Cameroon has his knickers in a twist over tax, again. According to him, some of the world's largest companies don't pay enough tax and, according to Margaret Hodge, chairman of the House of Commons 'Public Accounts Committee', the internet company 'Google' are 'evil', as a result of this.
When it comes to tax we all know one thing; governments will take whatever they can from us in order to throw much of it down the drain on useless schemes. To my mind, paying as little tax as we can get away with is a public good, and in no way evil. However, governments inevitably see these things very differently, particularly when they're run by multi-millionaires whose affairs are managed most carefully by squadrons of expert tax lawyers and accountants; whatever rules they introduce to stop other people from avoiding paying tax, they won't be affected.
Both Cameroon and Hodge come from wealthy backgrounds, Hodge, despite being a committed socialist, being a shareholder in her family business which is one of the largest privately owned UK companies; she is clearly very rich. Cameroon is descended from an illegitimate child of King William IV and his family has many aristocratic and wealthy connections; he, too, is far from being poor.
Neither Cameroon nor Hodge has ever had to work for a living and both find it very convenient to conflate the concepts of 'avoidance' and evasion' when it comes to tax; they've eagerly latched onto the newly created concept of 'aggressive avoidance' and both seem determined to muddy the waters to such an extent that the man in the street will have no idea that there's actually any difference between these 3 quite different actions.
Before going on, let's just be clear that whether or not tax is paid, the money doesn't disappear. If tax is paid, then governments get hold of it and use it for whatever purpose suits their current political aims; this will almost certainly include the employment of hordes of faceless bureaucrats carrying out pointless and worthless tasks in pursuit of political ambitions, and with no real chance of success. It will quite likely include wasting billions of pounds on information technology which never works or fulfils its purpose and will certainly include spending huge sums on enquiries and consultations about anything and everything. Lawyers, of whom many are MPs, make money and the rest of us pay.
If tax is not paid, then the money is available for either individuals or companies to spend and invest as they see fit. Individuals with more money in their pockets are inclined to spend it on new cars, home appliances and so on, the increased demand boosting economic growth. Companies may actually distribute some of any such money as dividends to shareholders who, in turn, spend it as individuals, or they may invest in new premises, plant or projects, boosting employment and the economy. Far from being a negative feature, not paying tax is almost certainly better for the economy than paying it. It creates real jobs that are needed, not make believe jobs that simply keep the unemployment figures down.
When it comes to the difference between tax avoidance and tax evasion, this is very simple. Evasion is against the law as it entails lies and deceit; the taxpayer deliberately falsifies their figures in order to defraud the authorities and this is clearly wrong. Avoidance, on the other hand, is perfectly legal and entails working to the letter of the law in one's tax affairs; governments have, in fact, introduced many avoidance measures over the years including personal allowances, ISAs, SIPPs, tax-free National Savings certificates and so on. Companies can benefit from a variety of special schemes and allowances designed to help them expand and most of these involve some form of escape from taxation. These assorted approaches have been introduced because governments have understood the need for people and companies to be able to have control of, and benefit from, as much of their own resources as possible. Sadly, the current economic crisis has caused them to think again and they're now looking for ways to deprive us all of as much of our own money as they can.
In creating the concept of 'aggressive avoidance' government has now tried to move the goalposts and to make it appear that avoidance and evasion are really the same thing. While it is true that some taxpayers may well employ specialists to dissect every line of tax legislation in order to discover previously unknown loopholes, this is still perfectly legal and no court in this country would disagree. If legislation is poorly constructed, it cannot be right for the victim to be held guilty when they exploit this fact. Governments may well try to argue that it is wrong, even immoral or, as Mrs Hodge says, 'evil', to work to the letter rather than the spirit of the law but this is nonsense; the law is the law and is not adjustable to suit the whim of anyone who dislikes its application.
If Cameroon, Hodge and their pals are so sure of the rectitude of their position, why don't they join forces and enact new legislation to outlaw tax avoidance ? The simple answer is because they know it wouldn't gain acceptance and would create more problems than it's worth. Instead, they bleat on about 'aggressive avoidance' and berate and vilify large corporations which are acting quite legally. In this whole sorry saga, it is not the companies who are at fault, it is the politicians who bring themselves into disrepute.
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