Futurology blog: what’s the next trend that’ll disrupt our world, financially, socially or just pointlessly?

Wednesday, 3 September 2008

Tax avoidance for all

When I discovered that the UK Inland Revenue leases their headquarters from a Bermuda-registered company, something clicked. (You'd hope something would snap for Prime Minister Brown, but it won't and that's the thing.)

It seems that tax avoidance has become so sophisticated that it's simply not worth the government's while to try to stop it in any meaningful way. They know they're losing billions, but they'd have to spend millions on investigations and still have the corporations run rings around them.

To justify their existence, Inland Revenue has resorted to harassing the middle classes. This doesn't pay either. In three separate and time-consuming attacks on my wife and myself, they have gouged back a grand total of £27.50 at who knows what cost to them.

OK, they still keep the middle classes toeing the line – we simply can't afford £200-an-hour accountants. But when a clever tax accountant and a crafty web developer finally get together to create the eBay of tax avoidance, everything will change.

Tax accountants justify their enormous fees by offering personal service. But already, online divorces are available for a tenth of what you'd pay for face-to-face service. Why not disintermediate tax avoidance?

You'd go online, browse for the shelter or scheme that best fits your situation, submit your details and the computers would do the rest. The more people who signed up, the less the authorities could do about it. They'd be stretched ever thinner, and would be able to investigate a smaller and smaller percentage of tax avoiders (who would pay an annual insurance premium allowing them to hire a real face-to-face consultant in the event of an investigation).

Let me make it clear that such a situation is the last thing that I want. I simply think it's inevitable. While the government and the diminishing numbers of PAYE taxpayers would obviously lose out enormously, the tax avoiding community would simply use some of the money they'd save to pay for the services the government wouldn't be able to afford to provide anymore, like education and healthcare.

In the meantime, of course, the government would have to ratchet up other taxes: VAT, duties on luxury goods and fuel – which would hurt responsible taxpayers intolerably.

Is there a solution? Yes. Simple prosumerism. Already corporations are slathering their product packaging with greenwash logos and carbon footprint labels. With similar logic, I suspect that most consumers would rather buy stuff from companies that pay full taxes to the country they're operating in.

All it would take is for a critical mass of marketers to set up an independent organization to manage – and publicise – a "responsible corporate citizen" label that could be displayed on packaging and in advertising and public opinion would do the rest. Result? Companies like Tesco that currently save over a hundred million pounds in taxes each year might find that it's just not worth it.

1 comment:

Alistair McKechnie said...

Read all about the "Tax Tick" concept at http://www.taxticked.com/