The Grumpy Old Man

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....The Panama Papers....

....A new (Grumpy) view of Tax affairs through 'the panama papers'....

There's been a lot on the news and in the popular press on the "Panama Papers". What a fart in a colander that all seems to be!

Since the story broke, it seems to have produced a lot of self-righteous pontificating and publishing of so-called tax affairs. I find it absolutely fascinating that both the Scottish National Party leader and the Labour Party leader both published theirs in a great hurry and then very self righteously stirred the pot. Grumpy believes, only so they could score political points when the Conservative Party leader published his, as I must say, was bound to happen.

With no further allusions to colanders, there seems to have been a lot of hot air on a matter that, given half a chance, all taxpayers indulge in to a greater or lesser degree. I am reminded of an old story told of a young lad who had been brought before the juvenile court by a local farmer for scrumping. The tale goes, that the JP on the bench asked for anyone in the court who could honestly say that, in their childhood, they had never, ever scrumped an apple, strawberry, raspberry, gooseberry, pear, plum or the like thereof from a neighbour's garden or fruit farm to hold up their hand. Nobody did, so case dismissed!

The reason for this ditty, is that Grumpy believes that we have all indulged in some tax avoidance some time in our life. Let me be perfectly clear, there is a huge difference between tax avoidance and tax evasion. In simple terms, the nub of the whole Panama Papers controversy is that tax avoidance is perfectly legal, whereas tax evasion is definitely not. The moral being if you have at any time taken any positive steps to reduce your tax liability, then you can hardly complain.

As a simple example, in the 1960s, when a man married, he would claim a "married man's tax allowance" (which was significantly larger than the single man's allowance) for the whole tax year in which he got married. That, of course, resulted in a glut of marriages in March (the last full month of the tax year), and a positive famine of them in April. Since then, the rules have changed significantly and I believe that the married man's allowance is now only claimable from the month in which one gets married. This is an example of tax avoidance or to phrase it differently, tax management, or planning. And how often have we heard these two words used with particular reference to things like inheritance tax? Or to quote other examples much nearer to home, how many people fill their car with petrol or diesel when the excise duty goes up, how many people stock up with cigarettes when the tax on them goes up? In my retail days, I've even seen shop proprietors purchasing vast quantities of tobacco on budget day. And I bet they get sold at the "new tax" price! So given the chance we all do it.

But to get back to the Panama Papers, I get the impression that the whole thing is a load of old sour grapes being stirred up by the opposition in an effort to try and score political points. They must be pretty desperate to bring up the activities of the Conservative Party leader's father. I hate to get biblical but, to have the (apparent) "sins" of the father visited upon the son in such a manner is getting particularly desperate.

This actually reminds me of another little story regarding a sweet little secretary I met in my working life. She was very pleasant to all and sundry, irrespective of how she was approached. (Not in a Mary Poppins sickly sweet way, but very approachable pleasant and businesslike). She told me once that she had been interested in following up her family history and had been horrified to find that her great great grandfather had had a terminal encounter with the gallows for sheep stealing! Once again, excuse the pun, she was actually quite mortified! Which goes to show, one shouldn't be expected to carry on one's shoulders the apparent "sins" of one's forebears.

I would observe that the Labour Party's leader's cant and rhetoric is very "socialist" and smacks of the old slogan of previous Labour parties wanting to "sting the rich". In this matter, he conveniently forgets the basic tax axiom, that you will collect far more with a little bit from everybody than trying to collect it all from one person!

As Grumpy, I could go on and quite some length regarding the two-faced hypocritical approach of the critics of people who have used this legal mechanism to manage their tax affairs. The critics are desperately searching for illegal activities and as the current state of affairs goes, there doesn't seem to be any. (At the moment). Having said that, there are indications that those bastions of Socialist Societies around the world (Russia and China) have leaders who have availed themselves of these offshore accounts and the tax benefits attached thereto. I am sure that if these allegations proved true, then these people are acting out with the terms of their own national legal code, (but then who really knows?)

Finally, I must observe that what is happening is a good example of democracy at work! (Blimey the old bugger's thinking backwards again!). We have to remember that in our democracy, laws are passed establishing a framework. (In this case for payment/collection of tax). Once these laws have established the framework, we, and I mean everybody, looks at it to see how, within that framework they can reduce their tax liability. We even see multinational companies doing this, trading with themselves across international borders in order to reduce their tax bills. What they do at the moment may be morally reprehensible, even questionable, but regrettably, it is legal. What should now happen is that the legislature (Parliament) should analyse these activities (loopholes?) Closing these loopholes with new or amended laws, and thus the process starts all over again. But then, that is democracy at work.