Transparently Unclear

Possibly I am alone in this; but I have absolutely no interest in the content of David Cameron’s tax return, nor George Osborne’s, nor Jeremy Corbyn’s – and certainly not the returns of any Scottish MPs.

While that might be because I see so many tax returns in my profession that the thought of going out of my way to review one I don’t have to is not that appealing, my instinct is that I see it as an intrusion into someone else’s privacy – financial voyeurism. I do not want to share my own tax return with even my close friends – not because I am afraid they will see how much I earn, but more because it is my private document and is nobody else’s business.

So – do I feel sorry for David Cameron? No, not really.

Just Deserts

What has David Cameron actually done wrong?
It may turn out that, after a thorough investigation by HMRC, there has been some tax evasion wrapped up within the structure to which he has been party. I would be astonished if this was the case.

Note that when he had income from the fund he disclosed it on his tax return and paid tax on it.  Two facts leap out here. First if it was tax evasion he was not being very clever about it by disclosing the existence of the fund to HMRC (and indeed HMRC have been somewhat asleep on the job not to notice that the Prime Minister of Great Britain is receiving funds from a Panamanian trust and not satisfy themselves that it is above board!). Second – he paid tax on the income. Paying UK tax on income received is generally not a sign of tax evasion. It could not even be classed as tax avoidance – he didn’t avoid it!

Now there are a number of reasons for investing via a Panamanian entity. Some of those are illicit. Some are not.

However one of the reasons for using Panama to invest, rather than any other tax haven, is to take advantage of its secrecy laws. If one was going to illicitly use Panama for THAT purpose however, the one thing you do NOT do is declare its existence on the tax return. The whole point is that no-one but you knows that you have invested in it.
So the strong likelihood is that David Cameron has done absolutely nothing at all wrong here.
However, Panama IS a tax haven country and it is (forgive me for stating the obvious) “offshore”.

And David Cameron is, by any of the criteria that have been used over the last few years, “wealthy”.

In my opinion because of the “tax avoidance” propaganda that has been put out over the last few years by all politicians (including himself) to constantly explain why the country is in such a poor state, having the words “offshore”, “tax haven” and “wealthy” associated with you is more than sufficient to make you guilty of… something.

So we must see the Prime Minister’s tax return and we should ignore the fact that if this Panamanian entity were being used by Mr Cameron for illicit purposes then the one place that you would not expect to see any reference to it at all is his tax return.

The fact is that, if you are evading tax, it generally does not appear on your tax return.

So in effect what has forced the Prime Minister’s hand is a smear campaign. But it is one that he himself has helped to fuel – so my sympathy is somewhat limited.

There are, of course, other arguments as to why certain public servants’ tax returns should be made available to the general public – most notably that you are able to see whether they have income from sources that could signal a conflict with their day to day work.

Again – two points.

First that has always been the case and would be no more a reason for making the tax return public now than it was in January when we were told, unequivocally, that the Prime Minister had no intention at all of publishing his tax return.

Second, and I am speculating here, surely whoever might be influencing the politician does not pay them while they are a politician? I had always believed that, and possibly I am much too cynical, the reward was forthcoming AFTER the person left office.

How often do we see a Minister tasked with assigning an extremely large contract to a private sector company subsequently find employment at the successful company as a “consultant”?
Now I do not want to be accused of instigating my own “smear” tactic. There are valid reasons why that Minister might end up at that company – not least that clearly they have the inside knowledge of the machinations of the Government department that the company is dealing with and will be able to provide additional insight.

However, my point is that, had a politician been “influenced” in awarding the contract (or in a vote) by any particular company then his tax return while he was a Minister would show no sign of this.
Further, I am certain that, if Ministers know that their tax returns will be publicly available, then trustees of offshore trusts would be told not to make any distributions to them while they are in office, and likewise any benefits from those they might be influenced by would not be received until after they had left that office. So neither would appear on the tax returns.
Where we will end up is having tax returns publicly available that show exactly what each Minister wants us to see – and we will still be none the wiser.

What about transparency?

From the foregoing it sounds as though I am implying that there should not be greater transparency where politicians are concerned. That is not the case – I believe that there should be far greater transparency – but I have serious doubts that the tax return is the document to achieve this.

The tax return is a personal document between the individual and HMRC that establishes that person’s liability to both income and capital gains tax for a given year.

It is NOT a declaration of interests.

Thus you can be a beneficiary of an offshore trust with worth many millions of pounds and yet legitimately nothing may show on your tax return.
The tax return does not give the information that the media and general public seem to think it does.

In essence what we need is a well considered and thought through solution to the issue.
That might be, for example, for an independent body to sit and assess what information should be made publicly available by Ministers, what Ministers should have to declare and for a further non-political independent body to be set up to investigate those disclosures. That organisation also needs to have real teeth, such that, if a particular Minister is found to have not disclosed something the penalties are extremely severe.

What we are getting is a knee jerk reaction of various politicians showing us their tax returns which they know show nothing of interest and a misinformed media drawing incorrect conclusions from what they are seeing.  

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