It probably seemed like a great idea to David Cameron when he criticised Jimmy Carr’s tax affairs during a round of TV interview in Mexico. His comments – attacking the immorality of avoidance – chime with the public mood. People don’t like to find out that others aren’t paying as much tax at a time of austerity, unemployment, spending cuts and so on.
But the Cameron stance quickly unravelled within minutes of him uttering the words on Wednesday afternoon. First question was why the prime minister criticised a single comedian and not those closer to home (Sir Philip Green, Lord Ashcroft, etc) whose tax affairs have been questioned in the past.
Second question was why the PM attacked Carr but not Gary Barlow, the cuddly Take That singer who supported the Tories before the last election. Asked about Barlow on Wednesday, he said something vague about having not reached his computer yet. By today, it was a matter of no comment.
During a press conference today Cameron sought to shift into reverse gear, saying it was everybody’s right to arrange their tax affairs efficiently and that he wouldn’t provide a “running commentary” on individuals’ tax. Yet the genie is already out of the bottle. The spotlight will now be on members of Cameron’s family, his friends, his donors and his MPs; who else has been a little too efficient in their tax management? I await the Sunday newspapers with interest.
As for Ed Miliband, he has been a little more canny. His message appears to be: “Don’t lecture on morality, just close the loophole.” Labour, which hates fats cats, supposedly, has its own skeletons in the closet. The fact that major donor Andrew Rosenfeld spent five years in Switzerland – before turning up, on a white charger, with the promise of money for Labour – cannot be easily ignored. And then there were those uncomfortable questions before the local elections about why Ken Livingstone was paying a rather lower rate of tax than others on high incomes. (Google “Ken Livingstone” and tax is the first word that comes up.)
Instead the Labour approach has been a call for a crackdown on loopholes to ensure that tax avoidance is harder in the future. The party has pointed out that the Treasury’s excuse for cutting the 50p rate was that too many high-earners were using avoidance schemes: “Instead of cutting the rate to 45p they should have taken on the avoidance,” says one of Miliband’s aides.
Meanwhile the big question is whether the shaming of one boy band and a comedian will lead to a major fall in tax avoidance. Anthony King, professor of politics at Essex University, suggests: “It may open up a gap between celebrities, worried about being in the papers and their names blackened, and people who were quietly getting on with dodging tax and who have less to fear.”