Adam Smith Institute

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New at AdamSmith.org: Tax Avoidance, Boon or Bane?

Geoff Cook, CEO of Jersey Capital, defends tax avoidance and argues that we need tax havens.

The recent Times series on tax avoidance has triggered a huge spike in coverage of the tax affairs of the rich and famous.

David Cameron’s condemnation of Jimmy Carr’s tax arrangement as ‘morally wrong’, presumably based on newspaper headlines, was arguably unwise, and may well come back to haunt him as open season is declared by the press on Tory donors tax planning arrangements.

Rather ironically, in the same week he welcomed the news of the introduction of a 75% tax for high earners in France;

“If the French go ahead with a 75% top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they will pay taxes in Britain and that will pay for our health service, and our schools and everything else.”

A more sure-footed Ed Milliband made the following observations when responding to Cameron’s comments.

"I'm not in favour of tax avoidance obviously, but I don't think it is for politicians to lecture people about morality.

"I think what the politicians need to do is - if the wrong thing is happening - change the law to prevent that tax avoidance happening and I think that is the right course the Government should take.”

However, the mood music of popular opinion can sometimes be irresistible for politicians. The same Ed Milliband last year pronounced that:

“The bankers who took millions while destroying people's savings: greedy, selfish, and immoral; the MPs who fiddled their expenses: greedy, selfish, and immoral; the people who hacked phones at the expense of victims: greedy, selfish and immoral.”

The next Prime Minister's Questions with the two UK leaders could be quite interesting!

Whilst few will have much sympathy with Jimmy Carr, given his TV antics lampooning tax avoidance, Mr Milliband is right. Individual judgement of personal tax affairs is a matter for tax administrations and not the court of public opinion.

Read this article.

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