Whatever lefties may tell you, faith in markets has never quite taken hold amongst conservatives. There has always been a tendency, as with socialists, to affect social change by turning to the state. William Wilberforce, an enthusiast for socially repressive legislation if ever there was one, provides a good historical example.
This blog does its best to support the many sound things about the current government but it comes as no surprise that David Cameron, more your ‘social liberal’ than classical liberal, should make such a tyrannical and, frankly, idiotic speech at the World Economic Forum yesterday.
The Prime Minister claimed the public had ‘had enough’ of companies which, perfectly legally, avoid paying the maximum amount of tax they are liable for in this country. In terms clearly aimed at Starbucks, he then warned such companies they should ‘smell the coffee’ as customers would vote with their wallets over such tax arrangements.
His description of – again, totally legal – tax avoidance ‘becoming so aggressive’ (aggressive how? Against whom?), his use of the words ‘avoidance’ and ‘evasion’ interchangeably (one is illegal, one isn’t) and his pontification on the ‘ethical issues’ of a legal activity are odious in the extreme and characteristic of a tyrant abusing his position to rule arbitrarily.
He calls it ‘a simple issue of fairness’ but ‘fairness’ calls into question the very morality of corporation tax to begin with. Directors, employees and customers have all paid income tax already – why do they need to be taxed again? The contract between provider and consumer has already been fulfilled in, for example, Starbucks providing coffee that people want and those people buying it. No one side fares disproportionately from the other in the exchange – there is nothing to ‘give back’.
But a government using such threatening language, such aggressive targeting – I would even say persecution – of a group of people conducting themselves in a manner wholly compliant with the laws of this country is not only deplorable, it is inconceivably stupid.
The Prime Minister has fallen into the very same logical fallacy used by those who advocate coercion to affect results such as having more women in board rooms. While using menaces to intimidate firms into complying ‘voluntarily’ with their point of view, such legislators claim that, anyway, board rooms with women are more profitable – so we’re doing you a favour really.
What is rarely pointed out, of course, is that if it were so obviously a financial benefit to have more women on company boards, neither legislation nor the threat of it would be necessary. That’s how capitalism works. Likewise, if people were really so incensed by these companies’ tax arrangements as to decline their business, that is nobody’s concern but the company’s. Government need not involve itself.
The real issue, of course, is government pathetically trying to claw every single penny it can from the productive elements of society in an attempt to plug the gigantic black hole of its own creation. And, before you say ‘well it wasn’t this government that ran up the deficit,’ remember that in 2005 David Cameron pledged the party to match Labour’s spending. Remember how the Conservatives supported Gordon Brown’s bailing out of the banks.
For an institution so financially inept to hector private companies on the conduct of their affairs is simply beyond ridiculous.