Taxes are vital to the well-being of a nation. They pay for education, health care, security and transport. Therefore, it is our duty to pay taxes. There has been growing public outrage at tax avoidance. Prime Minister David Cameron (DC) joined in saying that tax avoidance was morally wrong. His tax crusade is part of his One Nation Tory ideal. In 2012, he said that he wanted to “Make sure the richest people in our country do pay their taxes.” He expressed dissatisfaction that “more than 300 people were earning over a million pounds who paid a rate of tax of 10%”. Except, now DC says that taxation is a private matter! DC is not responsible for his father’s tax avoidance but DC is accountable for his double standards.
Ian Cameron, the father of DC, held an offshore account paying little or no tax on profit. Offshore tax avoidance is legal. Ian Cameron also issued a particular type of share called a Bearer Share. They are like cash so nobody can tell who owns them unless the holder declares it. They can give rise to tax evasion (which is illegal) in the wrong hands so I would question the use of them at all. DC has defended his father’s tax avoidance saying there was nothing wrong with it. However, being legal does not make tax avoidance right. DC himself said, “It is not fair on hardworking people who do the right thing and pay their taxes to see these sorts of scams taking place.” DC sold his shares in his father’s company in 2010 a few months before he became Prime Minister, a necessary political move.
We know that DC has argued that tax avoidance is “frankly and morally wrong,” but he was being selective. He was critical of comedian Jimmy Carr, exposed for using a tax avoidance scheme but not of Gary Barlow, pop star, who was in the same scheme. Gary Barlow is a friend of DC and campaigned for him during the general election. Both Carr and Barlow used an offshore system like that employed by Ian Cameron. DC also made unfounded allegations of tax avoidance against Ken Livingstone during Mayoral Election 2012. However, of Tory Peer Lord Ashcroft, who claims non-domiciled status for tax purposes he said: “I’ve always taken the view that someone’s tax status is between them and the Revenue.” DC was certainly of this opinion last week until, after a cycle of half truths, he finally came clean on Friday 8 April admitting his offshore affairs.
DC says “No government has done more than this one to crackdown on tax evasion and aggressive tax avoidance.” However, his actions do not match his words. The team at Revenue & Customs (HRMC) are reluctant to collect. The executive chair of HMRC, Edward Troup, says taxes are “legalised extortion.” He is from the private sector, like many of the senior officers at HMRC. They are accustomed to avoiding rather than collecting taxes. Thus, they are not suited to their roles. DC has cut 11,000 collection posts reducing HRMC ability to collect tax. Further, there has been no reversal of Mrs Thatcher’s policies which removed all restrictions on the movement of money and facilitated offshore tax avoidance schemes.
Tax avoidance is bad for business. It encourages poor business practice to the detriment of all. Andy Street, Managing Director of John Lewis recently expressed his concern that offshore companies like Amazon have an unfair advantage because they do not pay UK tax on UK profits.
DC has paid lip service to tax avoidance to pander to public opinion. He has condemned tax avoidance except where it involves cronies or his family. We don’t know if his children will benefit from offshore tax avoidance schemes, he has not published that information. He has not reversed the Tories policies which removed financial control on overseas investment. His double standards affect the country. Tax avoidance reduces a nation’s ability to deliver quality public services. DC has spoken of being a One Nation Tory, but there appears to be two, one for the elite of which DC is a member and one for everyone else.
Since writing this post, DC is now planning to introduce a new law. It will hold companies criminally liable if they fail to stop their employees from facilitating tax evasion. I think the law will be unworkable because it would be unreasonable to hold a company accountable for the actions of their clients, who would be the tax evaders. I also notice that the proposal is for tax evasion and not tax avoidance which is legal.
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