Tax avoidance or tax aversion? Why we need a vision

The investigation into the K2 tax avoidance scheme prompted understandable outrage. But rather than questionning the morality of the individuals involved, it would be more useful to ask why people try to pay less tax in the first place. Less about individual tax avoidance, more about our society-wide tax aversion.

It’s a serious issue – apparently costing the UK £69.9 billion per year – and it’s worth remembering it isn’t confined to the super wealthy (and let’s also remember not all rich people avoid tax). While Jimmy Carr may have admitted his terrible error of judgment, the dilemma he faced (in his case “I met with a financial advisor and he said to me ‘Do you want to pay less tax? It’s totally legal’. I said ‘Yes’.”) is the same one that leads many others to take cash payments, or to pay dividends instead of larger PAYE salaries, or to invest money off-shore. Let’s face it – rich or poor, we don’t seem to like paying tax.

Why not? While greed certainly plays a part for some, the underlying issue is that we don’t consider tax to be the best use of our income. We don’t tend to think giving the government £1,000 to spend for us will give us anywhere near the same benefit as spending it ourselves – whether our motives are philanthropic or otherwise. This is a problem.

The solution? It comes down to having a vision for society. A vision we can all (or mostly) buy into, and see purpose, value and compelling reasons to support. Right now I don’t believe we have that vision. When we do, then we could consider what we need to make that society happen. We could decide which services to provide commercially, and which might be better provided as public services – and these we would fund by pooling our resources. So what would these public services be? How should we pay? And should some people pay more than others?

Agreeing on the answers to these questions is always going to be difficult, but it is impossible without a vision to guide us. Getting that vision is a process with which everyone has the capacity to engage, but only if we all have access to the better conversations – and better questions. Making those conversations accessible to all may seem a tough challenge, but well worth the prize of clearer direction and greater social cohesion.

Keep the ideas, and the conversations, flowing. We can do it.

Matt Chocqueel-Mangan

Digital producer, agile practitioner, scrum master. Pursuing sustainable democracy and social change.

6 Comments

  1. Tony Cook   •  

    An interesting point with many areas for debate. As a company owner my taxation is nearly 60% with NI payments included so where I can save in taxation I will. Personally I do not feel my taxes are spent how I would like and true benefit received. Public services, local government cuts, schooling, NHS and Welfare are all areas for discussion. The only challenge really is where to start.
    The government clamped down on single person Ltd companies with IR35 but they seem very reluctant to aggressively attack the building trade with all the cash work that is involved in that industry and subsequent losses in taxation.
    Where to start? Tough one!

  2. Red Heron   •  

    i think there is a quality of difference between the tax avoidance schemes/robbery and the person who takes cash in hand. Many who take cash in hand often do it in order to subsidise their meagre wages or benefits. It is a means to survival. In some ways they have been scorned by society and left without a way of coping. For the super rich who use loopholes to avoid paying tax, or deliberately break the law to avoid paying tax, they believe they are above society. That in fact laws do not apply to them….and given a current lack of action on this matter involving the super rich – no wonder they think that. I do not feel that the two are equal moral choices, and in fact an issue of the powerful, and the powerless doing something illegal but for different reasons – one person does it to survive in a society that has spurned them, the other to spurn a society whose rules they feel do not apply.

  3. Steve McAdam   •  

    The flat 50% rate for rich people is nuts. The govt. needs to get real about about this.

    If I had the income of a successful comedian, say £2M/year, I’d seriously grudge paying over £1M of it in tax. Why should I pay so much more tax than 500 people on £20k/Year?

    Of course wealthy people try to dodge it. I WOULD! Sadly I can’t afford a tax lawyer.

    For people on £1M+, if we lowered the tax rate from 50% down to 10% for that upper part of their income (perhaps on a sliding scale), we would take away the incentive for them to dodge it.

    Most rich people paying some tax is better than most rich, smart people paying almost no tax.

  4. gregg   •  

    so…what is the problem (exactly) that we’re trying to solve here? perhaps a distinction is needed between a) debating / trying to make people agree on the whys & wherefores of the taxation / redistribution of wealth debate…and b) just trying to raise as much cash as possible (via taxation.)
    the former is a multi-layered debate with probably no easy / simplistic answer. the latter is a practical issue which bright minds can solve.
    time to decide

  5. Stewart   •  

    “The Govt using my money does not benefit me as much as when I spend it myself”. Short-sighted, baseless, and incredibly selfish. Yes, we all have a part of us that would rather spend our money on the things we individually want, but such a system would even further marginalise huge sections of society. These taxes directly fund public education, public health, transportation, the military, human service safety nets, the regulation of important spheres such as the environment etc.
    Do we trust our govts to use public money effectively? Clearly not, and sometimes for good reason. But removing ourselves from the system is vile and directly severely harms (and sometimes kills) other people.
    On the other side of the coin, as a U.S. resident, my tax dollars have directly funded the death of innocent people in the Middle East.
    Is it feasible to be able to choose where your tax pounds go to from a pool of important services? Can we even all agree which services are important, or even vital?
    No-one enjoys paying tax, but no-one enjoys going to see the dentist either. Quite frankly it’s sad to think we have people among us who will do anything to avoid paying their share.

Leave a Reply

Your email address will not be published. Required fields are marked *

*