THE TIME HAS COME to challenge the distinction between legal tax avoidance and illegal tax evasion, according to the prime minister.
In his first speech on his tour of India as he seeks to build trade links, David Cameron said businesses have no excuse in avoiding paying their fair share of tax when his government cut corporation tax to 21% in order to make it more competitive, the Guardian reports.
He added there should be a moral obligation placed upon tax avoiders to pay up given difficulties in changing the law quickly enough to keep apace with schemes.
He said: "There has been a problem in this debate in the past in that people have said: 'Well of course there is a difference between tax evasion, which is illegal and should be pursued by the full force of the law, and then there is tax avoidance which is perfectly legal and okay.'
Great emphasis has until now been put on distinguishing between legal tax avoidance and illegal evasion, and tax practitioners are unlikely to welcome Cameron's comments.
"Some would say: 'Well just keep changing the law to make the aggressive avoidance illegal'", the prime minister added. "But with respect to many friends in the accountancy profession it is difficult to do that. So there is a legitimate debate to say very aggressive forms of avoidance are not appropriate, particularly in a country that set a low tax rate it is fair to ask people to pay.
"I think the problem with that is that there are some forms of tax avoidance that have become so aggressive that I think there are moral questions we have to answer about whether we want to encourage or allow that sort of behaviour."
So the Prime Minister is saying there is a moral side to this debate. Actually, it feels like it is now moving beyond debate. The debate has been won (or lost) depending on which side you're on. We are clearly now moving into the action stage. At the end of the day it is Governments that change the law and the major G20 players seem to have at last got it, and seem to have the will and the stage to do something. It is now all about follow through.
Posted by: Richard, 18 Feb 2013 | 11:53
If Dave does not like the offshoring of profits, then maybe he should chat to young Gideon next door who loosened up all the laws on it.
He built the road, we have the right to drive a coach and horses along it.
Posted by: Eleanor Greene, 21 Feb 2013 | 11:31
It is about time that Cameron and all other members of the Cabinet and other millionaires in Parliament opened the tax affairs of themselves, their families and their family trusts to inspection by the rest of us. I am sure with no effort at all we will find extensive examples of what a lot of us will consider to be immoral and in many instances illegal tax avoidance. There will be more than one aggressive tax avoidance scheme amongst those disclosed. However, as we all know, there is one law for them and one law for us.
Posted by: Finian Manson, 21 Feb 2013 | 14:20
If the goverment was competent and HMRC likewise we would have sufficiently clear tax law to make thid debate disappear. I do recall many years ago dealing with and Amercan buiness in the US. I beleive there on has the standard tax calc and "alternative minimum tax" which is calculated on the accounting profit with no adjustments. You then had to pay whichever was the higher of the two figures! I think something akin to that would knock most avoidance on the head if that is what is rally wanted
Posted by: stuart, 28 Feb 2013 | 12:13
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