lördag 10 maj 2008

Tesco tax dodging


, originally uploaded by Tommunism.

The Guardian is threatened with legal action from Tesco's for writing about its exploits in avoiding Stamp Duty Land Tax. It is indeed deplorable that a large company should threaten journalists with libel action for questioning its activities - in this case, its exploitation of loopholes in Stamp Duty Land Tax. But to argue, as the Guardian does, that democratically ordained tax laws should be obeyed in the spirit intended by parliament is to defend legislation that is flawed in its conception and sloppy in its implementation. Such criticism is certainly true of SDLT.

This tax was the subject of a consultation exercise in 2002. The Land Value Taxation Campaign was one of the respondents. It argued that Stamp Duty should be abolished, on the grounds that it was already a significant barrier to the transfer of land and, as such, must act against the efficient workings of the economy. The Campaign pointed out that Stamp Duty achieved no social, economic or political benefit, nor was there any moral justification for it except in so far as it was a small occasional tax on land. As regards transfers of land, the Campaign proposed charges just Sufficient to cover the costs involved in running the Land Registry.

The Campaign argued instead for an annual tax on the rental value of the land element of all property, based on market assessments. Continued holding of land titles would be conditional on payment of the tax. Under such a system, avoidance is impossible; compliance is readily enforced with the ultimate right to sequester rent payments or even seize the land, which cannot be transported to a tax haven or demolished.

Had the government and its advisers treated the consultation seriously and taken notice of what had been said, the Tesco situation, and the many others like it, would never have arisen. Criticism should be directed not so much at private companies and individuals who take advantage of loopholes and anomalies in the tax laws, but at the politicians and civil servants who persistently saddle the country with legislation that is unfit for purpose. Until these people do their job properly, we must expect taxpayers to look for ways to run rings round the system.

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