Last week in the Guardian, Owen Jones gave an accurate and succinct exposition on the immorality of tax avoidance. Businesses, he reminded us, depend on a workforce expensively trained by a state education system, and kept healthy by state healthcare. They depend on state-funded infrastructure such as roads and transport, a bailed-out financial system and a system of law and order that protects them and their property. By not paying their taxes, the workforce is forced to subsidise their costs. As Jones puts it, “Tax avoidance is robbery, regardless of what any silver-tongued outrider of the corporate world tells you.”
Given that tax avoidance is such an incontrovertibly bad thing then, it is difficult to understand why last week Bob Geldof responded “bollocks” to a suggestion by a Sky News reporter that fundraisers such as Band Aid 30 would perhaps be unnecessary if more of the wealthy individuals involved paid their taxes properly. Geldof is a prominent charity campaigner and, one would be forgiven for thinking, not a free market zealot. Why then was he so hostile towards such a valid concern?
I assume Geldof wasn’t disagreeing with the argument’s premise. That some of the musicians involved in his fundraiser avoid tax would be a difficult point for him to contest. For one thing, he is himself a registered non-domicile, meaning he is free to avoid income and capital gains tax on international earnings. Then there’s Bono, who despite being worth $600 million, fronts a band that is registered in Netherlands for tax reasons. Even One Direction are at it.
Other than sheer denial, the only other explanation I can think of for Geldof’s response is that he considers tax avoidance defensible in some sense. Indeed, one can quite easily see how he might be tempted into thinking such a thing. Band Aid raises millions of pounds for humanitarian aid, and – in spite of the fact that some of the artists involved avoid tax – surely this doesn’t morally forfeit the cause? Indeed, Geldof has played such a charity card before. When questioned by a reporter about his tax affairs, Geldof responded, “I pay all my taxes, my time? Is that not a tax?” The bottom line seems to be that if you’re wealthy and doing something charitable with your money, avoiding tax is an entitled perk.
However, such an argument demonstrates a callous disregard for the destructive effects of tax avoidance as a large-scale practice, which of course is nothing more than an aggregation of many instances of such deluded thinking. Indeed, such arrogance only ignores the real and pervasive effect tax avoidance has, especially in the developing world.
For instance, last year it was revealed by Action Aid that the FTSE 100 company Associated British Foods, who reported $123 million of pre-tax profits between 2007-2012, paid less than 0.5% corporation tax to Zambia in that period. The firm deprived Zambia of a sum 14 times greater than the UK aid provided to the country, money that would have been spent on alleviating the effects of food shortages. According to Christian Aid, the total loss to the developing world from tax avoidance is $160 billion: Action Aid has said that if these tax losses were to be recovered in Africa, there would be enough money to achieve universal primary education and healthcare, as well as enough money left over for an upgrade of Africa’s entire road network.
There is also the argument that to defend one’s tax avoidance in terms of one’s other charitable commitments ignores the knock-on effect a few individuals avoiding tax has, especially when such offenders are so prominent in the public’s eye. Indeed, a celebrity who avoids tax but who “does charity work only serves to soften the moral revulsion we feel about the practise of tax avoidance. They create a compartmentalisation of one’s duties, making it appear fine to practise something entirely incongruent with their charitable endeavours. This in turn reduces our outcry in the more severe cases of multinationals avoiding tax, such as the case of ABF, whose produce we still readily buy.
If Bob Geldof really wants to help the developing world, he should use his platform to lobby businesses to pay their corporation tax. Defending tax avoidance through his indifferent practice of it and his rubbishing of its criticism on live TV, is two steps backwards and one step forward for his campaign.