Thursday, March 02, 2006
The Great Tax Avoidance Con
Nanny is working herself up into a frenzy over tax avoidance schemes. These are legitimate methods used by companies and individuals to avoid paying tax.
Nanny and her "friend" Gordon "Smiler" Brown (nicknamed "Potato Head" by his own staff) are being very clever in their campaign against tax avoidance. They are allowing the media to run with the idea that tax avoidance is only a rich man's tool, used by the unscrupulous to avoid paying what is in Nanny's view their moral obligation.
Indeed, Nanny has even persuaded her old chum Auntie to run a Money Programme documentary about it tonight. Doubtless we will witness some very fine schemes indeed including; offshore companies, paying people in bales of hay and artificial losses.
All of this goes on, that is true. However, what Nanny doesn't like to remind you is that tax avoidance is perfectly legal; it is tax evasion that is illegal.
Tax evasion is whereby an individual or company deliberately and knowingly makes a false tax declaration, with a view to defrauding the Inland Revenue, eg not declaring a source of income.
Tax avoidance is whereby the taxpayer uses the law to legitimately reduce their tax bill. This can include fancy schemes such as being paid in bales of hay, but also includes what every tax payer does (if they are aware of it) eg claim additional personal allowances or offset allowable costs against income.
Nanny, by allowing the media to portray tax avoidance as morally reprehensible is moving towards banning tax avoidance; ie those offsets and allowances that you and I currently take for granted will be disallowed.
Simple, she is running out of money and needs to find more ways to tax us.
The Nanny state is financially ruinous for us all.
One might suggest that were Smiler Brown to focus his efforts on streamlining the tax system, instead of making it more complicated, then people would devote less time and money to looking for ways to avoid his increasingly complex and incomprehensible rules.
However, Brown is an arrogant individual and will never admit to the fact that it is his complex and expensive rules that are creating ever more "ingenious" tax avoidance schemes.
The right to practice tax avoidance is as important to the tax payer, as is habeas corpus to every citizen of Britain. Unfortunately, Nanny has little respect for that either.