Morally right to avoid paying tax?

Mark Wallace pointed out that people being advised to buy goods before the VAT rise may actively be making decisions in order to avoid paying more tax on Twitter today. Dizzy Thinks then asked whether UK Uncut would be protesting at those people paying into pension funds thereby avoiding paying tax.

Unable to resist, then I got in on the argument asking about whether UK Uncut would be annoyed by the millions of people who will take advantage of their new ISA allocation later on in 2011, in order to avoid paying tax on the interest on their savings.

Now one tweeter pointed out that the money ISAs has already been taxed. Probably true in the majority if cases if it was taxed as income. Firstly isn’t that the point. I have no qualms about avoiding tax on income already taxed, but that would be like saying my income is taxed and then I pay more tax through VAT. But of course money in an ISA may not have been taxed. I could have been given it as a one off tax free gift. Does UK Uncut think it wrong and immoral for me to avoid tax on any interest by then sticking in an ISA.

Frankly any organisation that doesn’t attempt to limit their tax liability in line with the law as it currently stands would be rather silly.

So my question is simple… Is it morally wrong to try to limit or avoid paying tax, or is it the morally right thing to do? You know how best to spend your own money, not the state?

10 Responses to Morally right to avoid paying tax?

  1. Jack says:

    As always it is a question of degree & context. I don't think you can equate saving a few quid on an ISA (there are limits as to how much can be invested) and Philip Green shipping very large dollops of cash over to Monaco via his wife.

    Morals and ethics are rarely cut and dried.

    You may just as well pose the question is morally wrong to give your 1/2 used parking ticket t to someone else

  2. toryradio says:

    So in the question of degree have you worked out how much tax the workers of Boots, Vodafone, Top Shop etc pay to UK PLC? Have we a figure of the amount paid in business rates? To suggest as some do that no contribution is made is a fallacy.

    I guess UK uncut will hate F1 drivers who benefit from huge UK support but base themselves out of reach of the UK tax man?

    It is a simple question though. Is it only immoral if you earn more and then avoid more. If thats the case then its clearly a campaign of envy. If it’s a campaign to stop anyone trying to legally avoid tax I wouldn’t be so cynical.

  3. Jack says:

    I am sure that all tax dodgers can rationalise their tax optimisation strategies on a whole heap of grounds – including moral ones. But then, as they say, rationalisations are better than sex – could you imagine going a whole week without a rationalisation?

  4. Jack says:

    I did not refer to people with ISA's as tax dodgers. ISAs were set up by the Government to encourage people to save – with their tax free status being the sweetener. On this basis people who invest in ISAs are emphatically not tax dodgers.

    For me tax dodgers are people who finagle tax laws that whilst still (often just about) legal are certainly breaking the spirit of the tax regime. They are probably the same people who buy a car for their 18 year old son and then tax it as their own, making him the second driver. This saves a lot of money – but is stretching (and probably breaking) the insurance company rules. I went to a whole morning seminar the other day which was all about how to bend the tax laws in one's own favour. This included ferreting away savings of more than x 000 pounds so that Auntie Flo's care needs would be met by the state instead.

    As I say – it is a matter of principle, scale and context. We have Western Governments huffing and puffing about corruption – but I observe Amercian tourists tipping at the start of a holiday not at the end (which is the British way – where the tip is a reward & thank you. For Americans it is a bribe to say give me special treatment)

    Like I say – rationalisations are great! And I am sure there is still a place in Heaven for Philip Green and his wife.

    The question is though – is what he is doing honourable? It may be legal – but is it fair?

    • toryradio says:

      Now you ask is it fair? It's very dangerous bringing fairness into the debate. Tax isn't fair? I suggest if you stopped supporting organizations that had tried to limit their tax liabilities and stopped talking to individuals who had, you wouldn't talk to many people.

      Of course you could always not open an ISA and let the government take what you would regard as their " fair" share. Don't shop at Boots, at Vodafone, etc etc… But you will.

  5. Jack says:

    I admire your clairvoyant skills – I do indeed shop at Vodafone & Boots – and indeed do have two ISA accounts!

    I would contend that the reason we have such Byzantine tax rules is precisely because HMRC / Govs over the years have struggled to make tax 'fair' whilst supporting their political and economic agendas.

    UKUncut has raised people's awareness of the whole industry of tax avoidance that now exists. And as I said right at the beginning of this debate – it is always a question of scale and context. Sometimes it does seem that the level of scorn and approbation poured on people who cheat benefits is not in proportion to the scale of their cheating – in comparison to the billions of pounds finagled out of the country to Monaco, Belize and other places…. (Two countries picked at random, I would advise you.)

    Genuinely – what is worse – someone on benefits getting paid cash in hand for a day's for a mate and keeping the money or large UK company employing teams of lawyers and accountants to get out of paying huge dollops of tax to the Government? Are they both equally moral / immoral? Or possibly is one of greater concern than the other.

