provided services.
So what Teather is saying is that people should use tax havens to opt out of a system of government that supposedly denies them the level of government service they want. And what does he say of democracy's role in this process? (page 54):
[O]f course, democracy is a very inefficient check on government power; in the absence of a strong (and strongly defended) constitution there is no check on a majority, and there is a great temptation for politicians to use redistributive taxation to build a coalition of support funded by the minority.
Teather's position is, I hope, pretty clear. He wants to undermine the right of democratic government's to set tax rates in accordance with the wishes of those who live in those places. This is the man who is attacking Oxfam. I think it fair to ask what his motive for doing so might be.
Let me then turn to his argument with Oxfam. The fairest description of this is that it is based on falsehoods. At its kindest it is a wholly straw man affair. This is because Teather is falsely representing what tax avoidance is. Tax avoidance is using the law in a way that no government or tax authority anticipated to achieve a result that neither could ever have intended. It is not, as Teather would wish to infer, any arrangement that means tax is not paid, such as putting money into an ISA or claiming a deduction for a legitimate and allowed expense. Those are tax compliant behaviour.
So the test for Oxfam is whether or not the government intended, or knowingly permits, the arrangements that Oxfam uses.
The use of trading subsidiaries by charities, with those subsidiaries then donating their profits to the owning charity tax free, has been an arrangement known about and unchallenged and clearly legally permitted for decades in the UK. That is not tax avoidance. It is a known, endorsed, encouraged and wholy acceptable arrangement. It's about as tax abusive as a forming any comoany to run a trade. Teather's claim is absurd.
So what about the Gift Aid arrangement? Three things here, First, no one has ever hidden this. Day in day out HMRC can see and challenge this if they wish. I suspect countless HMRC staff have used it. And what we know is that when HMRC do see a Gift Aid abuse that they think is non-compliant they do challenge it. The government then, almost invariably, over-rules their challenge on public policy grounds.
It is the intention of government that gifts to charity - and not just of cash because other assets may be gifted - be tax free. HMRC have not challenged this scheme. I presume they have not challenged the commission charge in it either, but no one has hidden it from view to make it hard for them to do so. We must therefore presume the arrangement is both consistent with the law and public policy. In that case it cannot be tax avoidance: you cannot avoid tax that a government says is not due.
Which is why Oxfam can also advertise the arrangement. That accusation by Teather is akin to saying a bank is tax avoiding by advertising that it has an ISA available to anyone who qualifies to use it.
To put it another way, a man who loathes the state and democracy and who promotes tax systems that would increase inequality is raising wholly artificial questions about the tax practices of a charity committed to the relief of poverty that sees the ending of the type of offshore tax abuse that Teather promotes as harmful to the vast majority of the world's population, as a mass of evidence proves to be the case. And, in the process Teather hopes to capture the ear of a government that is inclined to his view and so bring an end to campaigns aimed at ending a cause of both poverty and inequality.
Oxfam is not a tax avoider.
Teather is an unreliable source of tax opinion.
His claims hide his true motives.
I rest my case.
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Teather is a lawyer – therefore I immediately distrust him out of natural instinct for the self-evident lack of morality in his chosen profession. (With a few notable exceptions who still uphold the relationship between law and morality of course!)
Not to mention he appears to be short of several marbles in his thinking. I look forward to hearing more from this apparently odious gentleman and learning what really makes him tick. Self interest and personal greed no doubt! In true Adam Smith Institute style.
Meanwhile, we must leave it to the French to undertake a “thorough” investigation of Google’s tax affairs. Hopefully they will get stuck into a few more multinationals which the HMRC have chosen to go very easy on.
https://www.theguardian.com/technology/2016/may/24/google-offices-paris-raided-french-tax-authorities
An intersting description of tax avoidance: “..or knowingly permits, the arrangements…”
On this basis neither Amazon nor Starbucks have been avoiding tax.
Tour elation ship with facts appears to be remote
Ignoring the ad hominem bits about Teather, and focusing on Oxfam, I have to say that your arguments are rather weak, and undermine much of what you have said about avoidance previously.
You say “So the test for Oxfam is whether or not the government intended, or knowingly permits, the arrangements that Oxfam uses.” That is not a common test for tax avoidance – indeed, as I think you frequently complain that the Government knowingly permits activities that you regard as avoidance (cf Google, Starbucks, Amazon, Rolls Royce, etc), that test would excuse an awful lot of behavior you object to.
