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British politicians have shouted in unity on the issue of tax evasion, denouncing it both as an evil and amoral practice. In both 2012 Budget statements, George Osborne moved to stem tax havens found in the British Isles, whilst partially closing and condemning the loopholes used by the nation's accountancy firms, whilst also announcing an additional £77m for the specific purpose of tackling tax evasion.
Meanwhile, the Coalition alongside Labour politicians have been waging a war of words against multilateral firms like Amazon, whose tax affair's are by Westminster standards, questionable. In 2012, Amazon held a turnover of £207 million in the United Kingdom, yet only paid £1.7m to the Treasury, thus prompting Margaret Hodge, chair of the public accounts select committee to accuse them of "ripping off" the British tax payer.
But this public affair, one that our politicians believe to be based in the deepest depths of populism and public anger, begs the question- who is tax evasion harming and what should we do about this practise? Perhaps in a capitalist society a company is completely within their rights to reduce the cost of business, its good business after all. Yet, if it's detrimental to the Treasury, then we should act to curb it?
I believe we should, but not in the way one might expect. We as a business-minded nation must decide whether to ban tax evasion, with full and proper legislation, or openheartedly embrace it. Continuing this debate is not stopping immoral business practice, and such discourse does little to make foreign enterprise believe we are a business-friendly country.
Whilst the ability of firms like Amazon to minimise their costs by not paying tax is clearly in their favour, it's not in their favour to have politicians tarnishing their name by accusing them of immoral practise, when by actual legal standards, they remain with the remits of the law.
A law banning tax evasion, would simplify the tax system. If a firm can't channel its profits, revenue or cash flow into other businesses, then it pays its due. It doesn't need a complex methodology of cash flows to be mean and lean, and neither does the treasury have to employ so many civil servants.
On the other hand, a tax system with acceptance of tax evasion would bring in new businesses, new money and new jobs, but we would have to change how we perceive the ethics of business. Both are bold, but our politicians must be prepared to say unpopular things and change the way we look at taxing our businesses, continuing to close loopholes only encourages accountants to find new ones.
Tackling the dilemma of tax evasion calls for cool heads, not strong morals.