Ritchie\’s solution

A general anti-avoidance rule is an essential part of any effective tax system. That is because all tax regulation is written and it is an inevitable fact of life that words have uncertain meanings, however much we like to deny it and however hard Parliament works to try to define them in taxes acts.

That means all tax law is open to abuse if the only basis on which it can be interpreted is the strict meaning of words, which cannot be known until a judge has ruled on the issue. So, we need a better basis for interpretation and that is to look at the purpose of the law, and the intention of the taxpayer and then decide if the two coincide. If they do, then everything is fine. If they don\’t then quite clearly action needs to be taken.

And who is to do the looking and the deciding? That\’ll be a judge again, won\’t it? Well, in a country operating under the rule of law it will be anyway.

3 thoughts on “Ritchie\’s solution”

  1. In fact the principle for which Ritchie contends already exists in law, courtesy of a case called Pepper v Hart. Now, I have no time for this case because I believe the law should be certain, or, if it cannot be, then the plain meanings of words used in legislation should be used to interpet that legislation, and to do otherwise, as Pepper v Hart allows, is to underwrite poor legislative drafting. Moreover, despite practising in the courts of England and Wales, I have never heard Pepper v Hart formally invoked (informally, it is).

    All that said, Pepper v Hart does allow courts to look at the legislature’s intention when interpreting statutes (provided there is uncertainty as to the true construction of the words used in the given statute).

  2. RM carefully sets up his straw man and the knock-down with his :
    ‘That is because all tax regulation is written and it is an inevitable fact of life that words have uncertain meanings, however much we like to deny it and however hard Parliament works to try to define them in taxes acts.’
    What he fatally fails to see is that the knock-down also defeats his answer.
    ‘The purpose of the Law’ will also be in the written word, and thus open to various interpretation and so on and so on, ad infinitum.
    Unless he wants to rely on the reports of the spoken word in the debates in the House, of course. Personally, I’d rather rely on Paul Krugman’s aliens…

  3. “it is an inevitable fact of life that words have uncertain meanings”

    That’s why we developed mathematics, which can work wonders. You still have to understand the system you’re specifying, however, which might encourage a more scientific approach to taxation, and would certainly require simplifying the tax system.

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