The Paradise Papers; The biggest story about nothing for years

Those bastions of decency the Guardian and the BBC are among 96 news outlets that have been given access to papers leaked by a German newspaper who will not reveal its sources. They are being called The Paradise Papers and relate to a huge corporate service provider and law firm called Appleby and millions of files leaked from it relating to financial investment. Many Rich And Famous people headed by the Queen, through the Duchy of Lancaster and Prince Charles through the Duchy of Cornwall and including actors, famous companies, the Tory donor Lord Ashcroft, U2 frontman Bono, Labour councils and many thousands more have had information leaked about their investments.

The two organisations have come under criticism from some for allegedly briefing Labour figures before the Inland Revenue, as Corbyn seemed to be aware of tax issues around private aeroplanes and the Isle of Man considerably earlier than anyone else. Both organisations deny this. The BBC did at least state front and centre that there was no evidence of illegality in what the Queen or almost all the others had done and that caveat could probably also be found if you searched diligently enough through the Guardian (a Hellish task I agree). Both, however, felt it be lead news even though in America a nutcase had murdered at least 26 people and in the UK a father had murdered his adopted child.

The facts the left will not tell you

Tax is a favoured issue of Socialist and Liberal outlets. They delight in painting the rich and businesses as the wicked hiding their cash, avoiding paying their due. They want to raise the tax on all of them. It is an easy sell to ordinary struggling people, it is also envious and destructive, not least to the poor who would suffer the most if these people upped sticks and left. The wealthiest 10% in this country pay about 60% of the total income tax and national insurance. When those two taxes plus company tax and business rates on companies which many wealthy people began, run and own, are added together, they account for well over half of the total income for any UK government (the rest comes from VAT, fuel duty, stamp duty, excise duty etc).

That 10 % of people can leave the country, many already have done and companies can choose where to base themselves. It is the main reason why high taxation always leads to lower revenues and vice versa.

The real issue with tax is the difference between tax avoidance (legal) and tax evasion (illegal). Those laws are set by governments, not companies or individuals. UK tax laws are incredibly complex and enforced by HMRC - AKA the Taxman. An organisation with an appalling reputation for bullying the little people, caving to the multinationals and imposing their own rules often retrospectively to suit themselves. This means that people with money can hire tax experts and challenge HMRC; the rest of us can't.

Tax law is the responsibility of Governments

Therefore, these things are the responsibility of Governments, not individuals. Anyone who has started a company in the UK knows that one of the first things to establish is the Articles of Association. These are the legal roadmaps for anyone directing companies. Those Articles invariably and correctly put making a profit as a high priority. As soon as possible a company needs to make a profit to survive. Those profits provide the tax the Governments use to provide services. Once profits are taxed the individual or company can invest the remaining money anywhere that it is legal to do so - because it's their own money! It seems harsh to me that those already taxed investments are then taxed again when they make any return, (minimised anyway since the banks pay virtually no interest to savers).

Everybody, not just the rich and famous, tries to maximise returns on those investments.

I have just listened to the Labour equalities spokesperson, Dawn Butler, give an interview on Radio 5 stating that avoiding tax is abhorrent as it means there is less money for Government to spend. What she is saying is that anyone who does not pay more of their own money to the Government that is required by law is morally wrong. What tut! In the same interview, it emerged that both Sefton and Warrington Labour Councils have saved millions in tax avoidance, and she could not say if that money will be paid back. Awkward? I wonder if Ms Butler has written a cheque for say £10,000 of extra money from her own bank account for the Government to spend as it wishes?

No! Is that abhorrent of her? Think of the extra services the Government could have provided.

The way forward

Governments know there is a balance. If they make tax too punitive people and companies leave for more competitive regimes, that is the real reason tax avoidance does not become tax evasion overnight. The way forward is for governments to make tax rules as simple as possible and keep rates as low as possible. That will encourage people and companies to work here, make as much profit as possible and make it pointless to hire accountants and consultants to avoid tax. Evading tax is wrong, there are severe punishments for people who do it. Avoiding tax is perfectly legal and trying to pontificate on what is or is not moral is a game for saints or, more often by far, for fools!