The more normal test, that HMRC use and that you have used as a starting point, is whether Parliament intended the result that is obtained. The big question is of course whether one should look only at the wording of the legislation, but I think everyone accepts that it is a useful starting point.
I note here that you are conflating Parliament and Government, which is not an appropriate thing to do in this situation.
On the trading subsidiary point, you are right that using them is a device that is encouraged by law. What you are missing however is that there are a lot of artificialities involved. The main one is that the company needs to pay out the whole of its taxable profits, and these usually exceed accounting profits. This means that the company eventually runs out of reserves, and needs to be recapitalised. The result is that the charity gives cash to the company purely so that the company can pay the cash back to the charity and obtain a tax advantage. There is no commercial rationale.
Now I think that this is a defect in the way the charity exemption operates, and the end result is reasonable, but there is no denying that cash flows in an artificial and uncommercial circle in order to achieve a tax effect. That is a hallmark of avoidance.
On the Gift Aid side, you are confusing a number of reliefs. There is indeed a relief for gifts of non-cash assets to charities, but it is not Gift Aid – the donor gets a deduction, but the charity cannot reclaim any tax. Gift Aid explicitly excludes gifts of goods.
So when a charity says to a donor, “don’t give us the goods, let us sell them for you and give us the money instead”, it is consciously stepping around a rule which says that Gift Aid doesn’t apply in order to claim Gift Aid. How does it do this? It does it in a way which is, for all practical purposes, invisible to the donor and has no commercial impact. Again, these are hallmarks of avoidance – in exactly the same way as paying people in platinum sponge instead of cash is avoidance.
The one saving grace is, as you say, that HMRC and Government wink at the practice. But this is not an appropriate thing to do. If Parliament thinks that donations of goods should qualify for Gift Aid, then it can quite happily change the law to permit it.
If no changes to the law are made, then we effectively have the executive arm of Government giving financial advantages to certain taxpayers with no legal basis for doing so. That is exactly the sort of thing that you frequently object to, and indeed have recently badged as “corruption”.
There is no comparison here to ISAs. Those are operated in line with the legislation, but these donations are claiming a relief that legislation explicitly denies.
It should also be noted that as the relief is effectively given by concession, charities cannot rely on getting it. Relief should not be in HMRC’s gift, it should be certain.
In my view, what we have here is tax avoidance. It is not tax avoidance that I particularly object to, and I would welcome the rules as operated being enshrined in statute, but unless and until that happens it is avoidance.
By denying that this is avoidance, you are essentially saying that the end justifies the means: tax planning is OK if you approve of the taxpayer, but is avoidance if you don’t. That is far too subjective a principle to take seriously.
Oh come on
I have not changed my definition of tax avoidance one iota
And what I am saying is wholly HMRC consistent
And I will tell you that when I have donated goods – and I have – it has been made quite clear what is happening: there was no illusion
So bluntly what you are saying is the artificial construct whilst the rule I have suggesred is clear, consistent, comprehensible and applied
To suggest it changes any situation re the cases you mentioned is, to be candid, just wishful thinking, but if you are in doubt, of course intention matters. That is precisely what matters when you are abusing: does the mens rea to do so exist is the appropriaye question and to deny that is to suspend reality
But you have changed your definition. You used to say it was Parliament’s intention, and now you are saying it is up to the Government and HMRC to decide. Those are very different bodies, and you are privileging them above the body which is entitled to make law.
If you have donated goods, and been “quite clear” what is happening, then you must have been made aware that the legislation expressly prohibits donations of goods from being included in Gift Aid. And yet you knowingly went against the express intention of Parliament, in order to allow someone to claim a tax benefit.
The rule you have followed may be “clear, consistent, comprehensible and applied”, but it is not the law.
Andrew
Have your taces ever been assessed by an MP? Oddly enough, no. So of course HMRC is te haven’t of parliament in this respect. Of course it can be wrong, but no taxpayer has, I suspect, ever sued it asking to oath more tax. So de facto of course I am right and you are, as usual, showing your inability to comprehend an argument
Richard
My taxes are paid according to rules set down by Parliament. HMRC just does the paperwork, and some decision-making within that framework.
You are arguing now that HMRC can determine the rules, and decide the principles on which tax ought to be levied. That’s on a whole different level – you are essentially arguing that Parliament has no place in determining tax law, as HMRC can do that.
You also seem to completely misunderstand how tax law works in this situation.
