Tax avoidance breaches social contract

17:00, Jul 11 2014

Aggressive tax avoidance has gone the same way as smoking: Once common and even respectable, nowadays it's seen as a vice. Wealthy people like to make a fuss about the difference between tax avoidance ("perfectly legal") and tax evasion (a crime). But morally there is no difference. Both are forms of theft from the common weal and both are a breach of the social contract which requires all members of the community to contribute.

The sight of rich movie actors and film stars avoiding tax is especially repulsive. But perhaps the worst of all is the liberal entertainer who preaches one thing and practises another. Singer Katie Melua, it is now reported, tried to shelter $1.7 million through the Liberty tax avoidance scheme in 2008. That was the year the singer, who comes from the kleptocracy of Georgia, bragged that she was happy to pay tax in Britain. She had "seen what it is like living in a country where people don't pay tax and have poor services". Now she claims she did it at the suggestion of her accountants but repaid the sheltered money to the tax collector. Better late, perhaps, than never.

Singer George Michael and actor Michael Caine were among a herd of celebrities who tried to shelter inside Liberty. Caine never made any secret of his selfishness. He had threatened to move to the United States if the British Government raised taxes above 50 per cent. Michael had said he was happy to pay 50 per cent or even 60 percent to a Labour government, but not a Tory one. But at the time he made this statement he was trying to shelter - and Labour was in power.

British Finance Minister George Osborne has branded aggressive tax avoidance as "morally repugnant", but his party receives a lot of money from tax-avoiding tycoons. There has always been something of a contradiction in the position of people like Osborne. As a Right-wing ideologue he preaches the need to shrink the state. For people like Osborne, the government is part of the problem. Is it any wonder people with similar views think it is okay not to pay taxes? But Osborne's exchequer needs a massive amount of tax money, so the chancellor is forced to live a contradiction.

Celebrity tax avoiders have a particular problem. A tycoon or a lord who inherited large parts of the home counties doesn't need to care what people think about him. But entertainers depend on their fans. When comedian Jimmy Carr was caught out avoiding tax in 2012 he faced a monstrous public backlash. Eventually he apologised for his "error of judgment", a euphemism for ripping off his fellow citizens.

Perhaps with time this backlash against tax avoiders will become more widespread, like the campaign against smoking. Tax avoiders might come to be treated as pariahs, just as smokers are. Of course, the tax avoider is far worse than the smoker. The smoker is an addict and a genuine victim of Big Tobacco. Tax avoiders are anti-social creeps who have no-one to blame for their sins but themselves. They have nowhere to run when their nefarious schemes are revealed.


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