'Academic' Intelligence: On Tax Avoidance

For the benefit of the doubt, I would like to focus on the subtle differences and similarities between tax avoidance and tax evasion.

Namely:

Similarities:                                           Differences:

à You pay less tax through both          à Tax evasion is illegal, tax avoidance is not

Another arguable similarity that has recently been introduced and stressed upon on a myriad of occasions since its birth is that both of the above are morally wrong.

The above proposition presents us legal professionals, and most sensible people, one would hope, with quite the moral dilemma:

If tax avoidance is immoral but nevertheless legal, does that in turn, mean that our laws have become immoral?

If you look at the above from a purely logical point of view, you will most probably reach a very terrifying conclusion indeed.

However, if you put the above in its current economic context you are bound to encounter some contradiction.

Namely, it is quite peculiar that this hostility towards tax avoidance only appeared with the emergence of the so- called ‘credit- crunch’ era in the late 2007.

There are several reasons for the above phenomenon which, I firmly believe, need to be explored in turn:

• The Blame- Culture

Even though the above has always been a human trait, it has been severely exacerbated in recent years. Having no- one to blame in a time of crisis can prove to be quite enervating to the population. Ergo, to prevent a coup d’état, it would make a lot of sense for a government to shift the blame on to those who have managed to find a way out of the economic ‘apocalypse’.

• Focus- shifting

Until recently, the focus of everyone’s attention were the recent cuts to public spending proposed by the government and the new austerity measures along with the fiscal cliff, etc. Shifting the focus to another topic- namely, how little tax Starbucks, Amazon, etc are currently paying, gives the government both space to breathe and more time to implement the proposed cuts/ policies.

• The ‘We-Are-All-In-It-Together’ Theory

Most G20 governments seem to be of the opinion that the private and the public sector must co- operate at all times and at all cost and fight off the ‘credit- crunch’ together. Governments must, however, be reminded that they have themselves, through capitalism, shaped the private sector as an entity which will always pursue profit and revenue rather than world peace.

• The Masquerade Ball

Masks come cheap nowadays; this is why, it would seem, it is a lot more fun and challenging to buy a mask and put it over someone else’s face. There simply has to be a ‘bad guy’ in today’s economic downturn. It would seem that, at times, governments want to convince people that they are doing everything in their power to mend the current situation but the large and rather gluttonous and immoral corporations are hampering their every effort.

In the light of the above, a general conclusion can be drawn.

If the governments of the day do not approve of tax avoidance, then they can simply close off any loopholes that allow it and, thus, make it illegal.

Another alternative is for governments to revise the rate of the corporation tax in their countries so that they can compete with the one in lower- countries and tax heavens.

Alas, neither of the above seems to be in contemplation at this present time.

Governments must be advised, however, that complaining, blaming and biting with no teeth whilst attacking the morality of a corporation’s actions will not change anything.

Capitalism is anything but moral, dear governments of the world; and since you gave birth to it, it is your responsibility to deal with its current teenage unruliness.