Why Parliament legislates to encourage tax avoidance

 

In this election stopping tax avoidance is a popular cause. Like many I am all in favour of collecting more money without raising tax rates, to get our deficit down. Like many I also wish to see tax evaders and tax cheats  caught and made to pay.

Maybe we  should pause and remind ourselves of two facts. First,  tax avoidance is legal. Second, Parliament has legislated to offer various tax breaks to individuals, institutions and companies to encourage certain kinds of behaviour. Those who want to stop tax avoidance, need to tell us which good behaviours they no longer wish to encourage. They need to set out which tax breaks they think should be made illegal.

Let’s  take a good example. The Anglican Church is one of the richest institutions in our country. It has a portfolio of assets of well over  six billion pounds in value. Its policy is to minimise tax on the capital gains and income it earns on this portfolio, claiming charitable tax reliefs. I think it is right to do so, and I will continue to support this tax break. The income and gains from their properties, shares, and  bonds is used to pay for clergy, to pay for bishops homes,offices and cars and for a range of other charitable purposes.

Or let’s consider what most people do to cut their tax bills. The two most common forms of tax relief used by many people are pensions tax relief and ISA savings tax relief. I fully support these as well, and see nothing wrong with encouraging savings by allowing people to accumulate savings free of income tax and capital gains in their pension funds and isas.

 

Published and promoted by Thomas Puddy for John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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One Comment

  1. BobE
    Posted May 4, 2015 at 12:57 am | Permalink

    Also if possible most people do cash transactions to avoid tax. You forget this John.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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