The tax times they are a changing by Ian Hayes

by Heather Dandridge  22-Dec-2016 at 16:25

The (tax) times they are a changin' by Ian Hayes

Recently I attended the launch of "The Responsible Tax Lab", a group of diverse individuals and organisations with an interest in tax. The group included academics, tax advisers, accountants, representatives of corporates and NGOs, public servants and politicians.

Collectively we all had, and have, one common aim - the assertion and affirmation of integrity and fairness as key components in the application and compliance of tax. Knowing what we want in general terms, though, does not guarantee achievement and there is a way to go.

Clearly balance and consensus are essential, which means an understanding of how others feel about the myriad aspects of tax - personal wealth, the benefits culture, clever corporate operational structuring, complex and arcane rules for compliance which seem to defy logic.

Understanding does not mean agreeing nor does it imply automatic acceptance. It is, though a step. Should we accept that a tax evader is universally seen as a criminal, ergo antisocial and fit to be penalised? Or should we go beyond the conventional and ask why he/she has done it?

Criminal motivation in tax has never really been researched since tax crime is determined as a matter of prescribed fact and you are either guilty or not guilty. Most will presume that greed lies at the heart of the crime ignoring other possible causes like an attempt to keep a sinking business afloat when many jobs and families are dependent on it. Similar motivations can be ascribed to tax avoiders who have the additional object of keeping this side of criminality, just!

No groups or sectors should be required to bear comparatively heavier burdens of tax liabilities than any others no matter how tempting it is for legislators to seek the easy target. When tax becomes extortion, the taxed person will seek remedy in avoidance or, more likely, evasion.

We can all wring our hands and complain about the system without offering a solution. One possibility is to ask ourselves what an ideal system would look like. If we can agree on that there is, at least a target. Introducing real concepts of fairness and equity would be a start.

For a tax system to run smoothly, ethical principles must be visible at every level. In understanding how we act and react in our dealings with the State, we need clarity and self-awareness of our moral stance and a clear knowledge of the inherent integrity of the tax system and its administration. The strength of our own tax ethics may well be tested by our reaction to weak, ill-informed or stilted tax systems. Our reaction to a distorted system should be to seek change.

That is what has been happening since the BEPS process was kick started by the G20 et al and we have reached a stage where the blueprints for change have been drawn. We now await all governments adopting them in the same spirit that underlay their creation. In practical terms, it is for us to know our tax ethics and to push legislators when and where we can to continue with and embrace the BEPS process.

That will not be the ultimate solution but it will be a start.
 
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