    Go on – you choose – which is the more moral / immoral?

    (Oh – and by the way – the word 'fairness' is a word I hear much bandied about by the coalition govt. – that is why I use it in this context. And Tax can be fair, in my view – without it we certainly would not have had the roads gritted recently. That was fair?)

    • toryradio says:

      Lets keep this simple for you

      Tax avoidance (which you indicate even you participate in with your ISAs) legal = Im fine with that
      Tax evasion – illegal = should feel full for of the law
      Benefit fraud – illegal = should face full force of the law

      If you feel the methods of tax avoidance are wrong…make them illegal. Fairly simple.

      Interesting you raise the point about fairness and roads being gritted. Funny how 100s of houses on the estate I live on had no grit. I seem to remember the vast majority of our council taxgoing to the County. So no, in many cases tax isnt fair. We paid once through taxation and effectively subsidised the gritting of other roads and then bought our own as the state did not feel the need to do it. I can live with that, but no it isn’t fair, just like tax.

  6. Jack says:

    Oh the old evasion / avoidance thing as if something being legal makes it moral – or vice versa. It is illegal to drive at 31mph in a 30mph speed limited zone. I have done it and I bet you have too. Does that make us immoral?

    And you talk as if the law is so cut and dried. If it was so – why do companies employ teams of lawyers and accountants to find the loopholes. And then they look for the loopholes in the loopholes and so it goes on an endless dance to get out of paying tax.

    I would expect that what Philip Green has done is legal in some strict sense of word. But that is not the answer you first posed – you asked about the morals – did you not?

    If it is simply of question legal = moral and illegal = immoral – why did you bother writing the blog post in the first place? Except of course to get across some rather petty point scoring against UKuncut – the blog equivalent of nah nah nah nah nah…

    And you did not answer my question – probably because it is difficult to do so. I am not maligning your intellect here – but to highlight again – morals are slippery things.

    How is that we have a world where people are still living rotten lives, if not dying from the disaster in Bhopal all those years ago because Union Carbide managed to hire some pretty damn fine lawyers who managed to make sure that precious little compensation was paid. Whereas across the world, people are suing microwave manufacturers successfully because the small print did not explicitly say do not put poodles in microwaves to dry them.

    The law is not fair, it is not clean and it certainly is not the arbiter of what is moral or not.

    So let's leave the law out of this.

    So allow me to keep this simple for you this time:

    Does it seem fair or moral to you – in the spirit of everyone paying their reasonable share of taxes – that Philip Green ferrets away several million quid to his wife in Monaco just so that he and his company pay less tax?

    • toryradio says:

      Perhaops if you had ever seen correspondence between HMRC and individuals being hounded for tax they did not owe you would not be so quick and flippent to say leave the law out of this.

      Whether it is legal is of course a key point. Do I think it immoral that someone tries to limit their tax lianility… clearly not. Have I not given that impression already.

      You seem to suggest a little bit of personal tax avoidance (an ISA) is OK, but alot, a la Phil Green is not. That's like saying a little bit of shoplifting is OK, but on a mass scale how very naughty.

      The point I put to you, is if you think the likes of Phil Green or indeed the likes of what Boots may be doing are immoral, then you by frequenting their retail outlets are condoning any perceived immorality.

  7. Jack says:

    I am not saying the leave the law out of ~all~ of this – of course not – but we are talking morality here.

    I do not support the Government claiming tax from people unfairly any more than I support people finagling their tax returns. And for the record – I do not support shop lifting either.

    An ISA is Government policy to encourage people to save. As far as I know – no one in any political party / movement even calls this avoidance let alone evasion! Using this as the basis of your argument does not do you any favours.

    I gave up boycotting things years ago – when I realised that we live in such an interconnected world when so many companies have shares in others – it becomes very very hard to be 'pure'. The ethical investment industry will back me up on that.

    And the UKuncut campaigns are political not financial in any case. A few people gluing their hands to Top Shop windows or refusing to pay their VAT is not going to do much damage to the bottom line of that company.

    And to say that by using vodafone or boots I am condoning all that they do in the world is, quite frankly, facile. That is a reductio ad absurdum argument which I am surprised you have used.

    And to answer your earlier point – yes I do think Philip Green avoiding paying zillions of pounds to the exchequer when the country is so short of cash is a darn sight more immoral than (say) a person getting a few quid extra in their ISA savings interest. Although when you add up all the ISAs in the country – perhaps more money would be found by removing the tax free status of ISAs. I don't know. I really don't know. It is a very hard judgement to make.

    So- as I keep on saying – and you keep on ignoring – morality is not cut and dried. Maybe it is in your universe – but in my one – it is complex, slippery, challenging and thought provoking. Perhaps it would be easier to live in your slick and simple moral universe where things are either Right or Wrong – but I think, sadly, I don't think I can.

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