Bernard Ingham: Pity taxpayer who wants more than a cheat’s guide

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MY text this week is taken from Shakespeare’s The Merchant of Venice (Act 1, Scene 3):

“...many a time and oft,

In the Rialto, you have rated me

About my moneys and my usances:

Still have I born it with a patient shrug:

For sufferance is the badge of all our

Shylock was speaking feelingly as a Jew. I borrow his words to speak no less feelingly as a taxpayer. In our fevered 
pre-election atmosphere, we are all suspect now about our moneys and our usances.

Anybody who employs an accountant to do their tax return or pretends to have some knowledge of our complicated tax laws is especially thought to be up to no good.

In short, we are suspected of tax avoidance. While the words “avoid” and “evade” have the same meaning in my dictionary, there is apparently a difference these days. According to the Daily Telegraph, evasion is illegal whereas avoidance is not.

Welcome to the opaque world of tax semantics.

I first entered it when my accountant advised me to do something that was “tax efficient”. I don’t feel the slightest twinge of conscience for that efficiency, if that is what it was.

After all, no-one, if they are honest, wants to pay more tax than they are legally required to do, however much they inconsistently call for more public spending.

Which brings me to another tax condition, apparently lying somewhere between evasion and avoidance, called “tax abuse”. It reminds me of the legal luminary next to me at a dinner in Scotland decades ago. I was moaning about how Budgets can complicate matters when he rebuked me with the words: “I will not have a word said against Budgets. They are my meal ticket for the coming year.”

In other words, here was a respectable lawyer who, along with accountants, was earning a handsome living by finding a way to minimise his clients’ tax liability as one Finance Act followed another in the wake of succeeding Budgets, each trying to close tax loopholes.

It would be interesting to know how much these two leading professions – the law and accountancy – earn each year from their tax avoidance business and how much might be classified as abuse as distinct from evasion. After all, Gordon Brown, as Chancellor, is reported to have regarded a “deed of variation” used by Ed Miliband’s family to alter his father’s will to share out ownership of his house as a “tax abuse”.

Let this be a lesson to all politicians who see some advantage in exposing tax avoidance by others. They had better be clear whether it is avoidance, abuse or downright evasion and whether the mote they find in someone else’s eye is not a beam in theirs.

The truth is that, by whatever means encompassed by the words evasion, abuse and avoidance, rich and poor actively seek to reduce their tax payments to a minimum.

It could also be said that both create jobs in the process – the rich by employing professions who make an industry of it and the poor who only take cash for services rendered in the black economy and then quickly spend it.

We need far less sanctimony on this subject and a commitment by the Government to four courses of action:

1 – A long-term simplification of the tax system, starting with the next Budget; a complicated system is one riddled with opportunities for dodging tax.

2 – Creating a much clearer public understanding, regularly updated, of what constitutes tax evasion and abuse as distinct from mere avoidance.

3 – Preventing companies from transferring profits earned in this country to overseas HQs, so ensuring they pay their dues on profits earned in this country.

4 – Intensifying co-operation between nations’ banking systems to identify the national liabilities of investors, with an annual report on the numbers involved and the proceeds from collecting their tax dues.

The last is calculated to bring out the privacy lobby in full force. But if tax evasion is such a heinous sin, should we not also require every citizen to record how much cash they have paid into the black economy and to whom, as Ed Balls already apparently does, and then declare it?

Few other issues are polluted by so much holier-than-thou, dishonest, smearing cant and political mud slinging. Let us hope that after recent political tax bruises on all sides we are all more careful about “rating” folk about their “moneys and their usances”.

Sufferance is not the badge of all my tribe.