Tax Avoidance: should the government have the right to punish me for doing something that is legal but, in its view, morally wrong?

An action can be wrong as well as illegal (for example, murder), or - conceivably – illegal but not necessarily wrong (for example exceeding a designated speed limit when it is, objectively speaking, perfectly safe to do so). But can an action be legal but still wrong? Of course the concept of moral relativism makes this a very difficult question to address. Many people believe it is wrong to sell one’s body as a prostitute. But – in this country at any rate – prostitution is of itself not illegal. However, I am thinking more of the public domain rather than the private. The campaign now being waged by the Guardian – and latterly with the apparent support of Chancellor Alastair Darling – against tax avoidance falls squarely within this category.

Earlier this year the Guardian launched a widescale investigation of the stratagems used by large corporations to minimise their liability to UK tax. The Guardian named twenty or so major British companies, analysed their “secretive tax strategies,” and asked: are they paying their fair share? The Lib-Dem’s shadow chancellor, Vince Cable, naturally jumped upon this bandwagon. “The shocking scale of systematic corporate tax avoidance strikes a particularly ugly note [he thundered] in these straitened times.” [www.guardian.co.uk/commentisfree/2009/feb/03/vince-cable-tax-revenue?showallcomments=true] According to Dr Cable, UK corporations should be paying 28% of their profits in tax, but many were paying much less. But neither he nor the Guardian suggested that anything illegal was actually happening. Why? Because they and he knew very well that it wasn’t.

At that time (February 2009) I entered the debate, via the Guardian’s website. I challenged the solution favoured by Dr Cable and his allies, that the UK should adopt a General Anti-Avoidance Rule, which would be interpreted and enforced by tax inspectors and which would proceed on the assumption that tax should be levied wherever Her Majesty’s Revenue & Customs considered that there had been an intention to avoid the tax liability. This is part of what I wrote:

"Elsewhere in Europe the law of the constitution is (in general) that nothing is allowed save that which the law expressly permits. But in England … everything is permissible save that which the law expressly forbids. This is a cornerstone of English liberty. So, unless the law expressly forbids me from so arranging my financial affairs as to incur the least possible tax liability [tax avoidance], I am within my legal rights in so doing. What Dr Cable and his supporters want is a fundamental shift away from this position. He writes in favour of a more aggressive approach to tax avoidance and supports the notion of a General Anti-Avoidance Rule … that tax is applied wherever there is an intention to avoid it, even if the loophole hasn't specifically been identified in advance by the Inland Revenue. This would leave the door wide open to legislation [and not just interpretation of legislation] by tax-inspector decree. Let’s get one thing very clear: tax avoidance is and should be legal. Why should anyone – or any corporation – be prevented from exercising this right?"

The rule of the Guardians’s comments’ website meant that the debate was curtailed at this point. So my question was never answered. But a recent announcement by Chancellor Darling has re-opened the debate, and has, I think, given much greater urgency to the question I posed back in February.

Alastair Darling has announced [www.guardian.co.uk/business/2009/jun/26/banks-tax-avoidance-darling-hitlist] that he proposes to publish a list of those banks that, in his view, assist their customers to avoid paying tax. Banks will be asked to sign up to a “code of conduct” prepared by Mr Darling. Those that refuse to do so, or which act against what is termed “the spirit” of current UK tax law, will be “named and shamed,” and will be subject to heavier scrutiny by the taxman. They will, in other words, be bullied and harassed until they do obey Mr Darling’s diktat.

Let’s get one thing absolutely clear: tax evasion – for instance concealing income -is illegal. Tax avoidance is not. Got that? It is my right, and the right of every citizen and every corporation in this country, to so arrange their tax affairs so as to incur the least possible amount of tax. What on earth does the Treasury mean when it threatens those who act against “the spirit” of current UK tax law? And who defines what “the spirit” actually is?

The law of the land collides with the Law of Moses

A ruling by the Appeal Court last week raised the question of how Jewishness is to be defined

http://www.timesonline.co.uk/tol/comment/faith/article6632500.ece

So long, Ken's synthetic Simcha

I, for one, won't mourn the axing of 'Simcha on the Square'. It was always more a Livingstone-fest than a genuine Jewish event

http://www.guardian.co.uk/commentisfree/2009/jun/16/judaism-london

Bogus Colleges: Closing The Loophole

The alleged terrorist plot in the north-west threw light on the sham academic institutions that offer a backdoor route into the UK. A crackdown is needed – for the sake of genuine international students as much as anyone

http://www.journal-online.co.uk/article/5714-bogus-colleges-closing-the-loophole

Silence over Sri Lanka

Why do those in the international community who expressed outrage over Gaza stay silent while Tamils die?

http://www.guardian.co.uk/global/2009/apr/27/sri-lanka-war-silence

Don't Free Ronnie Biggs

When the Great Train Robber comes up for parole, sentimentality must not cloud justice: he is not a hero, he is a criminal

http://www.guardian.co.uk/commentisfree/2009/apr/10/ukcrime-brazil

Better safe than sorry

To abandon our deterrent would be to court danger without divine sanction

http://www.guardian.co.uk/commentisfree/belief/2009/mar/27/religion-judaism-nuclear-weapons