THE CONTRARIAN VIEW

Despite the common view, loudly expressed by the Press, Politicians and ‘Campaigners’, large quoted companies have a duty to avoid as much tax as they can.

First, the idea that anyone has a moral duty to pay more tax than the law requires is, to quote a famous judge, “mere cant”. We have a legal duty to pay tax, not a moral one. The only morality of tax is the age-old requirement, learnt at our mother’s knee, to tell the truth. The tax system is not ‘fair’: it is merely a practical way of taking money from people who’ve got it, because you can’t tax people who haven’t got anything. But the Government has no moral right to that money, merely a legal right.

On the other side of the coin, the directors of a company have a clear duty, imposed on them from the first days of joint stock companies, to maximise the value of their shares. That’s what they’re paid for, and that is their moral duty. Since one of the major overheads of a company is its tax bill, this moral duty therefore extends to the duty to minimise the tax cost as well as all the other costs. This duty to avoid tax derives from basic principles of what companies are and how and why they are set up. Any supposed ‘moral duty’ on the part of a quoted company to pay more tax than is legally due is mere cant.