Monday, 11 April 2016

David Cameron and the Tax Haven of Panama.

I wasn't going to write about this. Frankly, the PM has followed the law to the letter (which is part of the problem, more on that later) and the sustained bluster that has followed has been complete garbage. I frankly didn't want to add to the noise surrounding what, despite what some people who are clearly unfamiliar with the story think, is a non-issue. But as it seems to have no intention of dying down any time soon - thanks in part to Cameron's own woeful handling of the situation - I figured I'd throw in my own two cents on the issue.

After sustained pressure from the aftermath of the Panama papers leak, David Cameron has disclosed that he owned shares in the tax haven fund Blairmore Holdings, which were sold in 2010 for a profit of £19,000. It is important to distinguish here that Cameron was not running any money through this company in order to avoid paying tax, he merely held shares in the company. Now, one can rightly remonstrate with him about fighting to close tax loopholes and reduce tax avoidance whilst having previously owned shares in a company that allowed people to do just that. Frankly, anyone who is involved in any of these schemes, in any capacity, whilst working to ensure that the rest of us have no such luxury is both hypocritical and a scoundrel. But when Cameron sold those shares in 2010, making a somewhat decent profit, all taxes due were paid. So far from actually doing anything illegal - such as tax evasion - he hasn't even partaken in tax avoidance, which is perfectly legal and should be encouraged. Anyone who has ever taken out an ISA, held premium bonds, or stocked up at the duty free on the way back from a holiday has avoided tax. Minimising your tax bill within the confines of the law is a perfectly reasonable and sensible thing to do. I'm reminded of this 1929 quote from Judge Lord Clyde: "No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores."

The irony of this whole charade of course, is the fact that this isn't even new information. The Guardian first reported on Cameron's links to Blairmore Holdings back in 2012. Four years ago. This is probably why the Guardian's main focus of it's Panama papers leak wasn't Cameron, but in fact Vladimir Putin and other world leaders actually involved in dodgy financial practices.

There has since been further revelations about Cameron's inheritance but the idea that people are decrying a mother giving money to her son, rather than applauding it, is ludicrous. I have even seen one Times columnist calling for Inheritance Tax to be 100%. The idea that you can work hard all your life and build a nest-egg for your children so they don't have to worry quite so much about money is a noble one. Having the state confiscate part or all of that should seem abhorrent to anyone.

Cameron is really only guilty of catastrophically mismanaging the situation. He should have been far quicker to volunteer that he had previously had an investment in his father's fund, though I'm inclined to agree that a person's private investments should remain so. Cameron has now taken the unprecedented step of releasing his tax return from the last 6 years. This of course tells us absolutely nothing new as the Prime Minister's salary is a matter of public record, as are any extras received by MPs. But having uncorked this particular genie's bottle, there are now cries for all MPs to disclose their tax returns, and even that of private individuals in business and the media. Why people are seemingly so obsessed with the financial affairs of others is beyond me. Full credit to the first politician who confronts these calls with 'no chance, that's a private matter.'

Now, there is a further point to be made here. The fact that tax avoidance schemes are so prevalent indicates two things. Firstly, that taxes are too high. The accountants and other personnel required to set up these schemes don't come cheap but they're self-evidently worth the money if you're minimising your tax bill by a greater amount. Were taxes lower it would cease to be worth the effort and the expenditure, plus there's a lot to be said for letting people keep a greater sum of their own money.
More pressingly though, it demonstrates that the tax code is clearly too complicated. People exploiting the rules and loopholes to their benefit is not an argument against those people but rather an argument against the Chancellors who concocted the rules in the first place. There would be a much greater sense of fair play and much less resentment against those wealthy enough to employ someone to decipher the pan's labyrinth that is the UK tax code, were taxes simpler and flatter.

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