The issue of tax avoidance is highly complex, notes Philip Booth. Not all avoidance is illegal or immoral—some is even encouraged by the government. So how, Booth asks, do Catholics determine what is acceptable?
Evasion involves illegally not paying tax that is due. This includes not declaring £10 received for babysitting and multi-million pound schemes by professional criminals. Evasion is wrong and it is also wrong to aid and abet somebody else in evasion, for example by paying a tradesperson cash when we know that they are not declaring the income. Even if the state does some immoral things with our money, we cannot choose whether we pay tax that is legally due. If we did, the state could not provide those things that are necessary for the common good.
Avoidance involves taking action within the law to pay less tax. This can include saving in a pension fund or giving to charity. The government often deliberately provides these avoidance mechanisms as part of a conscious policy and it would be wholly unreasonable to suggest that it was immoral to use them. The difficulty comes when individuals use quirks in Britain’s 11,000 page tax code – the longest in the world – to try to reduce their tax bill dramatically. That is precisely what has happened in recent high-profile cases such as that of the comedian Jimmy Carr. Is this more aggressive avoidance immoral?