Wealthy individuals 'hold $11.5 trillion offshore'

This is an issue that will never go away.

Some key points as I see them:

1. What is a fair share of tax for the rich to pay? One viewpoint says that they already pay enough to more than cover what they take from society in the form of VAT, etc. They often pay for things like education and healthcare themselves. The opposite viewpoint says they should be forced to pay a lot more to help those who are less fortunate. No one (I hope) will argue with the idea of helping the poor but is it right to force people to do so?

2. Where do you put the rich person who legally avoids tax but also chooses to make substantial donations to charity (probably tax deductible but that is another story)?

3. If it is right to force people to help the poor, is the Government the right body to do it? Some good points have been put forward to say no (vote buying, etc). However, realism says what alternatives are there?

4. As Ian Young of the Tax Faculty commented recently, there is a serious gap in the perception of tax avoidance between the profession (or some of it at least) and the Government. On a similar theme, in a lecture I attended last week, the lecturer said that in the eyes of the Treasury those engaged in serious tax avoidance are worse than those who evade tax by suppressing cash takings.

Taking a Christian viewpoint, I believe that ultimately everyone will be held accountable for how they have used the resources (time and talents as well as money)they have been given. And I emphasise that everyone has been given these things. To be accountable implies that a person must have had the choice how to use his gifts.

If a person chooses not to help the poor with his surplus resources then I do not see it to be the Government's role to force him. If a Government does try to force him then, in my view, I do not see a problem with legal avoidance of tax.

That's all this article is Richard.

If the churches were so concerned about the levels of tax remitted by some taxpayers, then why don't they take the lead, revoke their charitable status and pay corporation tax like any normal concern.

Some comments have been made below about the relationship between the Tax Justice Network and some notable faith leaders and people whose work is motivated by their faith. I regret that.

I have never denied that my work in this area is motivated by faith but let me assure any reader that the issue of faith and taxation is not a new one. The current Bishop of Liverpool is an original thinker on taxation in his own right as this article shows.

So too was his notable predecessor, the Rt Rev David Shepherd, who died recently. He wrote this in 1983:

‘The heart and soul can find fulfilment in doing worthwhile work, in making a modest personal income and in contributing to the wealth of the whole community through taxation. Christians should take a lead in a public campaign to change the assumption that everyone pays their taxes grudgingly and unwillingly. Taxation is a proper way by which wealth is distributed more fairly and by which the poor and the whole of society are given better opportunities. A scheme of international taxation is needed if the enormous gap between the rich and poor nations is to be lessened’.

That quote comes from “Bias to the Poor” (p133). In his choice of title the Bishop revealed the economic ethos he thought all Christians should have, and the criteria by which he thought any economic system should be assessed. Such thinking goes back to Christ and is based on sound theology. It would seem that the two Bishops of Liverpool agree. In which case the comments made below do seem particularly inappropriate.

And finally, just in case of doubt, let me be clear that I do not think this opinion exclusive to Christians, or those of faith. Many of other faiths and no faith hold it too. I offer this comment from a Christian perspective merely because it is that persepctive that appears to being criticised in the comments made below. I welcome those who hold it for whatever reason that they might do so.

Some of the comments here astonish me.

Unless I am much mistaken this is a piece of research. The obvious questions seem to be about sources and methodology, and so what support is there for the conclusions drawn. Is it in fact true that there is this much money stuck away in tax havens ?

But nobody asks that. Instead what we seem to have is people accepting that this is probably true and justifying it in terms that make no distinction between tax avoidance and evasion : the proposition seems to be that these are rich people and have a right to their money (however they came by it) and taxation is robbery by the state anyway.

Research conducted by Tax Research, owned and managed by Richard Murphy, results published by TJN, whose policy adviser is ....guess who? Richard Murphy!

What did you expect to be published? "Naw, after substantial investments and worldwide research, we have concluded that it is impossible to guesstimate, whether half wrong or half right, just how much wealth is salted away offshore."
Somehow it does not carry the same headline "shock new figure" power and using both the Catholic and Anglican Church and Christian Aid, all of whom are not short of a bob or two themselves as accomplices to publicize what is at best and at worst an irrefutable study, what is the use of it? How much wealth is salted away in the Vatican that could be given to charities if the thrust of the research is to highlight how charities could benefit if this "wealth" was in any way
accurately quantified?

Who is going to put the counter argument? How many of these rich individuals actually own trillions of $ in not only offshore but sub-sea oil? How much of that was taken into the equation? Are these guys going to leave tracks for HM Govt to tax them? I think not!