Trading subsidiaries of charities are treated exactly the same as any other trading company, except that if they are 100% owned then they can back-date their Gift Aid contributions to their parent. That is a very narrow relief, which does not at all say that the intention is to exempt their profits. Exemption of profits could be very easily managed by extending the charity exemption to 100% (or even 51%) subsidiaries of charities. Parliament has chosen not to do this – yet you overlook that. I wonder why.
With the donations of goods, as I say you completely overlook the fact that the legislation explicitly excludes donations of goods from Gift Aid. I see that you have put up no defence for your position there.
To argue that it is OK to bypass an express provision of legislation so long as HMRC are happy is to shift legislative power from Parliament to HMRC. That is profoundly undemocratic.
It also means that every case where HMRC has chosen not to pursue a taxpayer is no longer tax avoidance. If HMRC have the power to forego tax from Oxfam, and bless this as “not tax avoidance”, then Google’s permanent establishment position is not tax avoidance, and neither is Amazon’s, and Starbucks’s transfer pricing is perfectly acceptable… and indeed all the cases you have slated over the years are no longer tax avoidance.
Andrew
Do you have any clue how tax works?
Or even how most law is written?
I am sorry but unless you improve e quality of your comments I will assume you are trolling
Richard
What has mens rea got to do with this? Now you are confusing tax avoidance with evasion.
No I am not
Of course intent is an issue
Not criminal intention – that is what mens rea is!
“Actus reus non facit reum nisi mens sit rea” – do you know what this means?
So either you have used “mens rea” incorrectly or you are trying to amalgamate tax avoidance into tax evasion.
Tax avoidance and evasion are both about free-riding
Of course they are an amalgam
In the recent past it would not have been possible for individuals to espouse such naked corporatist views, which are I think are also anti-human. This has nothing to do with free market – sorry but using that fig leaf to provide cover does not wash.
This is all about not challenging the elites unfettered right to rule and ransack the world economy.
This attack is politically motivated. A number of charities have been vociferous about increasing inequality and the “masters” do not like this!
http://www.peacedirect.org/uk/closing-the-gap-between-the-worlds-elite-and-the-worlds-poor-a-critical-step-towards-peace/
http://policy-practice.oxfam.org.uk/publications/working-for-the-few-political-capture-and-economic-inequality-311312
http://policy-practice.oxfam.org.uk/publications/working-for-the-few-political-capture-and-economic-inequality-311312
Your arguments seem to be:
1) this arrangement is widely accepted (everybody’s doing it)
ii) Richard Teather is not a nice person.
If Parliament had intended trading companies controlled by charities to be tax exempt, it could have said so unequivocally. It clearly wants these trading entities to pay tax on profits.
Surely Parliament did not intend gift aid arrangements to be engineered internally by related entities in this way. It has a ‘transfer pricing’ feel to it – an artificial inter-entity transaction which would never take place if the parties were acting at arm’s length.
Good luck to them if it is legal, but the arrangements do look contrived.
The government intends me to pay tax on my income, unless I give it to a charity
You miss out the ‘unless’ in your arguments. It’s key. I can’t imagine why you did not notice
“The government intends me to pay tax on my income, unless I give it to a charity”
If you are at arm’s length, sure.
But this arrangement is not at arm’s length. It looks artificial. It is not something either the trading entity or the charity parent would rationally do if they were acting at arm’s length. There is no obvious commercial purpose other than to avoid the tax which Parliament expects to be paid from trading profits.
Similar enough in substance to some of the transfer pricing arrangements on which you have been critical.
If it is legal, it’s fine. But it does make their criticism of others look a little flaky.
Does the government intend that companies pay less tax by abusiv g transfer prices? No
Does the government want charities to have a tax free income? Yes
Can you spot the difference? I am doubting it
“Does the government want charities to have a tax free income? Yes”
But it isnt about the income of the charities. It is about the income of trading entities controlled by charities.
Parliament plainly does not want this to be tax free. It wants these entities to pay tax on profits.
But through these artificial transactions that would never happen if the parties were operating at arms length, they manage not to pay tax. Legally.
If HMRC now challenge these arrangements you are right
I put the odds on that as very, very low indeed
In which case I am right
Thank you
HMRC do challenge these arrangements. They have said that distributions must be limited to the distributable reserves, and excess payment must be repaid and tax charged on the resulting profits.
Also, I had a case a little while ago of a guarantee company which was acquired by a charity as to 99%, but with two minor guarantors who could not be traced – they had been involved in the company’s formation many years ago, but had never taken any part in the running of the company.
HMRC said that the relief was not available as it was not a 100% subsidiary, even though they accepted that economically the company was wholly-owned by the charity.
