If I were Ed Lester, I’d have done the same

I’m going to give you £100,000. Now here’s the choice: I can either put £60,000 in your bank account and give the rest to the government, or I can put £85,000 in a business account and give you access to it. Which one are you really going to choose? Most of us would like to think that we would take the first option and dutifully pay our taxes, but in reality not a single one of us would: I sure as hell would take the extra £25,000 – even more so if I worked for it.

Now let’s instead pretend (I’m not really giving anyone £100,000) that you own shares in company. Let’s say for want of a better example that company is Vodafone. Now, as a shareholder, you receive a portion of the company’s profits every year it manages not to lose money. This means that the company faces a stark choice of setting up an incomprehensible string of overseas companies to channel money through and ultimately land a not inconsiderable extra wad in your pocket, or hand over two billion quid to the taxman. How livid would you be if, as a shareholder, the company handed over money in taxes that it could have avoided, much like everybody else already does.

Now it is of course fundamental to the maintenance of our society that the government collect taxes: without tax income there would be nothing for the country to base its unaffordable debt mountain on. The fundamental importance of collecting taxes due to them should be enough to motivate the government to go about the task properly. Taxes are only going to be paid if taxpayers, be they individuals or businesses, are compelled to pay them: if I could hold onto my full salary without having to siphon off a chunk of it to the central government I damn well would. But I cannot, because if I do not pay my taxes then I get a fine or go to jail.

However, if I form a company based in an overseas territory with lower corporation tax rates and have my salary paid to it instead of me, then I can waive a significant portion of my tax liability. Lambasting me in the press for doing this would be nonsense, since anybody else who could do it would. What is completely and indescribably ludicrous is the fact that I would be allowed to do this. Although it would be obvious to any vaguely sane individual that I was not in actual fact the CEO of a bona-fide company from Bora-Bora with one employee and no office, the taxman would not tell me to stop being such a dolt and give them their damn money, they would leave me alone because, technically, I have followed the rules.

OK, so there is certainly an argument that we should not be applying common sense to interpret the rules, as such common sense can be subjective and would in any event lead to legal difficulties; but then why not just change the bloody rules? Make it flat out illegal for any business or individual to not pay the full rate of tax on any profit which HMRC can reasonably show has been made in this country, no matter where it has been diverted to.

I fully believe that all businesses and individuals should have to pay their taxes and have to pay the full amount they owe, but it is foolish to blame the ‘tax-dodgers’ for not paying it. The real culprits are the politicians and bureaucrats who do not close tax loopholes because it is those very loopholes which provide their political donations and cosy board positions upon retirement from political office. Do your damn jobs and make people pay their taxes.

Disagree? Tweet us @mancuniondebate or email [email protected]