I’ve found the reaction to Gary Barlow’s failed tax avoidance scheme very interesting. As I understand it, the scheme he (and a few other people too) invested in (apparently to support up-coming musicians) has been ruled not to work as a means to off-set taxes due, so the tax on earned income invested in the scheme becomes payable. He hasn’t actually done anything illegal, unless he now fails to pay his taxes, and yet there have been calls for him to return his OBE.
Have we finally reached the point where trying to find and exploit loopholes in tax laws is considered morally wrong if not illegal? Perhaps it’s the OBE that upsets us – given for raising funds for good causes which would probably have benefitted from his tax revenues. Perhaps it’s just because he’s been found out – should or would we have felt the same outrage if the tax scheme had been ruled as legitimate?
However we look at it, it seems to me that we’re not keen on the idea that someone with lots of money isn’t contributing their fair share to the welfare and benefit of all society. This runs contrary to what our Government believes – that we mustn’t tax our so-called wealth creators too hard or they will run away and take their wealth creation elsewhere.
But wealth creators only benefit society if their wealth is shared around into the economy. The theory of trickle-down economics has collapsed under the pressure of the growing gap between rich and poor since the advent of Thatcherism. Rich people’s money isn’t circulated in the economy – it is hidden away in off-shore, tax-free investments. If we want the rich to contribute to the well-being of all, it’s going to be through taxes.
We seem to have the same attitude when it comes to companies too. Even our politicians are up in arms at the idea that the American pharmaceutical Pfizer wants to take over the British Astra Zeneca because they suspect the deal is all about stripping the assets from the British company and then benefitting from the low tax rate in the UK. In other words, using Britain as a tax haven. But it is the same politicians who have created the environment to make this possible. Attracting companies from overseas is one thing, but like with individual wealth creators, the wealth that is created needs to come into the economy.
So what do we really want? Do we create the conditions for individuals and corporations to pursue wealth for their own benefit (after all they have worked for it) and hope that we might gather up some crumbs from the table? Or do we want a system which works in the best interests of the whole of society, where each (individual and corporation) contributes to the good of all according to their means? The public reaction to both these stories suggests we want everyone to contribute to a better society. Let’s do what we can to make sure these principles are applied by those in power making our legislations, and think about these principles when we vote on Thursday.
Finally, thinking about contributing according to means and progressive taxation, I’m going to leave you to look up a story Jesus told about the offerings of the rich compared with a poor widow in Mark 12 v 41-44.