This whole area is policed by HMRC, and is certainly not operated as a blanket back-door exemption.
In other words, Oxfam must gave it right
I’m sure you’re right. Why would HMRC challenge a legal arrangement?
But the point Richard Teather is discussing is Oxfam’s use of artificial, non-arm’s length arrangements that have no commercial purpose other than to minimise tax of an entity whose profits Parliament clearly did intend to tax.
It seems like you are saying that whether or not HMRC challenges is now a test of whether or not there is tax avoidance. Or have I misunderstood your point?
If parliament intended to tax the company why did it provide an arrangement so it did not need to be taxed?
“In other words, Oxfam must gave it right”
So, you are basically saying that HMRC’s judgement is always correct, and so any tax arrangement they accept is perfectly acceptable.
Which means that, in every case where you have railed against HMRC for letting taxpayers get away with avoidance, you were wrong to do so. Starbucks, Amazon, Google, Rolls Royce… no avoidance there, even though you said so at the time.
An interesting volte-face 🙂
Oxfam is following published guidance that I have linked to
Are you saying thsoe trying to be tax compliant must ignore HMRC advice?
I would go and sit quietly in a corner for a long time Andrew
“Are you saying thsoe trying to be tax compliant must ignore HMRC advice?”
No, I am quite clearly saying that HMRC advice should be in line with the law as written.
In this case, the law should be brought in line with HMRC’s quite reasonable suggestions. But until it is, we have a rather uncomfortable case where certain taxpayers are being allowed concessions to reduce their tax liabilities.
You will of course recall that the Wilkinson case held HMRC concessions to be ultra vires…
But Oxfam are not avoiding tax, are they?
“But Oxfam are not avoiding tax, are they?”
Yes, they are. They are claiming Gift Aid rebates in respect of donated goods, where the legislation specifies that donation must be in money.
They may also be giving cash to trading subsidiaries in order to have it immediately returned as a deductible payment, although I have no direct knowledge of that.
HMRC think this is acceptable tax planning.
I think it is acceptable tax avoidance.
There’s a big difference.
It all depends on whether you think the applicable law is what Parliament wrote, or what HMRC re-wrote.
I note
I think you’re dissembling
If you honestly think a scheme HMRC explicitly approve is avoidance you have, candidly, defined the word into having non-existent meaning
Come on the matters Oxfam deals with e.g. poverty, economics etc are politics. They have been effective campaigners, this is a shot across Oxfam’s bows by the Neoliberal gunners. Some very recent headlines Oxfam have generated in the FT are:
1. “Panama tax advisers only part of a wider picture”
2. “Mexico’s billionaires are down but not out”
3. “Eight steps towards ending corruption”
4. “Do not let petty lobbying laws starve the body politic”
5. “Scientists should be free to influence policies like sugar tax”
6. “Larger UK families to bear brunt of £13bn in welfare cuts”
And a few of the Masters’ replies:
“Capitalism, not Oxfam, is defeating poverty” http://www.telegraph.co.uk/news/earth/greenpolitics/developingworld/12106587/Capitalism-not-Oxfam-is-defeating-poverty.html
“Oxfam: MPs shocked by ‘disgraceful’ political campaigning”
http://www.telegraph.co.uk/news/politics/10888966/Oxfam-MPs-shocked-by-disgraceful-political-campaigning.html
“MAIL ON SUNDAY COMMENT: Aggressive charities must be reined in“
http://www.dailymail.co.uk/debate/article-3367494/MAIL-SUNDAY-COMMENT-Aggressive-charities-reined-in.html#ixzz49aFuDKxw
Thanks
`… tax competition would be much less effective and therefore reduce the benefits that flow from it for the rest of us.`
Who is `the rest of us`? The 0.1% presumably.
HMRC is quite clear on how they view gift aid on goods donated. There is no “work around”, Oxfam is just applying the rules set by HMRC, on behalf of the Government.
Those earlier commentators crying Foul clearly haven’t read HRMC’s own rules on the matter – https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on
As you suggest, this is a straw man argument, which no-one apart from those who want to see the voluntary sector shackled and gagged, would support.
It’s very clear that this is part of a continuing attack on the voluntary sector by the IEA (and fellow travellers in other so-called thinktanks). I not sure I would call them “economically far right” as that puts in the same bracket as the likes of Norbert Hofer or Marine Le Pen – whose economics are to say the least contradictory. The IEA’s economic and political stance is, to me, more corporate-libertarian right, but that’s a side-issue.
