tiintax

Let’s talk a bit about “fairness”.  Or about “morality”.  Or we can talk about “equity” instead, if you like.  After all, “there is no equity about a tax” (Mr Justice Rowlatt in Cape Brandy Syndicate, 1921), and “there is no morality in a tax and no illegality or immorality in a tax avoidance scheme.” (Lord Templeman in Ensign Tankers v Stokes in 1992).  That’s tax wizard talk: people with a professional interest in tax can sometimes get caught up in the idea that tax is legal confiscation of private property and no overbearing state ought to be able to dip its hand in your pocket without good reason and legal backing, preferably from a body of law hallowed by time and created by a democratically elected parliament.  Quite right too… except, is that really the problem, in a twenty-first century democracy?

Let’s be clear: if HMRC were coming through my front door with guns I’d be against it.  When I DO deal with the actual HMRC, I get pretty pissed off if they’re inefficient, rude or inaccurate… but please note that I haven’t (so far) disappeared into a gulag for arguing my corner with them if they happen to stray.  In general, if they put their hand in my pocket, I’d rather they didn’t but I accept I also would rather have an education, an army, a National Health Service and a few quid back from the state when I’m too decrepit to work any more: that tax is, indeed, the price we pay for civilisation.  That, then, for me is the first point where morality comes into it.  We pay taxes for a good reason, we obtain public goods as a result, and it’s pretty contemptible to take the goods and weasel out of paying towards them.

But the crunch point for me isn’t there, in the dealings HMRC has with the individual citizen, but in the relationship between the state and the multinational corporation.  The hollowing out of the state by offshoring profits to tax havens (as described, for example, in Richard Brooks’ The Great Tax Robbery) seems to me to be contributing to all kinds of inequality and unfairness (see some of the examples quoted by the Tax Justice Network).  Is the relationship between the state and the multi-national analogous to the relationship between the state and the private citizen?

Well let’s think about it.  For one thing, the multinational may well have more money.  (Walmart is bigger than Norway, Apple is bigger than Ecuador…)  They may be able to bring influence to bear which the private citizen would be unable to exercise by the exercise of their single vote.  They may be able to persuade governments to modernise any inconvenient rules (for example) “to better reflect the way business operates in a global economy“, costing the economy £450 million this year, rising to £805 million in 2016/17 against not a penny of quantified benefit.

The tax wizard might be right that there is no moral failure in a corporation arranging its affairs to pay the least amount of tax according to the law of the land.  But if the corporation has the ability to influence the making of the law by which it is taxed, is there a moral failing in its doing so?

In tax policy-making, perhaps it is politicians who are failing to make moral choices when they allow themselves to be influenced?  Or perhaps it is our fault, as citizen-stakeholders, for not holding our politicians to account?

It’s not an easy thing to do – is anyone actually doing it? (Margaret Hodge?  Any time her name comes up in the news my twitter feed comes instantly alive with tax wizards complaining about or mocking her.  Similar animus is shown towards Richard Murphy)

So what are the rest of us, those of us who aren’t tax wizards and are pretty sure the “no equity” thing is a crock, to do?  Well, fellow muggles, here’s my attempt at a muggle moral maze.

1. If it is morally justifiable to arrange your tax affairs so that you pay the least amount of tax possible under the law, and
2. It is morally justifiable to influence tax policy making so that laws which would tax you more heavily are not passed and laws which are favourable to you are, and
3. It is morally justifiable to say that it is up to parliament what laws they pass, then,
4. Logically it must then be the moral responsibility of the citizen stakeholder to exercise the only power which remains in their hands…

So to arms, citizens!  Any time someone asks you for their vote ask them a simple binary, muggle, question: are they in favour of tax competitiveness, or of tax justice?