OH what a tangled web we weave, when first we practise to pronounce on other people’s offshore tax arrangements. At least, politicians do. That is a lesson UK Prime Minister David Cameron might have done well to observe when asked last week to comment on Jimmy Carr’s offshore tax affairs, which apparently resulted in the comedian paying 1 per cent income tax on his millions.
Some sage Cameronian flannel might have been advised but, sensing the fury of the Twitter-mob swelling behind him, the Prime Minister remarked that Carr’s tax avoidance was “morally questionable”, and promptly tumbled into the great offshore elephant trap, to be pelted with awkward questions about Tory party donors, ministers and the investments of his own late father.
Cameron has since wisely refused to comment on the offshore investments of Gary Barlow OBE, who – with his masterminding of the Jubilee concert – briefly became the nearest thing we had to a secular saint. But it’s too late now, anyway. The tax debate is up and running amok, pausing every so often to punch a public figure on the way.
I can’t say I feel sorry for Jimmy Carr, who has quickly and shamefacedly terminated his relationship with K2. Indeed, I feel a measure of schadenfreude. I turned on the television recently to hear him saying, as though being especially witty: “What’s the difference between rape and football? Women don’t like football.” That, combined with his mockery of children with Down’s syndrome, is enough to make me think he’s a bit of a creep. It is a statement of our times, though, that tax, and not the rape joke, compels a public apology from Carr: in a recession, money gets much more emotional.
Regardless of what one thinks of his comedy, Carr is a relentless worker, and he seems remarkably astute in financial matters. I doubt very much that he sleepwalked into the K2 scheme, which – whether technically legal or not – teeters on the cusp of dodginess. It is ironic, however, that Cameron’s travails now seem destined to mirror Carr’s. For did not Carr, in a television skit on Barclays, deride that organisation for its “1 per cent tax scam”, thus opening himself up to accusations of hypocrisy? And Cameron, by slating Carr, has now effectively declared open season on that lightly dormant, and highly explosive, topic, the finances of the Conservative Party and its close associates.
The misfortune of both men is to touch on a subject that matters ever more fiercely to the public. For tax goes straight to the heart of that ancient pact, the contract between the individual and the state, and the question of where the boundary should be drawn. Most of us have mixed feelings about it: we appreciate that it is necessary, if Britain is to function as a civilised state which cares for its most vulnerable citizens, yet we also resent excessive intrusions into our freedom to dispose of our money as we see fit.
There are few more inflammatory phrases in the English language than “taxpayers’ money” and, increasingly, the British public feels that it has lost control over where or how that money is spent. One need only consider the horrific, unnecessary expenses of serial government PFI schemes, or the £11.4 billion cost of the abandoned “NHS database”, to feel a queasy lurch in the pit of one’s stomach.
At the same time, there is a feeling abroad that the attentions of the state are highly concentrated on the increasingly “squeezed middle”, the PAYE slaves, the workhorses of the tax system who – like Boxer in Animal Farm – must slog away dutifully paying their maximum whack in order to keep a leaky system awash with money. The effects of policies such as tripling university tuition fees and axing universal child benefit have ensured that Boxer is increasingly denied even a sugar cube, and the taste in his mouth is growing sour.
In this climate, a moderate level of “tax avoidance” is generally seen as canny rather than reprehensible: a way to avoid being made a mug of. When the sums become astronomical, however, and move offshore, it appears as though the very rich have been permitted to float out of the income tax trap entirely, and the middle class is dazzled with resentment at something most people still barely understand.