Leading article: The simple way to beat tax dodgers

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The Independent Online

It is difficult not to take a dim view of Jimmy Carr's former tax arrangements – or those, indeed, of anyone with so lucratively creative an approach. But to focus on morality, as the Prime Minister chose so ill-advisedly to do, is to miss the point entirely. What is usefully illuminated by the activities of Mr Carr and his ilk is not so much their unseemly greed – after all, there are few who would not pursue the best deal available within the law. Rather, it is the absurdity of a tax regime so shot through with loopholes as to positively encourage such accounting gymnastics.

Politicians have been talking tough on the subject of tax avoidance for decades. Nearly 20 years ago, the then-shadow Chancellor, Gordon Brown, pledged to "rewrite the rules" to introduce some much-needed clarity; in office, however, his tinkering did quite the reverse. The current Government, with the vertiginous deficit to concentrate minds and the prospect of £4.5bn a year to claw back from serial avoiders, has approached the issue with both greater flourish and extra money to boost enforcement. Now MPs on the Public Accounts Committee are weighing in, with the launch of an investigation into the most egregious dodges.

The PAC's proposal may be well-meaning, but it is as well-nigh meaningless as the Government's feeble efforts. At issue here is not this or that scheme. The problem of aggressive tax avoidance cannot be solved by a few judicious tweaks to the rules, any more than it can be stamped out by either moral pressure or a more zealous HM Revenue & Customs.

The only effective remedy is a radical simplification of the tax code, stripping out the web of reliefs and exemptions which fills the 11,000-plus pages of Tolley's tax guide. That means closing the ludicrous proliferation of loopholes; it means establishing a minimum rate, to be paid by all, with tighter rules on income and capital; and it means ending the manifest nonsense of non-dom status, which allows some of the wealthiest to pay the least. Until then, Britain's tax system will remain both hopelessly inefficient and an open invitation to both legal and illegal abuse.