The Daily Telegraph has a splash this morning on Stephen Hammond, the Transport Minister and Conservative MP for Wimbledon. It transpires that while Mr Hammond has paid the tax he is legally obliged to, he has arranged his affairs to keep the amount he has to pay to a minimum. Sensible fellow. Good for him. Wouldn’t most of us, certainly Daily Telegraph readers, be similarly guided by these two parameters.
So has the Telegraph gone mad, putting this non-story on its front page? I’m afraid not. You see, the Telegraph added that David Cameron has described legal tax havens as “morally wrong”. Meanwhile, in his Budget speech last year, George Osborne said legal but “aggressive” tax avoidance was “morally repugnant”. What does “aggressive” mean? Having a good accountant rather than a dopey one? So this was a story waiting to happen. Poor Mr Hammond.
If the Government wants to reduce tax avoidance it is quite entitled to tighten the rules. Another effective way to proceed would be to have simpler, lower, flatter taxes. Leaving the European Union would make this much easier.
Yet to say that avoiding tax – taking action within the law to limit the amount paid – is “immoral”, is misguided. That view is based on the idea that the state spends our money more morally than we do ourselves. Some rich people might decide to spend their money on gold bath taps and other extravagances. Other rich people who make an effort to minimise their tax make substantial donations to charity. Others plough money back into their businesses to expand and create more jobs. Some might do a combination of all three things.
Mr Hammond might feel that donating his money to the Helplanka charity for deaf and blind children in Sri Lanka is more moral than paying higher tax than he needs to. Or to the Fairbridge youth charity in Birmingham. Or the road safety charity Brake – to which he recently donated £4,000?
Do Mr Cameron and Mr Osborne think Mr Hammond would be wrong?
Why would it be morally superior for yet more money to be wasted by the public sector instead?