In the coming days, you will hear this response from the defenders of the status quo: “What the Paradise Papers have exposed is legal, so what is the problem?” They have an agenda, of course. They want to demonise the very concept of taxation because they want to roll back the state and construct a free-market “utopia” which, in practical terms, would be dystopian for the vast majority.
Let’s unpick this argument. Using sophisticated loopholes to avoid tax on an industrial scale is a choice, a conscious decision, that an individual or business has to take. Many choose not to. Formula One driver Lewis Hamilton was born safely in Lister Hospital in Stevenage, courtesy of the state-funded National Health Service. He was then educated by the state at great expense. Throughout his life, he has used state-funded roads and rail tracks, has been protected by the state’s police forces and fire brigades, and no doubt employed the services of accountants who used their state-funded university degrees to locate loopholes in the tax system for him. He has repaid his gratitude to his country by choosing to avoid paying European taxes on his £16.5 million (Dh79.44 million) jet.
Those who crow about the “legality” of tax avoidance are, of course, being disingenuous. The United Kingdom, for instance, has not passed laws permitting certain schemes in the same way that it has, for example, allowed the legal sale of liquor. This level of tax avoidance requires an encyclopaedic knowledge of tax and the law, and extraordinary amounts of cunning, pedantry and sophistication. You are, after all, trying to find loopholes and grey areas that lawmakers did not intend; you are going against the spirit, if not the letter, of the law. This is why you need extraordinarily expensive accountants, who the vast majority of individuals and businesses cannot afford to use.
Most workers are on what is called pay-as-you-earn tax (Paye), and cannot deviously exploit loopholes to slash their tax deductions. Small businesses will find the Revenue and Customs officials knocking on their door pretty promptly if they mess up their tax forms, and are being driven out of business by tax-avoiding corporate giants. No, this form of tax avoidance is the preserve of a super-rich who can afford to subvert the law’s intentions. And without state-funded infrastructure, education, health care, research, in-work benefits, law and order, or a banking system saved at enormous cost by the state, you name it, no individual or business can make money. Tax avoiders thrive at the expense of a state they refuse to adequately contribute to.
As it so happens, two law professors (in case of the F1 champion) have reportedly described Hamilton’s scheme as potentially “abusive”, with one suggesting that existing laws are not being enforced. This, I feel, gets to the nub of the issue. The state it seems is punitive when it comes to, say, benefit fraudsters or thousands of young people criminalised for arbitrarily banned drugs, but uses kid gloves when it comes to our shameless uber-wealthy elite. The colossally destructive behaviour of the rich is permitted; the infractions of the poor are deemed intolerable.
The Paradise Papers underline, once again, the sheer rottenness, injustice, immorality and bankruptcy of the globe’s social order. One rule for those at the top, another for everyone else. Relentless austerity for hundreds of millions across the West, justified on the basis of “there is no money”, while a grotesquely rich elite hoard their wealth away in tax havens. We can’t tinker with this system, it has to be replaced. A democratic revolution is surely coming in the western world, and this shameless, decadent elite only have themselves to blame.
— Guardian News & Media Ltd
Owen Jones is a senior journalist and columnist.