The IEA is also a charity, apparently – but is itself under investigation, as former Charity Commissioner Andrew Purkis has made a formal complaint against the IEA questioning whether they are fulfilling the charity Public Benefit test. http://www.civilsociety.co.uk/governance/news/content/21507/commission_looking_into_sock_puppet_think_tank_the_institute_of_economic_affairs?topic=&print=1
Thank you
“Oxfam is just applying the rules set by HMRC”
Exactly my point.
HMRC has no business setting rules like this. That’s Parliament’s job.
If the rules don’t achieve the right result, they should be changed by Parliament.
At the moment, the rules explicitly, and repeatedly, refer to “gifts of money”. You need to go to artificial lengths to turn gifts of goods into gifts of money. This was originally done by a few large charities, after which HMRC decided that they didn’t mind the practice and released some rules saying how the schemes should be operated to avoid objections from HMRC.
But this is all HMRC’s practice, not Parliament’s. It’s tax avoidance sanctioned by a body which has no right to do so.
As I’ve said before, I have no problem with the end result – I just think that the law should be changed to permit it. At present, it’s the equivalent of the 10% rule for speeding – if you drive at 75mph then you’re still breaking the law, even if the police won’t normally charge you with speeding.
Oh get real Andrew
You really are, with the very greatest of respect, an embarrassment to the tax profession when you can make comments as idiotic as that
If you want MPs sitting in tax offices say so
Either way please stop being an embarrassment and accept that of course authority has to be delegated by parliament
I am genuinely embarrassed by your comments
Just go and read what I have posted this morning
And then apologise
I’ll say what I said before but without the more personal asides:
Reading Teather’s ‘work’ is like reading an extract from a text book by von Hayek and any other anti-statists who bang on about Government who have come out of or is associated with the Chicago school.
If his writing wanted to truly reflect his academic status he would surely balance his opinions with the observation about how money from the cash rich corporations and the 1% is used to influence Government policy for their benefit – never mind how politicians apparently meet public spending needs and wishes in order to get voted in. In other words EVERYONE seems to be at it – campaigning, lobbying, looking after their supporters – and why? Because if they don’t, they won’t be heard – especially when compared to the money donors and their vested interests. Teather’s writing implies that it is OK for some to do this but not others. It’s totally inconsistent.
Teather’s status as academic reminds me of just how neo-liberalism has inculcated academia over the years. I wouldn’t mind if he and other neo-libs portrayed a balance in their writings but the fact is they simply do not seem to.
Thanks PSR
You rumbled my reasons
I think I’ll try reading some of (un?)Teather(ed)’s work – if it is as half a funny as the von Hack’s “Road to Smurfdom” then I look forward to a night filled with peals of laughter & reflections that anybody taken in by this stuff is truly a village idiot missing his/her vocation (hello Margaret).
BTW Pilgrim: if you want to see how money & power can destroy a society (or hold it back) – one only needs to look at Ukraine – spent an interesting night with an ex-minister recently – sobering stuff.
Actually ‘The Road to Serfdom’ is not half bad.
Last year we holidayed in Croatia and we were struck about how often the locals bemoaned the creeping privatisation of their country.
We tried to take a picture of a really beautifully built and designed interior of a main post office but were asked not to do so by the security guard who told us that the upper part of the building had been sold off to an investor ‘as they are doing to everything now’.
The creeping loss of our commons is occurring everywhere it seems.
It is very worrying indeed.
You say: “He is a promoter of flat taxes, whose sole purpose is to increase inequality in a society.”
This is simply incorrect. It may be one of the purposes. It may even end up being the chief result. However, it is undeniable that the wish to simplify the tax system is another purpose. I see this week that Andy Haldane from the bank of England was reported as saying that the tax system around pensions was now so complex he cannot begin to understand it.
Flat taxes may well be a load of tosh. But the more complex a system is, the easier it is to “play”, and the easier it is for disputes of this kind to arise. We need to simplify the system.
FWIW, my proposal for personal taxation would be to allow everyone a living wage tax free. Then impose income tax, at banded rates, above that. Get rid of all further allowances. Get rid of all NI. Subject all income from whatever source and all capital gains to the same rate of tax: no additional allowances. Have a debate about what the bands of tax should be, by all means, but keep it comprehensible.
