(JollofNews)- Successive governments have left us with a tax regime so complex it verges on a chaotic system. Which is exactly why we should be suspicious of politicians who talk imprecisely about tax avoidance and tax evasion – or who muddle the two terms, or use them interchangeably.
Tax avoidance and tax evasion is what we do when we fill in tax returns and carefully recall the legitimate expenses with which to reduce taxable profits. Tax avoidance and tax evasion is illegal, and it’s immoral. Most people expect, and are not fully prepared, to pay their due taxes. Not wanting to pay more tax than that isn’t something to be proud of. It’s dodgy or morally questionable or anti-social. It’s naturally evil.
The word beautifully describes the nonsensical, Alice-in-Wonderland world where people who seek legitimately to minimize tax end up being impugned as selfish, criminal, unpatriotic and the rest. Tax avoidance and tax evasion is not something that just the wealthy and the politicians can take advantage of.
Whilst there are some big names that have squirreled away piles of cash in offshore bank accounts and taken dodgy tax avoidance and tax evasion procedures, there are also people like poor or middle-income people who have paid as much as they can into their pension fund to secure a reasonable standard of living (i.e., not on the breadline) once they have retired.
But the biggest irony is that those doing the impugning are the very people who created our tax system with its endless layering of tax rates and allowances, and the fiendishly complex interrelation of the two: tax evasion and tax avoidance.
The tax system now works in such a way as to produce numerous cliff edges where, for instance, a tiny increase in earnings results in a huge jump in tax. In several cases the extra money earned would result in marginal tax rates of well over any amount.
Who would not act to try to avoid these and other tax traps: there is no “spirit of the law” unless you know exactly what was inside each lawmaker’s head at the time they voted for a law. There are laws made by National Assembly. If the laws made by National Assembly have more holes than a teabag then that is the fault of National Assembly, and there is no point in them whining about it. Either something is allowed or it isn’t.
What next? How about we have “aggressive law avoidance” for people we don’t like, doing things we don’t like, but who are not breaking the law? It is up to the government to write tax legislation in such a way that it cannot be exploited through so called loopholes.
The law on taxation is too complicated with far too many concessions which leads to exploitative schemes which then must be decided in court.
Aggressive tax avoidance sticks in the public craw as much as the drunk driver who kills someone then gets off on a technicality or the politician maximizing expenses. The public has a very good strong sense of what is right and wrong.
The answer is to significantly cut public spending and significantly cut the rate of integral taxation. There would then be little incentive for taxpayers to put so much effort into avoidance, and practically none to encourage taxpayers to take the risks of evasion! But of course, the politicians do not and will not do it, because their profligacy and corruption has no limits.