Tuesday, 24 July 2012

Enough of the moralising - people avoid taxes because they are too high.


There is no point at which paying or not paying taxes is a matter of morals. There may be some ethical questions involved – complying with the law, for example – but tax is not a moral issue. Here is the legal bit from Lord Clyde in the 1929 case of Ayrshire v Inland Revenue:

"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"

See folks even lawyers and judge think taxes are about rules not morals. So what frothing demon has possessed the Treasury Minister, David Gauke:

"When a tradesman says, 'Here's a 10%, a 20% discount on your bill if you pay me cash in hand' that is facilitating the hidden economy. That's as big a problem in terms of loss to the Exchequer as tax avoidance. Revenue is not being paid as it should be paid."

Is it? Can Mr Gauke be so sure that receiving cash means avoiding VAT or non-declaration of income? I suspect that he cannot and, more to the point, so what? The rules about taxes are pretty simple – if they are low, easily understood and hard to dodge people pay them. Under every other system people try to avoid them.

More to the point, the reason for the tradesman offering discount for cash isn’t known to me. The plumber or electrician doesn’t say “because that means I won’t put it through the books” or “otherwise you’ll have to pay VAT” – he just says; “I’d prefer cash, guv!”

And what about the sweet shop or the bakers where I always pay cash – “that’ll be £3.47 thanks”, I’m going to pay that by cheque!

Or better still there’s the informal time-banking approach – I do your website/books/leaflets and you fix my boiler. No cash changes hand but everybody receives the service. Perhaps Mr Gauke might like to think about taxing barter.

I am mighty fed up with this newly found penchant for wagging the moral finger – I fear that it is the sign of a government that has rather lost its way. One day we hear ministers threatening to name and same celebrities (however defined) for some presumed moral infraction rather than any actual tax dodging. And the next the idiot minister is telling us we are moral lepers for paying the ironing lady in cash.

All I can say is that I intend to go on paying in cash where the supplier wants cash and especially where I get a lower price. And if that means the government gets a little less income to waste on stupid nuclear missiles, dozens of “special advisors” and a host of grand projects designed merely to make some minister look good then so much the better.


1 comment:

Barman said...

Good post - you echo my own thoughts yesterday...

If you take 50% of somebodies hard-earned at source, then charge them 20% of the remainder every time they try to buy something it is inevitable that people will try to avoid paying it.

Especially if you piss what you have taken away on projects that nobody wants and nobody has ever voted (or had a chance to vote) for.