The sad irony of David Cameron’s run in on his taxes is that it makes it less, not more, likely that anyone will find the political courage to address the problem of an outdated international tax system.
The current tax regime was constructed by the League of Nations around a hundred years ago. In those days the recently-opened Panama Canal was the cutting edge of modern technology. It was revolutionising world trade.
Things have moved on since then. That tax regime is hideously out of date.
The fact that so many businesses have got caught up in disputes over what should be paid in which jurisdiction is evidence enough of the problem. Less obvious is the impact that tax havens have on the world economy by distorting the market, trade patterns and prosperity.
The problem needs to be addressed, by Governments showing strong leadership and supporting the OECD in tackling the issue.
It is absurd to hope the solution lies in asking corporations or individuals to make some sort of vague assessment of the tax burden they think feels about right for them. Their obligations are to meet the requirement of the law. That’s all.
It is Governments, in this case David Cameron’s Government, that should have been fixing the problem, and it is their failure that it still exists.
But instead of showing any sort of leadership on this complex issue, politicians of all colours have preferred to make cheap political hay by beating up on big business.
Either politicians don’t understand the real problem or they do. It is telling either way. David Cameron has been high among those hay makers. Labour’s indignant simpering is hardly better.
Now Cameron is stuck on the back foot. If he had a track record of calling for the right thing then these recent events would be further evidence of the urgent need for the reforms he had championed.
It would have meant turning down easy headlines and making complex and possibly unpopular arguments. That’s what leadership can be sometimes.
Instead the issue is now more toxic, more politicised, more confused and more likely to be the can that gets kicked down the road. Politicians won’t pay the price.
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