So we are left with self-publicity and a worthless unproveable exercise!

Once again, Richard has shown he is looking for a Govt tax advisory position in the near future.

are all these people uk domiciled then or have they included uk residents who do not have a UK domicile; at the very least these people can put their money where they like.

is unrelieved double taxation just as bad as evasion ?

Simon,
You question the 1/2 million civil servants, and you have a point. However, ask yourself just how many public sector workers there are "on the country's books"? As I have said in past comments, the next time you are in the mixed social company of some ten or more people, just ask how many of these work for the public sector, in central or local government, NHS, police, teachers, forces, quangos etc etc. The answer and true problem may come to you.

I can fully understand why monies are moved offshore by the wealthy. Once this corrupt and failed Government start to understand the wastefulness of their policies, then maybe we shall get back to sensible taxation policies (maybe pigs will fly!!).

That Flight MP chappie whinges on about £35 billion cuts (but remember, these are savings on what N/Labour would spend!!). These savings are a drop in the ocean compared to what this country is gasping out to be saved.

I do not blame either wealthy individuals or companies for avoiding paying income taxes by placing their funds in offshore tax havens. Our political masters would only waste the extra tax revenues collected and also these huge amounts although in offshore tax havens are used to create employment and further investment in the private sector which is far greater than they would be the case net of taxation.If the returns on these funds were taxed we would only end up with larger state sectors within the economy which are inefficiently managed and run.Waste would be on the increase and there would be less accountability on spending by the state. Also we would slowly loose our freedom of choice ulimately on how we are able to spend our money.There should always be a balance in the way power is shared between the State and Free Enterprise.

... made by the TJN and its friends is belief in the slogan 'the more tax the better'.

But experience all over the world has shown that lower taxes create healthier economies.

Look at the example of Ireland and the new East European members of the EU. Low taxes have created 'tiger economies' creating jobs and wealth for everybody, not just the rich.

Compare that to the 'old Europe' countries, especially Germany where high taxes have created disastrous levels of unemployment.

Moreover, the ethical argument against tax avoidance completely fails in the UK where, under New Labour, taxation has become a massive and massively corrupt political slush fund with which Gordon Brown buys the votes of the 500,000+ extra civil servants hired since 1997 and the votes of those he gives tax credits to, paid out of other people's money.

Bernard Shaw joked that 'the government that robs Peter to pay Paul can always count on the support of Paul'.

But the situation we now have under New Labour with regard to taxation is not funny. We have a corrupt government that has corrupted the tax system to buy its own survival.

Tax avoidance in these circumstance cannot be unethical because it helps prevent a corrupt government pursuing its corrupt
policies.

500,000 extra civil servants, eh ? At 5 April 2004 there were 554,000 civil servants in post. I never realised the tories had got it so slim before 1997.

When the top rate of tax was cut to 40% we were told that avoidance would wither away. It doesn't look that way.

There is an argument for countries offering low tax rates for real investments (like building factories and employing workers) whether it's Ireland or India, and building their economies that way. I don't think the money hiding away in those offshore accounts is being invested in those countries, do you ?

How many taxpayers in preparing their tax returns deliberately forgo available reliefs and/or voluntarily pay something greater than is due? Are those living in Jersey avoiding tax somewhere by paying only 20% of their income and nothing on their capital gains when they could become, for example, UK resident? Are they not, with the holders of that US$11.5 trillion, enemies of the state, Comrades?

("Do we know where they live?": L. Beria)

the fact that assets are held offshore does not indicate that the due tax is not being paid, or even that any tax is being avoided!

two telling words in the first page - tax not paid "might" exceed; and value of wealth held offshore is "hard" to come by.

compounded by the implicit (but fallacious) assumption that tax avoidance is in some way wrong, and that only governments are capable of "good deeds".

this sounds like envy (which I thought was a sin?).

i am suprised that accountingweb has published this rubbish.

Is there not something thoroughly distasteful and underhand about the way Murphy, Christensen and their crew have conned into their support so many naive churchmen who clearly are way out of their depth and do not understand in the least the issues involved?

By means of what perversions of Christian principles were they conned?

Murphy's and Christensen's well-known stance on taxation is based on nothing more than a thoroughly unpleasant and mean-minded combination of envy and resentment of other people and covetousness of their wealth.

Since when have envy, resentmment and covetousness been expressions of true Christian sentiments?