Rusbridger's defence of GMG's tax avoidance
Posted by Christie Malry on February 23, 2011 at 9:40 am
Tonight I watched an episode of My Life in Books, a show in which Anne Robinson talks to a couple of celebrities about their favourite books. In this episode, she was talking to Sue Perkins and Giles Coren. OK, so they're both a bit wanky, pretentious and hateful. But Sue Perkins chose a great book - Crime and Punishment by Dostoevsky. The book tells of Raskolnikov, who hatches a plot to murder his landlady and steal her money. He manages to justify this evil deed to himself by convincing himself that he'll be able to do lots of good things with the money. That's a gross oversimplification of the plot, but it'll do for now.
Alan Rusbridger today mounted a defence of Guardian Media Group's tax planning strategies, in the face of very severe criticism by Guido Fawkes. Guido has pointed out that it's hypocritical of The Guardian to put the boot in to companies that use tax planning and/or hedge funds while simultaneously signing off on GMG using hedge funds and undertaking some pretty pongy tax planning strategies. And, as coincidence would have it, Rusbridger's defence is broadly the same as Raskolnikov's:
"It's okay for me to do whatever I like with GMG because I'll be able to do lots of really good things with The Guardian."
Don't be fooled by Rusbridger's flowery language and wistful tales of the poor Scott family, faced with terribly difficult circumstances as a result of the death of both CP Scott and his son Ted, triggering a potentially catastrophic inheritance tax bill. This is no different to the choices ordinary folk face every day. The Guardian doesn't have sympathy for ordinary people seeking to reduce their tax bill just because they're facing tough choices - it expects them to make the choice that keeps their tax bills high. Similarly, we shouldn't tolerate Rusbridger's mealy-mouthed excuses for why he believes it's acceptable to keep The Guardian afloat, no matter the consequences for anyone else.
It's the same with hedge funds. If The Guardian wishes to criticise the use of hedge funds by others, then it needs to eschew them itself. It can't have it both ways. It's not alright just because it provides a bit of extra money to plough into The Guardian.
The Guardian simply isn't special. It's just like a retired person: it spends more than it earns. We don't accept that it's okay for Vodafone or Barclays, two recent UKuncut targets, to play fast and loose with their taxes 1 just because it keeps retired people afloat.
Even more amusing is Rusbridger wheeling out Richard Murphy and Richard Brooks to defend GMG's tax affairs. Both have written for The Guardian, so to apply one of Ritchie's favourite arguments straight back at him, neither can be considered to be independent. The Guardian has yet to correct its article on tax at Barclays, despite the obvious howlers being pointed out to them right here on this blog. The newspaper simply isn't a credible outfit in the realm of tax. And their failure to put their own house in order while they seek to criticise others is a rank hypocrisy.
It's commonly argued that the end justifies the means. Rusbridger's paper won't tolerate this argument for tax avoiders. And therefore this argument is closed off for The Guardian too, unless it wishes to expose itself to hypocrisy.
Notes:
- Even if they haven't, we don't accept that it would be okay for them to do so. ↩
[...] This post was mentioned on Twitter by Helen and Tim Johnson, Bobski. Bobski said: RT @fcablog: New blog post: Rusbridger's defence of GMG's tax avoidance http://bit.ly/fADRVv // Must read for everyone [...]
I'm afraid your view that the Guardian does it too is still not a very good defence of how certain UK companies use tax avoidance in an aggresive manner in order to reduce their tax laibilities and increase those of the ordinary tax payers on PAYE, at present however it appears that it is the only one you have!
Also the argument that everyone who is connected with the Guardina is somehow tainted by the same hypocrisy as those reponsible for its corporate affairs is not a very good one either - I quite like newspapers where there are a diversity of views and different standpoints are tolerated, rtaher than the Pravda model.
But there you have it. You claim that "certain UK companies use tax avoidance in an aggresive (sic) manner". When asked to produce evidence, the facts simply don't support that allegation.
And, in fact, we can point out that precisely the same fact patterns can be found at Guardian Media Group. In relation to GMG, we also know that the Scott Trust was founded precisely because the Scott family wanted to dodge a possible capital gains tax liability. There is no other reason for it. This is portrayed by Rusbridger as some selfless act, but that's only because he (and presumably you) think that The Guardian's very existence supports all sorts of scurrilous behaviour. I don't. At least, I believe that if you're prepared to hold your nose for The Guardian then you should equally be prepared to accept that other organisations may have very good reasons, perhaps beyond your understanding, for behaving the way they do too.
Where have I said that the Guardian's behaviour supports all sorts of scurrilous behaviour - I haven't. You on the other hand seem to take the view that because the Guardian does it as well - then it can be ignored. As for evidence of agrressive tax avoidance - why exactly do many groups go to considerable expense of setting up such complex corporate stuctures (mixers etc.) , you might also want to look at some companies audit fee notes to see how much they spend on tax advice. Or failing that we could just do an analysis of effective tax rates over a number of years - and there is one major newsgroup that stands out in this regard rather than the Guardian if you care to look. The last time I looked these companies were not charities. Certainly the complexity and aggressiveness of much of it goes way beyond the Guardian claiming SSE for a part disposal of a subsidiary that GMG had held for a number of years.
The reality of this corprate tax avoidance, which I acknowledge stays just the correct side of legal, is that those on lower incomes and/or without access to accountants (i.e the vast bulk on PAYE) have to pay a lot more tax. And perhaps I know from personal experience that what you say are very good reasons are often only such in the eyes of the beholder and for presentation to the Revenue which only coincidentally lead to lower tax bills.
Stop making diversionary noises and address the central issue i.e. is there too much corporate tax advoidance, and if so what should be done about it.
Those on lower incomes don't pay a lot more tax. The most tax is paid by the richest. Indeed, the richest 10% of earners pay over half the income tax take.
See this post for why you're committing a grave fallacy.
The richest 10% pay over half the income tax take - and so they should given that they have a far greater ability to do so. But that isn't my point - my point is that if corporates pay less tax then others have to pay more - it was not about how the income tax burden should be shared out. We could have a similar conversation about the taxation of private equity and income taken offshore if you wish.
What do you think about the (not so) latest wheeze of having personal homes owned by offshore foreign companies in order to avoid the higher rates of stamp duty. Is that fair or moral - or doesn't fairness and morality enter into it as long as its legal?
"my point is that if corporates pay less tax then others have to pay more"
This isn't true. There's simply no reason to presume that government adjusts one section of the tax take to compensate for another. If corporates pay more tax then government will simply spend more. It won't cut the tax on others. We know this because we can see the graph of government spending from 2001 onwards (the year Labour abandoned the spending plans of the previous government). Governments just spend as much money as they can get their grubby little hands on; the only way we can get them to exercise any restraint at all is to avoid paying it in the first place.
Sorry? Guardian and diversity of views - in the same sentence.
chuckle.
The Graun is hypocrisy personfied.
Even if it were true that governments will spend whatever they can get their hands on - then the fact that one sector avoids taxes will mean that the government will raise thoise taxes which others are less able to avoid. Why do you think that VAT has been used inrcreasingly for just such a purpose - especially by Tory governments. Death and taxes are here to stay like it or not - best to ensure the tax buyrden is shared out as fairly as possible - a point that Adam Smith recognised many years ago.
" I quite like newspapers where there are a diversity of views and different standpoints are tolerated"
You should see how CiF is moderated: the "diversity" you get to see doesn't reflect the actual comments made. If you think it's just the swivel eyed loons who are deleted, think again. CiF makes Richard Murphy look even-handed.