A HSBC files leak which revealed how the bank assisted clients with tax avoidance on an industrial scale has dominated Westminster, headlines and conversation up and down the country.
After weeks of outcry however, it is clear that almost no one understands how deep tax avoidance practices go and those that do, are keeping quiet.
Tax avoidance, for the most part, is perfectly legal. Corporate and private clients receive professional tax advice from companies like PwC, Deloitte and KPMG on how to structure their affairs and they do so accordingly.
And why not? It makes perfect business sense.
Just like any other expense, if you can minimise your costs by legally structuring your business in another way, you would be foolish not to. As such, many multinational companies and the world’s wealthiest decide to locate their assets in offshore jurisdictions where tax rates are generally lower than onshore counterparts.
It is morally reprehensible, I agree, but in capitalism, there is an inevitable temptation to let profit trump corporate social responsibility.
As a result, HSBC is a very small tip of a colossal iceberg. I understand why the anger towards them is there – but it is completely misplaced, especially given that they are not the cause.
What many in the media and in turn the public are currently failing to understand is that due to the legality of tax avoidance practices, there is an entire industry dedicated to it – made up of bankers, lawyers, accountants and fiduciary service providers – and it operates on a truly global scale.
Yes, HSBC is involved, but it is one of many thousands in an interconnected web responsible for wiping out trillions off of balance sheets and tax returns, not excluding the likes of Barclays, Lloyds and Royal Bank of Scotland.
Why, then, is our government so “outraged” by these HSBC revelations?
One option is to suggest that they are just as misinformed as the general public. It is appealing to suggest that our politicians are completely ignorant and incompetent, but that strikes me as rather unlikely.
The other more compelling theory is that government, through the years, have been complicit in a system where the laws are engineered in the favour of wealthy elites and their corporations, and what we are seeing is a mischievous act of concealment.
If this is the case, they will ride the public anger of the HSBC scandal until it quietly fades away, allowing the rest of the industry to heave a sigh of relief, as the inequality-ridden system remains untampered with.
Meanwhile, the nation will endure years more of austerity, being repeatedly told that this is the only viable option to turn the deficit around. This cronyism in our public officials – particularly of those in the Conservative party – was summed up perfectly by Margaret Hodge MP, the Chair of the Public Accounts Committee, when she said: “If this had been benefits scrounging, they would have had to be queuing around the court to have their cases heard.”
With reports confirming that the latest bout of budget cuts are due to leave some councils struggling to meet their minimal statutory duties and with the general election approaching, the population must ask itself whether it wants to live in further austerity or expect its government to do more to close the tax gap.