Thursday, 7 April 2016

Just because it is legal does not make it OK. It is still cheating.

Some people are defending the actions, revealed in the Panama Papers, of David Cameron’s father and other very wealthy people, on the grounds that they are apparently legal.

Some of the people doing so happen to be employed by billionaire press-barons whose own tax affairs may resemble those revealed in the Panama Papers. I am reminded of the comment of Upton Sinclair - “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

Just because something is legal does not make it OK. The Holocaust was legal. So was slavery. And apartheid. 

The pointless and cruel bedroom tax is legal. When Douglas Hogg MP claimed over £2,000 of taxpayers’ money to clean his moat, that was legal. And later making Hogg a life peer was legal too.

Legality is only part of the story. We need a new vocabulary to describe the behaviour of the so-called elite when it comes to tax.

At present, if someone does not pay the tax that they would ordinarily have been expected to pay, they are described as either a tax evader or a tax avoider. Tax evasion is illegal and tax avoidance is legal. The apologists for Cameron’s father say - “he avoided tax, that’s not illegal, end of story.”

But, there are two very different types of tax avoidance. One type is only available to the very rich and the other is available to everyone. An ISA is an example of this second type.

The reason why these loopholes are available to the very rich is not - as is often claimed - because it is beyond the wit of man to close them and therefore they just need to be accepted as a fact of life, like the weather. 

The reason the loopholes exist is that the very rich and politicians are “all in this together” and they make sure that the loopholes are written into the law. It is central to this corrupt behaviour that the loopholes are only available for the use of the very rich. “Ordinary folk” cannot possibly get involved in the expensive goings-on needed to benefit. 

Why, do you suppose, hedge-funds and other very wealthy people donate so generously to the Tories, and New Labour? 

All this is well documented. Everyone in the Westminster bubble knows it. Somehow, they have not considered it important to keep the “ordinary folk” fully informed.

I suggest that for the new vocabulary that is needed, we adopt the harsh language favoured by Cameron and Osborne for those who commit benefit fraud. Those people are labelled cheats.

Instead of calling people tax evaders, let’s call them illegal tax cheats.

Instead of calling the people whose activities are revealed in the Panama Papers tax avoiders, let’s call them legal tax cheats.

For those using ISAs and the like, let’s just call them people using ISAs and the like. The term “tax avoider” has a completely inappropriate connotation.

Cameron’s father was undoubtedly a tax cheat. 

Cameron is refusing to answer some basic questions. He first tried to close down questions by saying it is a private matter. It is not. 

If the right amount of tax has not been paid, that is a public matter. 

If the prime minister has knowingly benefitted from the activities of a tax cheat that is a very serious matter indeed.


  1. The problem is, Mr London, that there is a competitive international marketplace for corporate taxation. So talking about the UK in isolation is kind of like saying that it's not fair that Real Madrid has a better football team than Man City. If country A (Britain, say) charges 20%, and country B (Eire, say) charges 12.5% wouldn't you go where your paid advisors suggest you will save the most money? I don't really understand the Panama thing yet. But, sorry, if it's legal I can't see what all the fuss is about. Governments waste money by the truckload anyway. Why give them more to chuck down the drain? Having said that, if David Cameron has knowingly - and I mean actively, knowingly - benefitted from the arrangements his father made, he probably ought to resign. But until you can get international agreement that corporation tax has to be paid in whichever country the corporation is trading, this is all tilting at windmills, I'm afraid.

    1. So if slavery is legal in one country then it should be legal everywhere then? Right, got it.

    2. "But, sorry, if it's legal I can't see what all the fuss is about."
      If we all ran our money through the same channels, we'd be in a bit of a mess wouldn't we. PanamaGate isn't about legality, it's about how our society works. Cheating is the right term -- the rich have decided to bypass the tax system the rest of us have to live with, yet still have a say in how things are run. It's corruption at the core.

  2. Paul, corporations are legal personalities. These persons are using their financial resources to escape taxation. You ask "why give Governments more money?" Precisely because this Govt is wailing that it has a huge deficit which means that it has to cut cut and cut again. If the rich paid their fair share of tax, we would have decent public services without you and I having to pay more tax.

  3. Tom, I am thinking that Cameron is morally obliged (having made clear that aggressive tax avoidance is immoral) to pay the tax due on the capital sum of £31k that he got from his tax avoiding father.

  4. Interesting. This looks super cool. I haven't read it all yet, but I'll be back to read the rest of it.