Tax avoidance. It sounds dirty, doesn’t it? And it’s meant to. It’s meant to evoke an image of some pinstripe suit wearing fat cat who’s fleecing the country for all he can get away with. And when we hear that George Osborne is going to crack down on the practice in the budget it reinforces the notion that individuals and companies who engage in tax avoidance are evil manipulators who aren’t prepared to pay what they owe.

And that’s just wrong.

I’m a tax avoider. I have an ISA. Yup, I put money that would otherwise be subject to tax into a special and entirely legal financial construct that removes the tax liability.

I know, you’re shocked. You didn’t think I was one of those people. Sorry to disappoint you.

And herein lies the key point. People and companies who avoid tax through legal constructs, and who receive vehement derision for their efforts, are no different to the everyday people on the street who have an ISA.

When you avoid tax, you’re simply ensuring that you pay the least amount of tax you are legally obligated to pay. And what sensible person wouldn’t do that?

That’s not to say the government isn’t within its rights to attempt to prevent certain currently legal practices which enable individuals and companies to minimise their tax obligation. But that’s a separate debate.

My point here is simply that the avoidance of tax isn’t a dirty practice. It’s simply an individual or company meeting their obligations and no more.  

Tags: George Osborne, GLA Budget 2011, ISA, Tax avoidance