Several readers have got hot under the collar in email about my support for Richard’s position regarding Jersey’s planned law changes. In Richard’s eyes Jersey is planning to further legitimise tax evasion, or at the very least exotic avoidance. Readers say that Richard’s position grates because he doesn’t offer balance by pointing to the levels of reported waste by the ever witty Wat Tyler.
The argument runs that it is a bit rich of Richard (sic) to beat up on tax avoidance when the UK has a profligate government needy of raising further taxes. They also have a point. Are the arguments mutually exclusive?
As I interpret Richard’s words, he is taking a moral and ethical position:
And I maintain my view: GSK were challenged precisely because they thought there were no stakeholders in taxation; because they just treated tax as a cost to be avoided and because tax authorities have the right and duty to say otherwise, especially when GSK is dependent for its survival upon government funds, in no small part.
Richard makes no secret that he believes that just tax systems could significantly contribute to reducing poverty. In response to the IASB’s refusal to meet with PWYP, Richard says:
So this [PWYP] is a standard to benefit developing countries, to tackle corruption, to end aid dependency, to protect shareholders, to stop tax abuse and the curse of offshore, and to ensure major corporations are good corporate citizens. OK, those are big claims, but they happen to be true.
The waste brigade have a different agenda – the abolition of taxation. They say:
Just as the seventies showed political discretion was hopeless at “fiscal fine tuning” (hence the abandonment of Keynesianism), and the eighties and nineties showed it was hopeless at monetary management (hence Bank independence), now the noughties are showing (er…reshowing) it’s hopeless at managing public spending. If we can’t get the politicians removed completely, we need clear simple rules to rein in their excesses.
You can argue that despite the apparent political differences, both Wat and Richard are reflecting two sides of the same coin. Much as Richard attacks nation states and tax practices he sees as beyond the pale, he is equally critical of government failure to adequately tackle avoidance. Wat on the other hand largely ignores the tax raising angle, concentrating instead on waste.
Richard is coming at the problem from the income perspective while Wat attacks the expenditure issue. The present government is far more likely to listen (and does) to Richard than Wat. So on that basis, government is politically selective. Wat’s arguments are more appealing to the public because, as we know, even when tax is at 3% – as is the case on Stamp Duty, people will take measures to avoid. In Jersey, framing the 0/10% law is causing consternation among lawmakers.
The joy of this medium is there is room for both positions. Even though they sound remarkably similar – if different. I wonder what government thinks about this? More to the point, can professionals afford to remain neutral? I wonder for instance whether the excesses of KPMG, PWC and the like have been motivated as much by what they perceive as tax and waste as their duty to mitigate clients’ tax positions? It’s certainly a pertinent argument but not one I’ve seen argued.
Technorati Tags: government waste, tax avoidance, tax evasion, tax gap, tax investigations
