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Panama Papers did not mean mauling the rich

Terry portrait with tieThere is nothing that gets the media worked up quite as much as a bit of ‘dodgy dealing’, particularly when it involves wealthy politicians.

The emergence of the Panama Paper has shown how dogged journalism can be a force for good. The downside is when those same dogs begin tearing at the body, turning a legitimate inquiry into an unseemly witch hunt with the motives of a lynch mob.

Exposing illegal tax evasion is fair game, as is the use of overseas investment vehicles deliberately designed to deprive domestic exchequers of tax revenues. These latter methods may be within international tax rules, but the process smacks of double standards and, at worst, unethical behaviour.

That said, there is no evidence that Prime Minister David Cameron’s dealings with his father’s offshore account was anything but legitimate.

Mr Cameron is guilty mainly of bungling his handling of the story. His tax affairs were sound, but his PR and ‘crisis management’ was rubbish.

It left him badly exposed politically. After a week in which he was forced to admit something he initially denied, he appeared to betray the trust of the public. That was a serious error of judgement. But when the truth came out, he and his father were shown to have paid all their taxes.

Sadly for Mr Cameron, his mea culpa has failed to kill the story. The media smells blood and Opposition MPs, falling over each other in the rush to publish their own tax statements, have demanded further disclosure of the Prime Minister’s financial affairs. He has obliged by giving details of his tax payments.  And still there is nothing to suggest any wrong doing.

But even this is not enough. He was accused of taking money from his mother who felt he would miss out when his older brother inherited the family fortune.

If there is anything ‘dodgy’ about all this it is the media’s reporting of the story which has grown arms and legs. For a start, inheritance tax planning is a perfectly sound and sensible practice. Donating a sum of money within a set number of years before the donor dies is perfectly legal.

So, the headline ‘mother gives son £200,000’ (implication: tax dodging) in the Sunday papers only tells us that Mr Cameron had wealthy parents who were able, and within their rights, to pass on a substantial sum of money to their children and probably acted on advice to do so.

Governments constantly encourage us to use tax allowances to reduce our tax bills. From ISAs to pensions relief, capital allowances and thresholds on income tax, these are all legal ways of ‘avoiding’ tax.

So is putting money into overseas bank accounts. One commentator noted that an investigation into British nationals ‘hiding’ money in Swiss bank accounts revealed only that they had all paid the taxes due and received the allowances available to them under international law.

The Panama papers have suggested widespread mis-use of the tax system but as one observer in the US media has noted, the reality is likely to be far less tax dodging than a frenzied and indignant media may be seeking.

Instead, their biggest revelation may be to highlight legitimate loopholes that benefit the rich over the average taxpayer who has no means of protecting their assets in the same way.

To that extent they focus attention, not so much on anything illegal, or even ‘dodgy’, but on the need to bring greater fairness and transparency to the system.

Just as worrying is that the row over tax affairs turns into another unseemly media mauling for its own sake. Once again politicians have been seen as easy targets. Mr Cameron, and now the former Foreign Secretary William Hague, are quite justified in defending their right to a certain degree of privacy, as long as they are not hiding anything that should not be hidden from the public.

Ultimately, the coverage in the media exposes an underlying attack on the rich which, in Britain, is still deemed to be something to be ashamed of.




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