All the talk about tax avoidance seems very confused to me. The press have named and shamed Jimmy Carr while many other celebrities and sports people have avoided the same direct criticism. Almost everyone appears to criticize the practice but there is also a bit of envy. People appear to think that paying as little tax as possible is the ultimate objective and its fair game to test the edges of the legal system. Jimmy Carr himself is at pains to point out that everything he has done is legal. If there was no cost to me I may be more sympathetic but Mr Carr is taking from all of us.
According to Government figures the total income tax take from 29.1m UK workers is budgeted at £159.8 billion. Jimmy Carr is alleged to have sheltered £3.3m per year and paid as little as 1% income tax on it. According to basic income tax calculators the income tax payable on £3.3m is £1,628,126. Of course Jimmy won’t have got away with all of that and therefore we could assume he saved £1m per year. If we divide the total income tax budget by the number of workers before Jimmy Carr’s action the average tax paid per person is £5,491.41. The extra £1m per year that Jimmy avoids has to be paid by the 29,099,999 remaining. I will have to pay a further 3p per year to make the books balance. This is where all the other little brackets, allowances and duties come into the budget – they are to make the tweaks to make the books balance because the adjustments to the main tax rates are too clunky.
Of course, we then found that over 1000 people used the same K2 fund to shelter £168m per year. If we assume the same kind of return i.e. a tax “saving” of £100m to those lucky investors, then the cost to me per year of just that one fund is £3 per year – that’s a pint of beer. Of course there are approximately 14,000 people in the UK earning more than £1m per year and the Treasury announced in April this year that, of the 200 people earning more than £10m per year in the UK, 10% pays less than 20% tax as opposed to the 50% they should be doing. To their credit approximately three quarters appear to be paying what they ought to be.
While I may disagree with Government policy on occasion, and while I may disagree with how my tax contribution is spent, I would much rather give it to the Government elected in my name than to Mr Carr and hundreds of others like him. We all know what the financial terms are of working and benefiting from this country and we have a moral contract with all the other people in our society to pay our way. If we disagree with the legislation we have the right to challenge through the ballot box or to emigrate to somewhere we prefer. What we can’t do is to enjoy the benefits but opt out of the responsibilities. Laws are not created to give the legal profession an opportunity to demonstrate their linguistic and arguing abilities (and by doing so earn fees) – they are there to protect us and provide us with a fair society. If the efforts spent in finding “not illegal” ways of stealing was applied in finding “not illegal” ways of raping and murdering there would be outrage.
Give me back my 3p per year (backdated if you like) Mr Carr and just concentrate on being a funny comedian