Flat tax removes tax rates, the easiest but, by far if the tax system
Calculating taxable income us the hard bit and simplifying that bas nothing to do with flat taxes
You are just wrong I am afraid
I don’t agree. I agree with Roger Phlegm that the tax system is far too complex. Right-wing campaigners often claim that we must make it simpler by having a flat tax which is, of course, completely unfair& unethical.
Roger has proposed a more simplistic tax system that, on first view, seems fair & ethical.
I think you should at least give it the value of consideration.
I have
See the blog this morning
I know who Roger really is
I do not trust his motives
I am aware of the harm that has resulted from the tax system of the jurisdiction in which he is based
I always thought that the IEA was ‘liberation’ in its stance and therefore it should be ant-tax haven. The IEA has published books by Fred Harrison who, although libertarian, is hardly corporatist and a campaigner for LVT and social ‘justice’ from a libertarian perspective similar to Ron Paul in the States. Perhaps I’ve misunderstood what the IEA is about and it is more ‘sinister’ that I thought.
Harrison and most landtaxers are libertarian. They believe that LVT should be the only tax, and at the extreme end, with revenues mostly distributed as a Citizen’s Dividend. Harrison and the IEA are worthy bedfellows.
Thanks for the clarification Carol. despite this, I still found Harrison’s recent book ‘The Traumatised Society’ a good one with a good analysis of the Land issue in history and deeply compassionate. I’m aware of his libertarian stance but think the Left can learn some things from him on LVT.
The IEA has always been pro tax haven, because tax havens embody the holy grail that the IEA and the rest of the Antony Fisher neoliberal think tank universe dream of, Economic Freedom.
I noticed a 2011 TJN conference had included a paper “The shaping of an ideology of offshore”. I can’t find the paper but here’s a summary:
Secrecy jurisdictions, widely perceived as small, exotic sideshows to global economic affairs, have grown to become central features of the global economy. Drawing on previously unpublished archive material and interview-based research, this paper explores how public perceptions of secrecy jurisdictions have been shaped by friendly academics, think tanks, journalists and other agencies engaged in constructing an alternative to the Keynesian world view that dominated political thinking in the 1950s and 1960s. In particular the paper will explore the role of three agencies, the Mont Pelerin Society, the Atlas Network, and the Institute of Economic Affairs, which are credited with much of the heavy lifting involved in shaping the ideology underpinning the world of secrecy jurisdictions. It will also explore the role of thinkers and activists such as Friedrich von Hayek and Antony Fisher.
That is spot on
Thanks -I didn’t realise that it was that extreme -I’ve had a certain respect for a figure like Fred Harrison (who has had at least one book published by IEA) but he may not be typical of the sort of stuff they publish. It is clearly a repulsive organisation.
“Tax avoidance is using the law in a way that no government or tax authority anticipated to achieve a result that neither could ever have intended.”
So the government never anticipated that I would avoid paying tax on the first £10,000 of my income when they wrote the law to state that I would avoid paying tax on the first £10,000 of my income. Bizarre!
Only your comment is bizarre
So what verb do I use to describe the fact that the government have set the law so that I legally do not pay any tax on that part of my income below £10,000 if it not avoiding paying tax on that £10,000 ?
That is tax compliant
PAYE is not optional you numbskull jgh, avoidance and evasion are entirely optional most probably by people like you!
I thought this was a good definition of tax avoidance, from the FT lexicon
http://lexicon.ft.com/Term?term=tax-avoidance
Tax avoidance is using the tax law to obtain a tax advantage that the government never intended. It frequently involves contrived, artificial transactions that serve no purpose other than to reduce tax liability. Tax planning involves using tax reliefs for the purpose for which they were intended. Also see tax haven and tax shelter.
HMRC also helpfully explain to the hard of thinking the difference between tax planning (eg paying into pension) and tax avoidance of the “industrial scale tax avoidance” type, promoted by PWC et al. http://www.bbc.co.uk/news/business-31147276
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372502/Tempted_by_Tax_Avoidance.pdf
Precisely
Am excellent little paper, for those non-accountants like myself. The difference between interpreting tax law according to what the government and parliament intended and, setting up complex schemes that are in a very narrow sense ‘legal’, but clearly set out to evade the intention of the law, seems pretty clear. However it does not stop the endless sophistry and hair splitting from those who seek to defend tax avoidance, and their financial, legal and accounting accomplices.
To be a touch melodramatic, if I could find a way of having someone killed in a way that left me legally unaccountable, would that make it acceptable? Too many in the legal, accounting and financial professions seem to deny that there is any moral or ethical dimension to law and regulation. A very ‘Randian’ perspective
Indeed