Death and taxes are supposed to be the two inevitabilities of life but, for some of the most privileged, the latter appear to be being widely avoided by sneaky investments in tax havens abroad.
As people who work in coffee shops and care homes and call centres find that income tax is taken from their earnings before they receive them, those who have much more capability to pay a significantly greater amount of money are apparently able to avoid paying their fair share thanks to savvy investors and loopholes in the law.
What are the Paradise Papers?
A leak of documents from law and trust firms has been dubbed the Paradise Papers. The documents were sent to German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and studied and reported on around the world.
The Paradise Papers have exposed the many offshore investments of celebrities, sports stars, politicians, companies and even the royal family, leading to accusations of tax avoidance and unethical investments.
What’s the problem with avoiding tax?
Few people relish paying their tax bill but tax plays an important role in society. In the UK, it pays for our healthcare, our schools, our fire services, our local councils and our social security benefits, supporting those who need help for as long as they need it. Well, as long as government policy allows it, at least.
There are a range of different taxes that we pay, from income tax to VAT, paid on many purchases, to inheritance and property taxes. Each goes into a central pot, to be redistributed if not in an entirely socialist way, at least across society to ensure that kids get hot food at lunchtime and we get healthcare when we need it. When I had a breast health scare a few weeks ago, the Breast Clinic saw me within a week, took a biopsy shortly afterwards and have now been able to reassure me that everything is fine. I didn’t pay a penny directly, and I feel proud that the taxes I pay ensure that anyone in that situation should receive a similar service, regardless of their financial circumstances.
That is what tax is paid for. I didn’t have to wait until I could afford a check-up and then pay out for the minor surgery before I could receive reassurance – or, had the results been different, more treatment.
Sure, there is financial waste and our taxes also fund bombing and nuclear weapons and other things we may not want to contribute to. However, the overall picture is one of contributing to society and helping to ensure that people receive the services they need, when they need them.
Who’s done what with whom?
Celebs from Gary Lineker to Prince Charles have been uncovered as having invested in foreign funds, thanks to the Paradise Papers. Whether they deliberately sought out investments that would help them to pay less tax, or whether they left it to their accountants and did not know the details, each must take responsibility for being part of the overall problem of super rich individuals paying sometimes a fraction of the tax that their cleaners do.
One of the problems of unethical investment is demonstrated in Brighthouse, a high street shop that sells goods for the home such as fridges, sofas, televisions and washing machines. What makes it stand out is that it predominantly sells to poorer people who cannot afford these items, offering them credit at an eye-wateringly high rate so that people, while they do end up with the appliance they need, can end up paying three or more times the value of the item by the time their debt is paid off.
The Queen, who received a £6 million pay rise from the taxpayer this year, has, it turns out, been an investor in Brighthouse. The Independent reports that “The Duchy of Lancaster, which manages the private estate of the Queen, invested £10m of her estimated £500m private fortune in the Watford-based firm which was recently forced to pay £14.8m back to its customers after the Financial Conduct Authority (FCA) found it was not operating as a “responsible lender”.”
It has also been revealed that some Brexit campaigners are so UK-focused that they, too, invested overseas. Arron Banks, who donated £millions to the leave campaign, Lord Magan, a former Conservative Party Chairman, the Barclay Brothers, Jacob Rees Mogg, and the husband of Andrea Leadsom (a Conservative Minister) all stand accused of investing elsewhere for their own personal benefit rather than the benefit of the country.
If the Queen, Prince Charles and British politicians cannot see the benefits of investing in the UK and paying UK tax, it is hard to see why celebrities and rich business people from the country would consider it important to contribute to the coffers. And yet those of us who are considerably less privileged pay tax on our earnings without the ability to negotiate or alter the amount that we pay.
And while I feel oddly proud to pay tax when my bill comes around, and I am glad that I can contribute in this way to the society I live in, it is profoundly unfair that those who have considerably more resources can pick and choose how much they want to pay and send their money elsewhere to make that happen.
Photo: Mac Qin/Creative Commons