Sunday, 24 June 2012

A Taxing Question of Ethics?

Here in the UK there has been a huge amount of media coverage around certain show business and sports celebrities and their approve to avoiding paying tax.  Even our Prime Minister has joined in condemning them for doing something that was not actually against the law.

This is not the first time in recent months I have given thought to the very legal practice of tax avoidance, as against the very illegal activity of tax evasion.  

The latter is without doubt wrong, as is the practice of fraudulently claiming benefits, or government financial support.  Both are factual breaches of law, rules or regulations.  

Now before I pursue this thread please allow me to muse over what I believe is a false belief among many of us.   This is that there is exists an us, being the people of the land, and a them, being the government/ tax collectors.   The reality, in my opinion, is some what different.  The them referred to above is also the us referred to above.

What do I mean by this?  Well where does the vast majority of the tax, that so many of us try to avoid paying, actually go?  It goes on; providing care for our sick and vulnerable relatives; keeping our roads fit for purpose for our cars and company vehicles; it goes on supplying our armed forces with the equipment they need to stay safe; it goes on education for our children, I trust you are getting my drift here?

So I suggest that when we seek to play the game of legally avoiding paying taxes, and for many large corporates and wealthy individuals I suspect it is seen as a game, just who are the real winners and losers?  

From where I sit it is the broader "us" who are the losers; either directly or the relatives/friends who are on the front line in the armed forces, waiting a medical treatment that cannot be afforded; that carer in desperate need of a good nights sleep and so on.

The winners?  Well that may be the tax payer who has successfully reduced their tax payment, legally, but are they a winner morally and ethically?  How does such an action fir with their organisation or personal brand?  Could it harm it?  It certainly has some individuals in the last week!  Certainly the specialist lawyers and solicitors win in terms of fees.

Just returning to my reference to fraudulently claiming benefits, this is comparable legally to tax evasion, but both these illegal acts have the same outcome as the outcome of the legal act of tax avoidance.  That outcome is to potential reduce the support available to the services that make all our lives, and the lives of our friends and relatives "better".

So my closing point here is to say, there is nothing actually wrong in avoiding tax through legal methods that successive governments have left open for highly paid accountants and lawyers to "sell" to their clients.  It is, however, up to you as an individual to exercise your mind, reaching your own decision on if it fits with your company or personal ethics.  The choice is yours and yours alone.  

Thank you for reading and remember that with passion and action you can make great things happen.