It should come as no surprise, then, that Geoffrey Robinson, the Treasury minister, should benefit from a Guernsey trust fund. Or that, when the story of his family finances is followed through public records it should lead to Bermuda trusts apparently named after his nieces. Mr Robinson is a multi-millionaire, possibly worth more than pounds 30m, a businessman before - and especially since - he became an MP. He was also left a lot of money by a Belgian former business associate of his, the satisfyingly named Mme Bourgeois, which was the origin of the Guernsey trust.
These are interesting arrangements, in the sense that the private lives of the very rich are bound to appear exotic to the rest of us, although they in no way justify the extravagant attentions of yesterday's newspapers. There is nothing improper about the way his affairs are organised, and Mr Robinson appears to have followed scrupulously the rules for ministers in respect of his private finances.
And yet ... There is something faintly alarming about the arrival in power of an aggressively pro-business Labour Party so blissfully unaware of the dangers of being hoist by the petards which it used with such relish in opposition.
Tony Blair's glee that the chairman of BP had agreed to serve in a Labour government led him to overlook the minor detail of Lord Simon's pounds 2m shareholding. Lord Simon could not sell it, because he might be accused of profiting from inside knowledge about BP's prospects. So he kept it, but no bright-eyed civil servant pointed out that he was just as likely to be accused of profiting from inside knowledge by hanging on to it. Not only that, he now also risked compromising his ministerial judgement. Nor did it help that a quarter of the shares were held for him by BP in a Jersey trust, presumably in order to reduce either his or BP's tax bill.
Tax avoidance is the tricky concept at the heart of the present issue. There is a clear moral distinction to be drawn between avoidance and evasion, and most taxpayers try not to pay more tax than they have to. For most, the mechanics are simple, such as claiming tax relief on mortgage payments or pension contributions. But for the very rich it is worthwhile to use tax havens and trusts. It is not ideal that most of the economic activity in parts of the United Kingdom and its dependencies should simply consist of the reduction of rich people's tax liability. There is a case for saying these places should either be part of the UK paying taxes and represented in Parliament or they should be independent, but in practice it makes sense that they should remain half in and half out, within reach of British law.
Equally, it would be oppressive to legislate against trusts. The discretionary trust is a dodge: the claim of avoidance rather than evasion contains an element of disingenuity. Legally, the trustees have discretion over to whom they hand out the money; in practice, they give it to the person they first thought of. But you cannot tax intentions. Nor, in the case of Mr Robinson, can he do anything about the constitution of the trust fund set up for him by Mme Bourgeois.
The fun really started when Mr Robinson announced changes to Tessas and Peps, the tax-avoidance devices of the middle classes. He was denounced as a hypocrite for capping tax-exempt savings at pounds 50,000 and seeking to spread the subsidy to poorer people who could not afford to put money away for five years. But this is just the eye-of-the-needle fallacy: that rich people cannot favour redistribution, or that individual rich ministers cannot sponsor measures which favour the poor. The trouble is that it is a fallacy that has been encouraged, indirectly, by the Government itself. On the one hand, it has harnessed the skills of some talented people who have, unsurprisingly, used those talents in the private sector to amass piles of money. On the other, it has presented itself as ushering in the dawn of a "new politics", in which the highest possible standards of conduct in public life will be observed.
This is compounded by an emphasis on presentation and surface perceptions. If Gordon Brown thinks that Princes William and Harry should pay pounds 7m inheritance tax on Diana's estate because it would look bad to try legally to avoid doing so, then logically he and his ministers should adopt a Gandhian moral posture and Mr Robinson should hand over all his worldly wealth, either to the Treasury or to cancer charities. Perhaps it is time for the Government to seize the slightly more realistic moral ground.Reuse content