On Monday night, the BBC's 'Panorama' programme featured an hour long investigation into how hundreds of big companies avoid paying their fair share of tax, but are they really the bad guys?
For those who can receive it, this programme is currently on iplayer, but check out the Panoramawebsite.
When the BBC or anyone says companies are not paying their fair share of tax, the first question to ask is: who decides what is a fair share? The late Chris Tame answered 0%. In his view taxation is theft, and he put it as bluntly as that. Almost all Libertarians would agree with this sentiment, and so does Rolling Stone Keith Richard, who writes at page 380 of his autobiography:
“Mick [Jagger] would come and visit me occasionally in Switzerland and talk about 'economic restructuring.' We're sitting around half the time talking about tax lawyers!...All of these tax thieves were snapping at our heels.”
Thieves is the operative word.
In the 1960s and 70s, British rock bands and singer-songwriters conquered the world, literally. There was the Beatles, of course, UFO were big in Japan and later the United States; Bowie, Elton John, Donovan, Al Stewart...the list was seemingly endless. They were big earners for this country, but it wasn't enough for them to sell records, earn foreign exchange and contribute to the building of the British music industry, they had to be taxed to the hilt. This was actually nothing new, Noël Coward, who died in Jamaica in 1973, had long been a tax exile, as was his neighbour Ian Fleming, the creator of 007, James Bond.
Although the minutae of this programme may be new, including the apparent collaboration of the government, most people who read the financial pages even occasionally will be au fait with the concept. Tax evasion is illegal; tax avoidance is not, although many people would like it to be, including the use of Luxembourg, a long time tax haven.
This sort of smear programme will resonate well with ordinary members of the public, especially the low paid and the unemployed, but there is something these people should not forget. Unlike banks - that create money out of thin air - every cent any company big or small earns comes from someone else. As Ayn Rand pointed out:
“...the businessman’s profits are the only protection of her home, her family, her life - and that if the erosion of profits were to force businessmen out of production altogether, the only alternative would be a ‘nonprofit’ industry run by the government...”
The person she is alluding to here is the average American housewife, but the principle is applicable to the British housewife and indeed to the British worker. The point being is these companies - the likes of GlaxoSmithKline - generate enormous wealth for the UK, including employment, simply by being here, and if they can't avoid tax here, they will go somewhere they can. How would that benefit the British economy?
All sorts of nonsense is bandied about in this programme, including by a tax official who likened legalised tax avoidance to legalised murder. Never let it be forgotten that the taxman is the bad guy!
Towards the end of the programme, the rationale of the government's turning a blind eye to tax avoidance is revealed, companies are moving to the UK, although the programme attempts to minimise this.
Earlier it was claimed that £42 billion was collected in corporation tax in the last tax year. Surely, the government should happy with that?