‘If you could legally avoid tax, would you do it too?’
Sir, – Mark Paul’s piece “If you could legally avoid tax, would you do it too?” (Business Opinion, November 10th) is one of the most astute pieces I have read on the subject.
Moral outrage won’t get us very far. People and companies will avoid paying taxes they are not legally obliged to pay whenever and wherever they can. Who or what company would ever volunteer to pay taxes they are not legally obliged to pay? Would you invest in such a company? In fact, company directors are legally obliged to act in the best interests of the company, which presumably does not include paying taxes the company is not legally obliged to pay. Who is to say what taxes they should pay? As Mark Paul writes, morality is too nebulous a concept to be used as the basis for payment of taxes. Morality and ethics are fine, but inherently subjective, concepts. They do not enter some people’s calculus, especially where money is concerned. The rule of law must be brought to bear. Even then, look at the water charges debacle. How many people refused to pay charges they were actually legally obliged to pay?
The principle that tax should be paid where the revenue is earned should be the guiding principle.
The only way to mitigate the effects of tax avoidance is to implement a set of clear, legally-binding global regulations, with genuine teeth- including a proper enforcement agency with criminal prosecution and/or financial penalties for breach. In effect, this would involve extending the remit of tax evasion on a transnational basis with a view to having a more equitable distribution of tax revenues across the globe, thus halting the flow of funds from countries badly in need of tax revenues to fund essential public services.
The OECD has been looking into this. Until this happens, people and companies will “avoid” paying taxes they are not legally obliged to pay. Pointing the finger at those who benefit from the system misses the point. You’ve got to change the system. Until this happens, tax avoidance will continue to be a massive industry. – Yours, etc,
Sir, – There may be a solution to the harmful effects of tax avoidance on societies and national economies. In a similar way to the licensing of banks, businesses and individuals that wish to sell goods and services to people could be licensed too. Traders could be required to adhere to certain conditions, such as not using tax havens, in order to have their annual licence renewed. – Yours, etc,