Leading Article: MPs who face taxing questions

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The Independent Online
ONE OF the best defences democracy has against corruption is the obligation of ministers and politicians to declare outside interests. It was therefore depressing to read the responses of some of the Conservative members of Parliament questioned by the Independent on Sunday about their declared links with firms that give tax advice.

While a few of the MPs gave brief but straightforward accounts of their links with the accountancy or legal firms named in the Register of Members' Interests, many refused to say anything. Some simply read statements prepared by the companies that pay them. Sir Edward Heath gave a hasty answer, later apparently contradicted by the firm concerned. But an astonishing number climbed immediately on to a high horse, describing the questioner as 'impertinent' (Patrick Nicholls), saying that the matter had 'nothing to do with you' (Sir Peter Hordern), or declaring through intermediaries that they had 'more important things to do than talk about stupid things like this' (Norman Lamont).

Such arrogance is horrifying. Aspects of the work MPs do as advisers or lobbyists may be confidential; but nothing precludes them from saying generally what they are up to, nor their electors from asking. When government policy can have dramatic effects on tax liabilities of companies and individuals, it is entirely legitimate to wish to confirm that no conflict of interest could have arisen.

Why should Conservative backbenchers, asked about openly declared interests, be so discomfited? One reason is that people on salaries are understandably suspicious of those who have more flexible arrangements. Many voters find it hard to grasp the distinction between tax evasion (lying to the taxman) and tax avoidance (quite legitimately arranging one's affairs so as not to pay more tax than necessary). Some mistakenly believe that anyone who thinks there is a difference between evasion and avoidance must be a casuist.

But there is a more substantial reason why tax avoidance should be an embarrassment to Tories. It is that tax loopholes are once again a growth industry. Margaret Thatcher's chancellors cut top tax rates and simplified the rules, thus making avoidance both harder and less lucrative. Under John Major, matters have been different. Norman Lamont began the retreat from simplicity when he invented a 20 per cent tax band; Kenneth Clarke added two new taxes and instituted half a dozen further complications. That made his Budget popular, but also profitable for the tax avoidance industry.

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