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Monday, July 09, 2012

Taxing the brain

So I'm late to the party on this one (see previous post), but I really wanted to write a little bit about the "scandal" a couple of weeks ago with Jimmy Carr being lambasted for paying not-very-much income tax, and his subsequent grovelling apology.

For readers outside of the UK, Jimmy Carr is one of the UK's most successful comedians, pretty left-wing, and earlier this year, lambasted a number of large companies for avoiding tax by keeping funds offshore.  The scandal came about when it was made clear a few weeks ago that Jimmy himself was doing pretty much the same thing.  David Cameron waded into the row and effectively said he thought Carr was a tosser.  Or words to that effect.

This I do not understand.  Jimmy Carr was exercising tax avoidance.  For those of you in doubt, tax avoidance is what you and I do every time we open an ISA, offset business expenses against profits or buy a high-priced item deliberately a few days before VAT goes up.  Tax avoidance is perfectly legal.  Teams of clever accountants are there to work out how they can best legally avoid tax for their clients.  This is what Jimmy Carr was doing.  (Tax evasion is illegal.  No-one has suggested Jimmy was doing this.)  At the very worst, you could accuse him of hypocrisy, because he took the piss out of banks for doing the same thing earlier in the year.

So hypocrisy, yes.  But avoiding tax - how many amongst us, given the option to a) pay a shitload of tax or b) perfectly legally not pay a shitload of tax, would choose option A.

I think I was one of the only people during the MPs' expenses scandal who just didn't see the scandal.  OK, there were those of them who were claiming fraudulent expenses.  And they were rightfully punished.  But for those who had been told openly that they could claim for x, y and z, and then did... well, surely that's fair enough.  It's the system that's broken, not the people operating within it. In a capitalist country, why do we expect people to have altruistic motives?  We need to give clear rules, guidelines and laws.

And whilst we're on the topic, if banks and big companies are also exploiting these loopholes, then surely that shows they're doing the best they can to return funds to their stakeholders... within legal limits.  (Exceptions go to Vodafone who basically does evade tax... and gets away with it.)

And for David Cameron to wade in on this when a) his own family made their fortune in tax havens and b) he's one of the few people in the country who could close the tax loopholes if he wanted to, was frankly ridiculous.

Rant over.  Not very entertaining Plog, but admit it, it's true.

1 comment:

Anonymous said...

I hope you saw Dispatches - Secrets of the Taxman last night. The Revenue themselves are bent as a nine bob note!