Sunday, April 10, 2016

Double Standards

I would love to know

1) What proportion of participants and signatories to any of the campaigns or petitions calling on Davie Cameron to resign who have money in a pension fund, savings account at the bank or building society have written to the management of their pension fund, bank or building society to say that they do not wish to benefit from offshore investments and asking that none of their money should be invested in any offshore unit trust or other offshore investment?

2) What proportion of supporters of any "Cameron Resign" campaigns who have money in a pension fund, savings account at the bank or building society have written to the management of their pension fund, bank or building society to say that they do not wish to benefit from tax-efficient investments and asking that none of their money should be invested in any form of tax-efficient investment?

3) What proportion of the supporters of any "Cameron Resign" campaign themselves have, or have a family member who has, in practice gained a financial benefit, directly or indirectly through a pension fund, bank or building society, from some offshore investment, and

4) What proportion of the supporters of any "Cameron Resign" campaign themselves have, or have a family member who has, in practice gained a financial benefit, directly or indirectly through a pension fund, bank or building society from some tax-efficient investment?

I don't know a way to establish the answers to those questions, but it will be interesting to see if anyone reading this dares to challenge the view that the answers to those questions are likely to be

1) Zero, or fairly close to zero

2) Zero, or close to zero

3) The majority

4) Fairly close to 100%.

And don't let's even start on how many of the people calling on Cameron to resign will have ever paid a builder, cleaner or other tradesman in cash.


There may be a few individuals who can produce a letter along the lines in 1) or 2) above, but I don't think there will be many. And even "ethical" investment funds do not go out of their way to pay more tax than is legally due. That, by the way, is not a criticism - there are plenty of "tax-efficient" savings mechanisms which parliament directly encourages people to use because the government wanted to give incentives to save, so they are not "cheating" the taxman.

The point I am making is NOT that it is wrong to benefit from tax-efficient investments. What I am saying is that it is double standards to benefit from tax efficient investments yourself while at the same time accusing someone else of unethical conduct for holding tax-efficient investments unless you have reasonable evidence that the ones that they hold are significantly more open to the charge of "aggressive tax avoidance" than your own.

Full disclosure: I own ISAs and other forms of tax-efficient investment approved and encouraged by the government. To the best of my knowledge I have never gained from any arrangement which the Inland Revenue has accused of being aggressive tax avoidance, but I have certainly never asked my bank, my employer, or my pension fund to pay as much tax on my behalf as possible and I have absolutely no intention whatsoever of doing so.

As a child I remember hearing my parents discuss a similar row about people paying tax, and my late mother made a comment along the lines that to the best of her knowledge there was only one politician in British history who had paid more tax than he needed to in order to try to help out the nations' finances, and that the person concerned wasn't a socialist but a Tory.

As an adult I remembered the conversation and looked it up, and mum was right. The politician concerned was Stanley Baldwin who while Financial Secretary to the Treasury, a hundred years ago next year, effectively gave 20% of his personal fortune to the government and, in anonymous letters to the Times, encouraged other rich people to do likewise to try to reduce Britain's war debt.

And you know what? If Stanley Baldwin were PM today I reckon his political opponents and much of the press would still find some way to accuse him of being a self-serving crook.

6 comments:

Jim said...

whats the difference between options 1 and 2, I know its fairly close and close.

Though judging by the other options, I think option 2 was meant to say "The minority" or words to that effect.

:-)

Chris Whiteside said...

It's not a major difference. The reason I separated out "Offshore" for points 1) and 3) from "tax efficiency" in 2) and 4) is that much of the press and social media comment and the Cameron family finances appears to assume that any financial arrangement involving a company registered in a country other than Britain must be a tax dodge.

So 1) and 3) refer to foreign investments particularly those made in or through a company registered abroad. While 2) and 4) refer to all tax efficient investments including those like ISAs which do not have a foreign component.

Of course, it is simply not true that the only reason to invest or borrow money from abroad, in either direction, is do to with minimising tax. My first mortgage, arranged from a building society based in Yorkshire, was at dollar interest rates and I seem to recall it involved borrowing the money for my first house from the States because dollar interest rates were cheaper at that time. Nothing whatsoever to do with tax.

On option 2, I doubt if more than a very tiny minority will have sent such a letter.

Jim said...

OK, with you.

My only real problem is that tax avoidance is so difficult to do, I want the government to simplify the tax system to make tax avoidance easier. I do everything I can to avoid tax, its pretty much one of my hobbies. So I certainly wont condemn anyone else for doing it. Thats why I cant write a letter, Im not a supporter of a "Cameron Resign" campain, and if I was it would not be for reasons of him avoiding tax.

The way I see it is "Tax evasion is illegal, tax avoidance is a duty"

Thats why the term "aggressive tax avoidance" just does not make sense to me, its like aggressive sticking to the speed limit.

Jim said...

Think you may be interested in This tax expert slapping the BBC off its soap box

Chris Whiteside said...

Yes, that's a very good link. It obviously baffled the BBC journalists who clearly did not know how to respond when the expert said this story amounts to

"man makes a modest investment and pays all his tax."

Chris Whiteside said...

I'm sure you won't have sent a letter to your bank or anyone else asking to pay as much tax as possible, and as I said in the updated version of the post, neither have I.

The difference between us and the vast majority of the people who are saying Cameron should have resign is not that they're giving such an instruction when we are not, it is that we are open and honest about it!