The news this weekend that Gary Barlow avoided millions of pounds in tax is just the latest in a long line of stories about tax avoidance. But tax avoidance isn’t the end of this story in either Mr Barlow’s case or in that of many major corporations. The bigger question isn’t just why more isn’t done to tackle massive tax avoidance scheme, a better question is why are some happy to subsidise tax avoiders and praise them as paragons of virtue?

Not only has Gary Barlow received an OBE, a positive endorsement via the Honours system, he’s also received free positive publicity in the form of the BBC dedicating a day to him (both of which increase his potential income). One of the arguments used to defend this treatment is the scale of his charity work. But it’s far easier to forgo earnings to do charity work if you have £26m in a tax avoidance scheme. Perhaps there’d be fewer children in need if everyone paid their tax.

There is no equivalent boost to the earnings potential to poorer people who give a greater proportion of their income to charity (and a greater proportion of it in tax).

But there are bigger subsidies going to bigger tax avoiders than Mr Barlow who receive similar generous treatment. I’ve previously discussed Apple on this blog and pointed out the massive pay packets and tax avoidance comes from a company whose most revolutionary products are based on publicly funded research. But more topical at the moment than the technology industry is the pharmaceutical industry.

The pharmaceutical industry is often praised for its creation of life saving and life improving drugs. However like the tech industry the pharmaceutical industry is heavily reliant on publicly funded research and at the same time neglects to pay tax to support that research. Pfizer who are proposing to acquire the UK pharma giant AstraZeneca has form in this regard. AstraZeneca has benefited from Government support. and the fact that they may be acquired and the profits from this government backing privatised has obviously caused some concern.

This is not a good argument for protectionism, or opposing such an acquisition. But it is a strong argument for locking down public benefits in the form of a golden share of intellectual property rights or though other tax arrangements. But there is a wider principle that should be applied to how tax laws are constructed and subsidies given out. Where the government is intervening in the market it should clearly mark what the public benefit is and how that will be retained. As it is, many government interventions could be seen as crony capitalism which privatises profits and nationalises risk.

Over and above its negative effect on public finances there is a basic inequality argument to be made for simplifying tax and subsidies.  The Times recently insisted that not only the rich use tax avoidance schemes. But it doesn’t take more than a moment’s reflection to realise that someone earning the median wage or below (£21,905 per year) can’t afford to pay an accountant to use these schemes. Similarly tax avoidance and subsidy maximisation are easier for large companies who can afford the accountants and lobbyists. Crony capitalism is a rich man’s game. A simpler tax system and simpler government subsidies for certain industries which were easy to access by companies big or small, would reduce the inequality exacerbated by the current system.

Tim Stacey, Policy and Campaigns Officer.