We are all injoined to ‘Render unto Caesar what is Caesar’s – but do we pay our taxes lovingly, willingly, begrudgingly – or not at all? A recent BBC poll found a difference in attitudes towards tax between the generations. Young people aged 25 to 34 were consistently the least positive towards taxation and people aged 55 to 64 were the most positive.
In an age of austerity, when we are constantly reminded about the difficult balance between raising and spending public money, attitudes to taxation matter profoundly. To many of us, the question might seem a bit arcane – we pay our taxes because we have to. But if you are wealthy enough, apparently, other rules apply. With the right accountant, paying taxes (or not paying taxes) is a matter of choice. And for some, paying tax is to be avoided at all costs.
According to the Evening Standard, of the 400 UK-based individuals who ‘earn’ £10m a year, only 65 paid any income tax at all. The rest use a battery of sophisticated but legal techniques to avoid paying.
Indeed, Tax avoidance is big business. I’ve been reading up on tax avoidance recently – not, in case you ask, so that I can salt away my personal millions in an off-shore bank account – but to understand how it is that some are able to – perfectly legally – dodge paying their taxes.
Take top Premiership footballers like Wayne Rooney and Gareth Barry, who are avoiding millions of pounds in tax – and it’s all legal. They are able to use complex tax avoidance schemes based on their ‘image rights’ that allow them to pay as little as two per cent on the earnings. According to press reports, Rooney has saved almost £600,000 over the past two years by using the tax loophole.
But its big business who are the really big tax dodgers. Have you ever bought CDs or DVDs on-line from the likes of Tesco and Amazon and wondered why they have been shipped from Jersey? A straightforward scheme, helpfully described on Tesco’s own website, to avoid paying VAT. The cost to the Treasury: £140 million a year.
And Britain’s 20 largest corporations between them operate a vast network of over 1,000 offshore companies, potentially allowing the companies and their clients to avoid huge sums in tax.
The Treasury admits to not collecting £42 billion in tax in the latest available figures. But independent analysts estimate the amount of lost tax could be anything up to £100 billion a year.
UK Uncut campaigners have been highlighting some of the ‘worst’ culprits for some months now. And Christian Aid’s Trace the Tax campaign has been calling for greater transparency in the affairs of multinationals and Tax Havens.
But it was nevertheless heartening in July, to hear the Methodist Church getting in on the act. The Methodist Conference called on the UK government and multinational businesses to end tax avoidance schemes which impoverish the vulnerable. It claimed that as public services are being cut, the injustice of tax avoidance is becoming more acute.
According to Paul Morrison, Public Issues Policy Adviser in the Joint (Methodist, Baptist and URC) Public Issues Team “Having a team of expensive lawyers doesn’t absolve you of the moral responsibility to pay a fair level of tax. Taxation shouldn’t be a game of strategy where you win by paying the least. Paying tax is a moral obligation – it is unacceptable to engage in complex financial arrangements in order to wriggle out of paying your fair share.”
Every pound raised in tax equates to a pound more to spend on our schools, heath services, libraries, on care for the elderly, benefits for the unemployed or disabled. If we truly love our neighbour, and want their needs to be met, then surely paying our taxes willingly is an act of love?
This is an edited version of an article which first appeared in Reform Magazine.