The news over the last few days has been full of the fallout from the so called Panama Papers. Something that we’ve known to be true has been proved to be true by the leak of these documents – that the wealthy and large companies hide their income in offshore trusts and companies and so avoid large tax bills. It has been an uncomfortable few days for David Cameron, the Prime Minister, as it was revealed that his late father had a company based overseas which meant that he paid no tax in the UK. Over a few days Mr Cameron has been gradually forced to admit that he did, in the past, benefit from this offshore company that his father set up. As a result he has now been forced to reveal his tax returns for the last five years since he became Prime Minister.
While this is not insignificant all of this fuss about the Prime Minister’s tax affairs hides a bigger issue. Most of what we have been hearing is not about illegal activity but about a legal way for companies and individuals to minimise their tax payments to a degree that most of us find to be immoral and wrong. President Obama was quoted as saying, The problem is that a lot of this stuff is legal, not illegal.
So while we have been witnessing a witch hunt on David Cameron (although had he come clean immediately the fuss might have lasted a day or two rather than a week) we have not had what we need to have, a debate about the purpose of taxation, the moral duty of everybody to pay their share of tax and the necessity of large companies paying tax where they earn their profits rather than where it costs them the least.
The purpose of tax is so that the nation can provide the services on which we all depend – health care, defence, education, infrastructure, welfare and so on. Underlying it is a principle that those who can most readily afford to pay pay the most and the least well off the least. If the best off and large companies pay little or no tax the poorest and the smaller companies need to pay more.
While it is undoubtedly necessary that the integrity and probity of our leaders should be checked and they should be challenged when they appear to fall short it is important that we do not lose sight of what is really at stake here. Regardless of the legality of their actions large companies and the most wealthy and powerful members of our society are exploiting our nation, the individual citizens and the companies that pay their tax in full and forcing the poorest to subsidise their extravagant life styles or massive profits.
When the Pharisees came to Jesus and challenged him about the payment of tax to the Roman authorities Jesus’s response, Pay to Caesar what belongs to Caesar and to God what belongs to God made clear that Jesus understood that tax is a tricky area of life. No one likes paying taxes and we would all be happier if we paid less. But Jesus understands when he says these words that what is important is that we pay what we owe, what we have a moral, as well legal obligation to pay – to the state, and to God. Both are important and both must be paid. The implication of Jesus’s words is that the Pharisees are failing in their duty to God, but also that both duties are necessary. We have learnt recently that there are those who are failing in the responsibility to the state, to society and to the most vulnerable.
We cannot allow this to continue and nor can we allow Mr Cameron’s tax affairs to cloud the issue.