Wednesday, 23 September 2009

Lessons In Morality From Nu Labour

BS
I see that Stephen Timms is making it very clear in all orifices of the media that in his, and the government's view, tax avoidance is immoral.

Using emotive words such as "rob" and "cheat" to describe tax avoiders, thus implying that tax avoidance is illegal, he signalled that Labour will now be going on the offensive over this issue.

Here are a few thoughts on the matter:

1 It is perfectly reasonable, sensible, moral and pragmatic to do your utmost to reduce your tax liability legally. Tax avoidance is a legal way to reduce tax liabilities (whether it be a complex scheme devised by lawyers/accountants, or simply using an ISA).

2 Tax avoidance is not an issue of morality.

3 During the years of plenty, Labour chose not to close the so called tax avoidance "loopholes" that they are now screaming about. Why did they sit on their hands then, if this is such an important issue?

3 This is merely a way for Labour to pass the blame, and take the heat off their own economic mismanagement, onto others for the fact that the country is now bankrupt.

During the years "of plenty" Brown had the chance to build up some reserves that could have eased the pain now. He chose instead to "spend, spend, spend", leaving nothing for the "rainy day". To try to blame tax avoiders for this failure in economic management is hypocritical.

4 MPs are not in a position to lecture the rest of the population on the subject of "morality", given their own "shortcomings" in this area (eg house flipping -Darling has flipped his four times in four years to make the most of his allowances, tax evasion, claiming the full cost of mortgage payments etc).

5 Labour is happy to consort and cavort with tax avoiders, eg it gave tax exile Philip Green a knighthood, surely he is an "immoral" person by their definition?

6 Many of the tax havens that Labour are so angst ridden over are actually still part of the rump of empire, as such we do have more than a little influence over them. Shouldn't they have tackled this issue many years ago, if it really is of such importance?

7 Tax avoiders have not bankrupted Britain. Brown's bankrupt Britain is entirely of his own making. No matter what extra tax Labour think they will be able to derive from their new found "moral crusade", it will be a drop in the ocean wrt balancing the books.

8 Lloyds the government funded bank offers tax avoidance advice to its clients.

Lessons in morality should not be delivered by hypocrites.

Tax does have to be taxing.

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6 comments:

  1. As someone who has small investments in ISAs I believe that it is the Labour government that has been (and still is) immoral. Especially in the way that they have wasted money and introduced so many steath taxes.

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  2. So true. Too much of it is badly spent in a way that is totally contrary to the wishes of most citizens in this so-called democracy.

    People are avoiding their taxes going to able bodied long term welfare dependants, dishonest people who evade immigration rules, pointless wars, French farmers, ridiculous quangos or index linked pensions for an ever expanding civil service?

    Good luck to them. I only wish the rest of us could afford those creative accountants.

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  3. The civil service is being reduced actually Xoggoth. They're changing redundancy/retirement options to make it cheaper to get rid of staff. I agree with all your other points though.

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  4. I invested in an ISA last year and I see that my tax return says I have to fill out details of avoidance schemes used. Do I need to do this?

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  5. A few thoughts on your thoughts:

    1) Probably not worth going over this again. Suffice to say that it's misleading and unhelpful (three words that could probably sum up most of the blogosphere!) to use such a broad definition tax avoidance, which is why most people working in the UK tax field have moved on.

    2) If it's not an issue of morality, why are you arguing to vehemently and persistently that tax avoidance is moral? If it's not an issue of morality then this debate wouldn't need to happen.

    3) Actually they were closing loopholes. Name any Finance Act from a year "of plenty" you like from the last 20 years, even one when the Tories were in power, and I'll find you anti-avoidance legislation. What's different now is pure politics: the Guardian and TJN have brought it out into the open; banks are under fire anyway so tax avoidance is another stick to (rightly or wrongly) beat them with; the Labour party is desperately trying to find any sort of agenda to cling to. Nothing's actually changed - it's just now being talked about.

    3? I think you meant 4) That's certainly the way they're framing the argument, yes. Would you believe it, Ken: I agree with you to an extent on this. Even the bit about years of plenty - you are of course exaggerating, but I agree that probably Brown did overspend in the middle of the decade, which probably contributed to the bubble. Don't come out with that rubbish about the country being bankrupt, though. You're an accountant and know better. Public debt as a proportion of GDP is actually pretty low historically and in comparison with other developed economies. As part of this ridiculous competition between the parties to see who can come up with the most swingeing cuts (apparently in order to ensure that whoever wins the election the recovery grinds to a halt), the Tories use the analogy of a household trying to reduce its debt. Leaving aside the fact that the country is more like a business than a household, if my mortgage was only 1x my income I'd probably be upscaling(*)!

    4) Agreed. Best leave morality to the bloggers and the Daily Mail.

    5) Also agreed. See my other comments about the undue influence industry has over the designing of tax legislation.

    6) Yes, this issue should have been tackled years ago. However, in spite of colonial history, these places are sovereign territories so we can't force them. When the sun was shining and they were brining in loads of money (which often did very little to reduce social and economic inequality in the territories themselves - eg Caymans) we had no leverage. Now they're broke so they're coming cap in hand for loans from the UK Treasury. Quite rightly, they're now being told they need to get their own houses in order first.

    7) Correct. Tax avoiders haven't bankrupted Britain. See my (second) point 3 above.

    8) Yes, that is a bit embarrassing.

    (* - note that this would not apply if I was 5 years from retirement. However, the economy never retires!)

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  6. We need never know about any ISA you have, you need not declare it on your tax return. Avoidance it certainly isn't!

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