David Mitchell and the Golden Rule

British comedian David Mitchell (seen here) has entered the tax justice fray with a long comment piece in today's Observer newspaper. And if you read beyond the title - You can't blame the rich for paying as little tax as possible. I do the same - he makes some important points, though he might also be misunderstanding the basis on which 38 Degrees have pitched their campaign.

Let's start at the beginning.

Two weeks ago Channel 4's Dispatches broadcast a programme revealing the use of tax havens by leading members of Britain's coalition government, including Chancellor of the Exchequer George Osborne. You can access the programme via this link.

The Dispatches programme, coming as it did just hours before the announcement of the most swingeing cuts to British public services since the 1920s, precipitated a backlash. Online campaigning organisation 38 Degrees launched a petition calling on George Osborne to pay his fair share of taxes. You can read the text of their petition here.

But the wording of the petition irritated comedian David Mitchell:

"What a stupid, wrong-headed campaign. Along with George Osborne and "two other cabinet members", I avoid paying tax. Only saints and incompetents don't. Most people pay the minimum amount of tax they're legally required to and not a penny more. That's prudent tax avoidance not illegal tax evasion."

Using the term "prudent tax avoidance" takes the debate straight into a political and moral minefield. By definition tax avoidance involves taking actions to reduce tax payments in ways that were not explicitly granted by policy-makers. This makes such behaviour anti-democratic. Mitchell undermines his case by not exploring this more fully: had he done so he might have recognised that Britain's tax rules have stimulated a global industry of tax avoidance that has corroded the revenue base and the social tax contract of many countries.

Not that Mitchell shies away from tackling the unfairness of the existing rules:

"...what the petition should really address, is how that one rule, which applies to all of us, is so much more beneficial to him and his friends - to the rich - than to everybody else. The rules are universal but unfair. They allow the rich to avoid tax without having to evade it, and Osborne, as chancellor, is responsible."

Quite so. City of London lawyers like to joke that poor people evade taxes, while rich people avoid them. Britain's tax rules did not become regressive by chance or accident: decades of political influence-peddling have created a tax code so riddled with loopholes that paying taxes has become almost discretionary for rich people, especially those who claim non-domiciled status.

Tax rules shape the nature of the societies we live in. Fair taxes promote social well-being, protect our ecology and encourage useful enterprise. Unfair tax rules stimulate free-riding and speculation, worsen inequality and undermine our social institutions. Sadly, Britain's tax rules are largely shaped to promote the interests of a tiny elite of wealthy people and powerful corporations. Their political power is known as the Golden Rule: those who have the gold shape the rules.

George Osborne knows this. His decision this week to negotiate the continuance of Switzerland's noxious banking secrecy, see here for details, clearly demonstrates that he has every intention of protecting the interests of Britain's tax evading classes. And as for tax avoidance, there is little indication that Osborne and other members of the coalition government are prepared to do anything to seriously reduce this cancerous activity.

On balance Mitchell makes a weak case for not drawing public attention to the way that Osborne organises his tax affairs: this is clearly a matter of public interest.