Don’t you just love edgy, anti-establishment comedians with their sharp wit and brutal satire, bravely holding the powerful to account and criticising the tax avoidance of large corporates – all in between appointments with accountants in which they effortlessly reduce their own tax exposure to a whole per cent?
The comedian Jimmy Carr was recently caught with his Y-fronts round his ankles when it was revealed he uses a (completely legal) offshore tax arrangement to all but extinguish his tax liability. The Prime Minister, David Cameron, didn’t pull any bitchslaps and called Carr’s behaviour “morally wrong” (and yes, this is the same David Cameron who forgets his own daughter inside a pub). But how exactly does one assess morality in the context of tax?
It is tempting to view “tax morality” – if those two words can ever belong in the same sentence – solely in terms of legality, in which case one is forced to conclude that Carr has not behaved immorally. Indeed, it is perhaps impossible to have any kind of discussion about such a specific, numerical form of morality without reference to the numbers, exemptions and allowances provided by law.
I pay the taxman or the taxwoman what I am legally obliged to pay and nothing more, and I make use of the exemptions and allowances to which I am entitled. Am I any different to Jimmy Carr? After all, we both operate within the law.
Well I say there is a world of difference between my behaviour and Carr’s, for two reasons.
Firstly, there is the question of degree: I pay a substantial percentage of my income as tax whereas Carr clearly does not, yet I assume he expects to benefit from schools, hospitals, roads and defence of the realm (however badly those services might occasionally be provided) in exactly the same way I do.
Secondly, the exemptions and allowances I make use of – whether it’s the tax-free amount before tax kicks in, or a tax-exempt ISA, or the legitimate running costs of a modest rental property – are clear, transparent and available to all, without requiring reliance on any dark arts of financial foul play. The same cannot be said of offshore tax arrangements which operate behind smoky mirrors, have significant barriers to entry and which also require for their effective functionality gymnastics of logic akin to reading tax statutes upside down under ultraviolet light with a favourable north-westerly wind. This quote, from Lord Justice Sedley on the topic of VAT, could equally apply to opaque offshore arrangements as well as other aspects of our tax system generally:
“Beyond the everyday world…lies the world of VAT, a kind of fiscal theme park in which factual and legal realities are suspended or inverted.”
There was a discussion about Carr on the BBC’s Daily Politics programme. The journalist Mary Ann Sieghart described his behaviour as “anti-social”, and I agree with that. The journalist Peter Hitchens, however, was of the view that others would make use of such schemes if only they had the chance, and speaking for myself I disagree with Hitchens for two reasons:
1. I like to keep my tax affairs above board. I have absolutely no desire to play an unpredictable and never-ending game of cat and mouse with HMRC because I don’t want to worry that I might be flying too close to the sun. I like to know I am complying with the law and that my actions will not be challenged by a gormless, faceless, unaccountable, invertebrate technocrat at some point in the future when I have spent what I should have paid as tax years ago. I acknowledge this driving factor is one of self-preservation and legal compliance rather than one of morality.
2. More importantly, I think it would be fundamentally immoral to pay 1% of my income as tax when the vast majority of my fellow citizens – many of whom are far more financially uncomfortable than me – pay significantly more than this, and when we all benefit from the public services that tax revenues provide. This is a moral position. Were someone to demonstrate to me that a universal tax rate of 1% or thereabouts, which is pretty much at the extreme end of the Laffer Curve, were enough to maintain a healthy, functioning non-Mad Max society with good quality public services for all, then I would be happy to change my mind and, of course, I would be delighted to have such a meagre tax bill.
Has Carr been treated fairly? Absolutely not. It was disgraceful how Cameron made an example of him but chose to spare Take That’s Gary Barlow – who uses a similar tax dodge to Carr – the prime ministerial wrath. Coincidentally, Barlow is a Tory party donor. The retail tycoon Sir Philip Green, who it is estimated saves himself £250m a year in tax, is another Tory party donor whose morality was not publicly questioned by Cameron. We must therefore assume that Cameron has no truck with immoral behaviour on the strict condition that his party is a monetary beneficiary of it. How moral indeed. And this is before we have even considered the tax behaviour of large corporations such as Vodafone, who tend to talk in billions rather than millions when trimming tax bills they take objection to.
This was disgraceful behaviour from our Prime Minister. A tax system should not and cannot rely solely on an individual’s notion of morality; it needs to rely on the law. Laws are enforceable by the state. Morality is not.
Mr. Cameron, if you object to Jimmy Carr’s behaviour – as I do – then there is a very simple solution: change the fucking law, you weak turd.