ROD STEWART, cracking corny jokes with Ron Wood about jeopardising his tax exile status by attending the recording of a TV special broadcast 10 days ago, may have been remembering his 1974 outburst in Melody Maker:
"The Government thinks it'll tax us bastards right up to the hilt because we won't leave, but that's wrong because I will if I want to ... with a 90 per cent tax ceiling, it's just not worth living in England anymore," the tousled-haired singer quipped before settling abroad.
Last month, Rod The Mod didn't know how close he was to a major news story. Within a week of An Audience With Rod, there were orchestrated rumblings about the Rolling Stones trying to cut a deal with the Inland Revenue over their Foreign Earnings Deduction. On Monday came the announcement: the band had failed to reach an agreement with the British Government. They had decided to stay away from these shores for the time being. The UK dates were rescheduled for a different tax year, next summer.
Michael Ackerman, American music business attorney-at-large, has read Entertainment Industry Economics by Harold Vogel. "It's very dry, like a surgical manual. Required bedside reading," he says. "Joking aside, if somebody knows about tax situations, it's the Rolling Stones. They're very business-savvy. Promoter Michael Cohl pays them a fee for the tour, say 100, 120 million dollars for however many dates he can cram in. There are physical limitations, practical considerations. The Stones are also extremely careful with respect to the number of days they spend in the States. They always really count those days. That's why they rehearse in Canada, that's why they play there at the beginning and the end of their North American tours. Also there's sponsorship involved and the Stones make a significant amount, I'd guess a million dollars, on merchandising per date."
Ackerman broadens the argument to his own experience. "Actually, the same kind of taxation happens in some states in America. You have to pay tax on your earnings within that state's borders. I don't see anyone not playing Pennsylvania as a result."
Bernard Docherty, tour publicist and spokesman for the Rolling Stones, concurs. He's seen this kind of controversy before. "A few years ago, the German government started to retain money at source until you showed your expenses, be they taxi receipts or spending on costumes. Some of my clients like Joe Cocker and Tina Turner kicked up a fuss, U2 complained as well and the authorities relented. Anyway, the Stones hate the term `tax exile'. It sounds like someone sitting by a pool sipping a pina colada. We're talking about a hard-working band.
Are the Stones betraying their British fans? Are they really looking after number one? Are they truly concerned about the financial well-being of their employees or too mean to pay the taxman? Band manager Francine Stasium has experienced first-hand the way Jagger treats employees and colleagues. "In 1987, he sought the services of my then partner and client, Ed Stasium, for the solo record that became Primitive Cool. That was done in Barbados," she remembers.
"At that time, we probably would have travelled in cargo and slept in a tent to get a chance to work with him, Jeff Beck and some of the other musicians involved. Nonetheless, every courtesy was extended to us through negotiations with Roger Davies (who manages Tina Turner and Joe Cocker amongst others), who was acting as consultant on the project. We got first- class travel, a generous per-diem, private accommodation with maid service and home-cooked meals served three times a day. It seems Mick really values the services being rendered. This is just a thought but maybe those who complain about Jagger's meanness are just resentful of the fact that he is more astute in business than they are."
Mick has had to be, since early dealings with former managers Eric Easton, Andrew Loog Oldham and Allen Klein left the Stones well out of pocket. The singer once chased Klein around the Savoy hotel while screaming "Where's my money?" and later testified in a lawsuit against him.
For attorney Michael Ackerman, "it's really a case of once bitten, twice shy. The Stones stuck their fingers in the music business pan and got burnt early on. Allen Klein gets a bad rap because he's retained the rights to their Decca Sixties back-catalogue which still sells in significant numbers, but he also did a lot of good for them, he revolutionized the music business for better or worse.
"He was an actual accountant who could audit the record companies' books. But, as Bill Wyman says, he was more out for himself than he was for them. Keith Richards just chalks it up to music lessons. We learned from the best, he will tell you."
Jagger copped a few moves from his nemesis, too, and now goes through contracts with a fine-tooth comb. Prince Rupert Lowenstein is on hand to offer advice to the Stones frontman, who is probably still trying to make up for lost earnings, playing catch-up with his contemporaries, eyeing a flotation on the stock market a la David Bowie.
We've been here before. In the early 1970s, when Labour got in, pop stars voted with their feet, departing Blighty the moment they hit a certain tax-bracket. The Stones picked France and soon Ringo Starr, Marc Bolan, Cat Stevens, Elton John, Rod Stewart, David Bowie, Bryan Ferry, Yes, Queen and Jethro Tull followed them into tax exile. They jetted between Monte Carlo, Switzerland and the United States and gave interviews in which they pined for Marmite, cricket and warm beer. They set up companies registered in the Virgin Islands, Bermuda, Gibraltar, the Isle Of Man, Jersey, Guernsey, Lichtenstein or Luxembourg.
Around the same time, major stars like Paul McCartney, George Harrison, Cliff Richard, Pete Townshend and Roger Daltrey bit the bullet and backed Britain by staying here. However, they hired financial consultants and accountants to maximise their tax deductions. As Daltrey himself declared upon receiving a cheque for pounds 1m, "You only have tax problems when you make a profit. Who says The Who are making a profit? What do you think it costs to run our sort of business?"
Even after Margaret Thatcher got in and brought the top tax bracket from 90 per cent down to a more manageable 40 per cent, Sting, Boy George, Def Leppard, Paul Young, The Cure and even Ian McNabb of The Icicle Works (remember, they had a major hit in America in the mid-Eighties with "From A Whisper To A Scream") sought a haven in France, America, the Republic of Ireland (where a law giving tax exemption to creative artists has also been a boon to the film industry) or somewhere more exotic.
This explains the popularity of recording studios in the Bahamas, Barbados, and Montserrat at that time. It's not just the vibes or the weather, man; after a gruelling world tour, you're outside the reach of the British tax regime for the rest of that financial year.
Boredom can set in, however. Marc Bolan famously remarked that he was bored out of his skull in Monte Carlo. "All I did was drink and take drugs." The late Who drummer Keith Moon got incredibly out of shape when he moved to California in the mid-Seventies. His self-imposed exile undoubtedly contributed to his early death.
Still, the Rolling Stones shouldn't worry unduly. With a new Motorola TV commercial using "You Can't Always Get What You Want" and "classic" live albums re-released on Virgin, the royalties are still rolling in (and nobody's properly trawled through the Stones archives yet, though the BBC's 1960s recordings are rumoured to be surfacing soon). Business as usual.
LIKE MOST Swedish artists, Abba have had their tax problems. In the Eighties, the band had to turn against their manager, the late Stig Anderson, when the web of companies he had created (trading in everything from oil to potatoes - accepted in lieu of payment for records sold behind the Iron Curtain) was investigated by the Swedish tax authorities.
IN MARCH 1975, the US Treasury Department claimed that James Brown, who fines his backing musicians at the drop of a hat, owed $4.5m in unpaid taxes. The Godfather of Soul eventually sold some of his radio stations to pay off part of the debt.
In 1979, Pink Floyd lost most of their earnings (including royalties from The Dark Side of the Moon) in the collapse of investment company Norton Warburg, which was handling its business affairs. In the debacle, the musicians found themselves liable for huge back-taxes. The group made the best of their personal differences and struggled on with The Wall tour.
IN 1970, after signing a series of dodgy deals, The Kinks found themselves almost penniless and facing huge tax demands. Songwriter Ray Davies, who'd already written the immortal "The Taxman's taken all my dough" line in 1966's "Sunny Afternoon", now penned a whole concept album about the labyrynthine nature of the business: Lola Vs Powerman and the Moneygoround.
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