As a result of David Cameron’s difficult week, I’ve been seeing some comments on Facebook, Twitter and the like about tax avoidance, and I feel the need to respond.
- Yes, I understand that tax evasion is not the same thing as tax avoidance.
The former is trying to avoid paying tax using methods that have already been judged illegal.
The latter is trying to avoid paying tax using methods that are currently legal (though may later be outlawed).
I can still find both immoral even if not one is illegal and one is legal.
- No. Using my entitlement to save money in financial products specifically created through legislation, like ISAs or pension schemes, is not the same thing as using clever tax efficient vehicles or manoeuvres, which exploit gaps or unintended consequences in legislation to avoid tax. It’s really not.Claiming that both are ‘tax avoidance’ and therefore morally equivalent just doesn’t cut any ice with me.I believe I’m justified in thinking that aggressive tax avoidance schemes are much closer to tax evasion than they are to saving in an ISA.
- No, not everybody is doing it.
- No, not everybody would do it if they had the money.
- No, even if 3 and 4 were true, that’s not a moral justification for sinking to the level of others.
- No, the fact that HMRC should be spending more money on hiring more and better lawyers on pursuing schemes and determining their legality does not mean that tax avoidance is morally fine until such time as they do so.
- No, your financial situation is not average for the UK.
Median individual income is just over £22,000
Only 15% of people are on the higher tax rate.
Most UK taxpayers are not earning enough to be able to save or invest any significant sums, and certainly not anywhere near enough that they would fill up their ISA allowance.
Tax planning is not available and is simply not an issue for most British people.
As such, tax avoidance is an inequality issue.
- Similarly, most people who die in the UK leave an estate which is well below the Inheritance Tax limit (yes, even after their house is included).
Inheritance Tax is only an issue for the lucky minority of us.
- No, ‘the rich’ would not all leave the country, reducing the tax take, if things were tightened. And threats like that are certainly not a good reason to keep things lax.
I feel a bit better now!