What a brilliant idea it must have seemed to spring that incendiary announcement of the UK government’s EU leaflet in order to bury the even more incendiary story about David Cameron’s offshore financial dealings.
They must have positively twinkled in Downing Street over the cleverness of it. Of course, there would be an appalling series of headlines in the Euro-sceptic press, and a chorus of outrage from the Left about using public funds for partisan purposes, blah-blah.But hey, guys, that doesn’t matter because the people who will be furious about the leaflet hate us anyway. Their anger is already factored into the political equation, so no net loss there.
There is a great mass of voters who are not obsessed with the EU question but who are very susceptible to the impression that Cameron is a rich man who may possibly be a hypocrite when he denounces the tax-avoiding wealthy. That suspicion is far more dangerous — or “toxic” as they say in Downing Street — than yet another argument about whether the government is playing fair in the referendum campaign. Yes, it must have looked like the coolest operation imaginable: open up another front of attack on Cameron which would take everybody’s eye off the really serious vulnerability that had been unexpectedly exposed by the Panama revelations. As we see, this didn’t work out well. Perhaps thinking they had succeeded in diverting all the attention to the more harmless story, the Downing Street team allowed the tax avoidance issue to stew. You know the rest.
Now Cameron has two disastrous news strands running at once. And they are both pretty much entirely his own fault. The EU leaflet scandal is a story that writes itself, as we say in the trade. It is a blatant attempt to game the rules by getting in your expensive propaganda before the starting gun is fired, thereby avoiding the spending limits. That’s pretty much all that needs to be said.
The other matter is much bigger and — as they rightly assumed in Downing Street — far more substantive. The Prime Minister and his Chancellor had put themselves in the forefront of the assault on “the rich”. This was the modern Conservative party and nobody, but nobody, was going to outdo them in the fight against the illegitimate advantages of wealth, particularly when that illegitimacy was under the government’s direct control: that is to say, when it involved the canny use of complicated tax arrangements.
Dangerous liberties with vocabulary
If the Tories were to expunge their historic association with privilege and class favouritism, the Left would have to lose its copyright on demonising those with the most money. The Conservatives in office would be seen to persecute the better-off with at least as much vigour as Labour.In fact, this largely took the form of penalising the only slightly better-off (those paying higher rate income tax) in favour of those only slightly worse-off (paying the standard rate of income tax). But more important was a major rhetorical revolution that took dangerous liberties with the vocabulary of what was being discussed. The government began to obscure the difference between tax evasion, which is a crime, and tax avoidance — which is what you do when you invest in an ISA, or engage in what used to be called “financial planning”. Since every grown-up who had ever consulted an accountant or an investment adviser was aware that such arrangements were perfectly normal — and often made available by government itself — this was a rather hard pitch to make. So George Osborne invented a new category of sin called “aggressive tax avoidance”. This was a far nastier, more elaborate form of financial planning only available to those rich enough to afford the most expensive advisers.
The message was meant to go out to the little people with their common-or-garden ISAs and their national savings bonds: we don’t mean you. Some kinds of tax avoidance are OK but other kinds are not, and the difference between them is, well, basically a matter of what kind of person you are — which is for the government to decide. If you are a stinking rich show business celebrity, or a Premier League football player, or a horrid banker, and the amount of tax you would be likely to avoid is really pretty large, then we are out to get you, even if your arrangements are perfectly legal. But if you are a self-employed tradesman or a small-time chancer who sometimes takes his payments in cash, we’ll just quietly look the other way. Not that all of those little off-the-books payments don’t add up to a fairly substantial sum, or that the black economy doesn’t sometimes make a nonsense of the benefit system. But in political terms it is simply too unattractive to be hunting down not-rich people. This is about how things look to the public eye. So there is now a species of financial offence which is not technically criminal but is so morally objectionable that the perpetrator may rightfully be subjected to public exposure and opprobrium without any due process or opportunity to prepare a defence
This position, in which Cameron now finds himself, is precisely the one which he and his Chancellor constructed for the celebrities and the sports personalities and the company executives who find themselves in the headlines after the Panama leak, even though many of them (particularly in the first two categories) will have had no idea of what their financial advisers were getting them into. Before I go on with this, I should make it clear: I have no personal stake in this at all. My investment life consists of an ordinary bank savings account which earns almost no interest and one plain vanilla shares ISA run by a high street bank. What the managers of my private pension fund do with my contributions, I have no idea whatever. In fact, tax laws and codes are now so complex and arcane that it is scarcely possible for any layman to understand what arrangements are being made on his behalf.
That is why accountants and tax lawyers exist: it is their professional responsibility to make one’s finances as “tax efficient” as possible. Indeed, you would probably have a case for official complaint against them if they failed to do so. Such financial managers are certainly expected to provide information on the legal compliance of your arrangements but not to offer advice, or to make any judgment, on their moral status (unless you specifically ask them to do that — in which case they can only give their personal opinion).
It is quite wrong to expect people who handle other people’s investments to wade into the subjective, ambiguous field of what is morally acceptable in the current political climate. In short, something is either against the law or it isn’t. Cameron says, quite rightly, according to expert opinion, that he has done nothing illegal or unusual (although he also promises to “learn the lessons” of this misadventure). Nor, apparently, have most of the people whose private finances have been revealed to the world in the Panama Papers. The general concept of “aggressive tax avoidance” is alarmingly fluid and open to wildly differing interpretations depending upon your ideology and social prejudices.
To talk about the repulsiveness of the super-rich may be fine in heated political debate, but free societies should not create moral “crimes” that can put people beyond the pale when they have done nothing illegal. Cameron may be about to conclude that himself.
— The Telegraph Group Limited, London 2016
Janet Daley is a freelance journalist who previously taught philosophy.
