From my speech yesterday on tax avoidance and evasion:
The heart of this debate is the question of altruism. My feeling is that Members of all parties often feel that people constructing sophisticated avoidance schemes are insufficiently altruistic. There are a wide range of perspectives on that. Rarely in this country do we hear the cry, “All tax is theft”, but at one extreme there is the rather childish hysteria of objectivism, which totally rejects all altruism, and at the other there is the altruism of the state collective.
As it happens, I believe that having the state collective as the basis of all altruism is extremely dangerous. I am a great believer in individual altruism, so I say to the wealthy that they should not only pay their taxes as Parliament intends but be altruistic and engage in philanthropy wherever they can. Let us win the moral high ground for lower taxes so that people can give more voluntarily and demonstrate that voluntary individual altruism is a better basis for society than coercion. I believe that liberty is the proper context for all virtue. There is very little virtue in obedience to an inescapable authority or in simply submitting to the pay-as-you-earn tax system, but there is a great deal of virtue in someone making their fortune and choosing to give it away.
There seems to be a suggestion inherent in the debate that people who are wealthy have in some sense done something wrong. If somebody in business has at every step created value for other people without force or fraud, they are justly wealthy. If people believe that wealth has been obtained by criminal acts of force or fraud, criminal prosecutions should be pursued. If people are wealthy because they have made a just profit and created value for society, they should be applauded. If we are to have a free, just and prosperous society, we must reconcile ourselves to the notion that profit is a social good.
May I suggest that you will never get people feeling altruistic towards paying punitive levels of taxation, particularly when we daily see the level of waste and imprudent spending which occurs across all levels of government. Surely you have to work the other way round? First reduce wasteful and unnecessary government projects and departments, then reduce taxes to flatter and more reasonable levels, then you can ask people to display more altruism.
Always remember that above all, high taxes hurt the poor the most. High taxes cause the price of everything, from fuel to food to services, to increase. I don’t see enough discussion of this fact. Perhaps this is why so many people, especially the poor, continually support higher taxation even though it’s to their detriment.
Government needs to get out of the business of perpetuating poverty.
Peter,
I agree with you on each point. I was not suggesting people should be altruistic about paying tax but that they should be philanthropic apart from the state. I appreciate that high taxes are prejudicial to charitable giving and I am not suggesting anyone should maximise their liability to tax.
I am saying that engaging in sophisticated but lawful tax avoidance helps the other side, making it harder for people like me to argue for lower taxes in the general interest.
Steve
Steve,
Private philanthropy is abhorred by those on the left so unfortunately the lower tax argument is one you will never win on that basis. The only way to win the argument, as far as I can see, is to continually point out, with calculations, just how much the high tax levels are hurting the poor. Keep on berating them about how they must really hate the poor by punishing them with these tax levels. Beat them at their own game.
Fuel duty is a good place to start, since the poor pay a hugely disproportionate amount. Also renewable subsidies, which are very successful at taking from the poor and giving to the rich.
Keep up the good work.
Thanks Peter
Labour has been consistently in favour of cutting VAT. The Conservatives put it up.
“Labour has been consistently in favour of cutting VAT. The Conservatives put it up.” – explain to me why we should pay any attention to someone who is “in favour” of doing something immediately after having 13 years to do it themselves?
Nick Heath, I think you have got your facts confused. Alistair Darling cut VAT from 17.5% to 15% in 2008, then put it up back again. Osborne raised it to 20%. So Labour did cut VAT at one point (and Brown cut it for several small areas still further), but the Coalition definitely did raise it. So VAT was consistently lower under Labour than the Coalition.