Tax evasion? Tax avoidance? Who holds the moral high ground?
We are told that aggressive tax avoidance is “morally repugnant” We’re also told that many of these schemes are legal. In fact, they’re not. But tax law is so complicated, so arcane, so twisted, it’s easy to bend the truth. Because the real aim of the tax system is to transfer wealth to the wealthy, it suits the punters, it suits the managers, and it suits the taxman, to say that it’s all perfectly legal. The government is not your friend. The government is only friends with the rich and powerful. The government is only friends with the people who can scratch its back. And they scratch the backs of the rich and powerful in return.
There are over 2000 “Tax Avoidance” schemes “registered” with HMRC as part of the regime, introduced in 2004, which is designed to monitor the take-up of “Tax Avoidance” schemes – and these scheme promoters twist their “registration” to give them the appearance of legitimacy.
In reality, of course, there is no such thing as tax avoidance – only tax evasion, which is illegal. There is the tax code, all 15,000 pages of close written impenetrable text, which is the responsibility of the government to write and maintain. And if they have failed in this responsibility in some way they cannot conscionably point the finger at someone else or call them morally repugnant.
Tax isn’t about money. It’s about control.
The government uses tax as a way of controlling those of us they can, and of influencing those they can’t. They try to use tax to change our behaviour — for example by taxing cigarettes, or giving tax breaks to those who donate to charity. Interesting to note though that partnerships (like Optimal Compliance) are taxed less than companies that follow the ’employment’ model of business. It’s not an unreasonable conclusion to suggest that the government is attempting to incentivise partnerships over traditional models – perhaps because they know they generate greater economic activity and therefore greater legitimate revenues. However, this probably has more to do with inequity and laziness on the part of the government rather than any noble motive.
The truth is that nobody really knows the difference between “tax avoidance” and “tax evasion” – one is legal, the other is not. But the boundaries are blurred and the government gets to define what is and isn’t acceptable or “moral” according to what suits their needs at the time. The government can change the rules at any time – indeed, there are many campaigning groups that have proven that lowering taxes whilst simultaneously simplifying the tax code would generate greater revenues for the government. But vested interests prevent this from happening.
It’s so much easier for the government to resort to slogan-slinging and empty, meaningless political gestures than to affect real change. The skill then is to know the system, understand the system and pay your fair share — without being taken advantage of.