By Sam Tomlin
Nearly a year ago I became self-employed. In my relatively young life, the jobs I had before had always been part of an organisation where HR teams paid my tax for me, so my pay-cheque would come in, PAYE and NI taken off already. This year, I have been invoicing for my time and receiving payments pre-tax straight into my bank account. Immediately when this happens, I put a set amount aside for tax.
Recently I received my tax-return reminder from HMRC that I needed to start the admittedly arduous process of declaring my earnings and paying my tax, which I have begun (but not finished yet). As I began to go through my records, bank accounts and invoices the Jimmy Carr tax-avoidance stories began to break, re-igniting debates around tax-avoidance. In my mind both Cameron and Miliband were right in their approaches to the situation. Miliband focussed on the fact that loopholes should not exist in the first place that people can exploit and clearly this needs to happen. However, strangely for a self-confessed socialist I found myself agreeing more with Cameron when he suggested it was ‘morally wrong’ to avoid tax even if it is legal.
I am aware of the difficulty of someone like Cameron making a statement like this with potentially many friends on such avoidance schemes, but my mind was immediately returned to my own situation. I have certainly benefitted from my family’s situation, receiving a fantastic education and an inheritance when my grandparents died (for which inherence tax was paid). In my mind this necessitates my contribution back to society – I have benefitted through no doing of my own and therefore basic fairness suggests I should give back a percentage of what I earn to create greater equality of opportunity. For those who have not received the benefits I did while growing up and still complain about tax, I will refer to Lord Paul Myners, formerly chief of the Guardian and RBS who claimed at a recent event I was at, that while coming from a difficult background and understanding the importance of hard work in where he now was, he also understood the vastly important role luck played in his success, and this was precisely the reason of his socialism. ‘Not everyone had the luck I had’ – therefore creating equality of opportunity through a fair tax system was paramount.
Fraser Nelson, writing in the Telegraph the other day went as far nearly to excuse tax avoidance: ‘Britain now has a tax code so monstrously complex that no one single person can understand more than a fraction of it. Avoiding tax was always possible in Britain, but for many years the rich did not really do so, and paid up in full. The mistake was to push the tax rate to the point where, the world over, widespread avoidance is the inevitable result.’ Inevitable maybe, but rather than blaming the tax system, why not more anger at the sense of inevitability? Indeed, he plunges the knife deeper, quoting one of my heroes, the Edge from U2 who famously said, “Of course we want to be tax-efficient – who doesn’t?”
Well, I’m afraid I disagree with both my musical hero and Fraser Nelson – I am an example of someone who not only earns a fraction of what the mega-rich earn (my current salary, I have worked out, is just more than a tenth of the average tax avoided by one of the 1,000 on the K2 scheme), but who actually takes joy in signing off my required rate of tax. This is because I see myself primarily not as an individual, loosely attached to a society which wants to take from me what is rightfully mine, but someone who is intrinsically linked to not only those I know and love, but those I see walking down the street whom I have never spoken to. My taxes are an expression of my relational nature as a human being – an acknowledgement that I am alive primarily not for my own benefit, but for the benefit of others. Striving to make the world a better place, especially for those who are oppressed and cannot support themselves actually provides the happiness and joy which people ironically strive for by hoarding things for themselves. This is true at a local and personal level, but I also think it should be true on a national level, and paying tax should be part of this.
Thatcher may have won the cultural war, now embedded as part of our social consciousness, by insisting there is no such thing as society and looking out for ourselves and those in our small circle is the most important thing we can do, but I beg to differ. Certainly, part of being human is about this – caring for the ones we love directly is important for a healthy society. But if we forget we are part of a great collective whole, that of humanity, we lose part of our humanity.
This does not mean we should shirk the responsibility of scrutinising where our tax goes and evidently there is a lot of waste which can be cleared up. But let’s not kid ourselves that those who avoid tax do so because of such reasons. The more we equate tax-avoidance simply with selfishness, the more advanced and justice-based a society we will become. It shouldn’t be legal; currently it is. But because something is legal doesn’t necessarily mean it is moral. Interestingly, I have heard no suggestion from Mr Carr that he intends to pay the tax that he has avoided over however long he was part of the K2 scheme, which in my view suggests he is still rather missing the point.