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tax avoidance / evasion

Comment 2nd July 2010

It used to be a cornerstone of tax law that evasion was illegal and avoidance was legal. In other words it was acceptable to arrange your tax affairs, within the law, to minimise your taxes. In recent years tax avoidance was made illegal so that arranging your affairs within the law was unacceptable if it saved you taxes. The (previous) government even set up structures where they could retrospectively change a tax law if they found it inconvenient.

Even at a time when the government needs tax revenue they, the Treasury and the Revenue will gain much more respect from taxpayers if fairness is re-introduced and making decisions within a clear and definite tax structure is available again.

Why does this matter?

When people perceive tax law as unfair they will break the law to avoid taxes, partly rationalising that if the government is corrupt 'why shouldn't I be?' At a time of rising taxes (which most people accept is necessary) there is also a tendancy to go further into the black economy.

If, in these troubled times, the government wants to control abuses of the system it must first show that it itself is playing fair, being clear, and being transparent.

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