The tax policy gap is the tax not paid in a country as a result of the decision made by a government not to tax a potential tax base, such as wealth. Additionally it is the value of the tax reliefs, allowances and exemptions given by a government for offset against a source of income that might otherwise be taxable.
Seriously? A potential tax base is all incomes of everyone. Not taxing all incomes at 100% is therefore a tax policy gap?
The definition of tax avoidance has also changed, no?
Tax avoidance is taxpayer determined behaviour where the taxpayer decides to submit a tax return and declare their tax liabilities based on an interpretation of the applicable law of the jurisdiction that the taxpayer knows may be unacceptable to the tax authority of that country. They do so knowing that the risk of their potential misinterpretation of the law being discovered is limited and so the chance of appearing to reduce their liability in ways they claim to be legal, whether that is true or not, is sufficiently high for them to justify the risk of doing so. The scale of this issue is related to the complexity of the tax system and the degree of uncertainty that might exist as to the proper interpretation of the tax rules that it creates.
No, that’s an attempt at tax evasion.
I stress that tax avoidance does not ever include making use of tax reliefs and allowances provided by the law of a country: the cost of these is included in the tax policy gap.
Therefore Vodafone wasn’t avoiding tax, was it? Because the law in place at the time specifically stated that the money piling up in Luxembourg was not taxable in the UK.
He’s changed his definitions. Which means that his numbers or the tax gap should be much lower. But will they be?
In that case not agreeing with a tax authority’s interpretation of tax law is not wrong. Disagreement can be honest.
Well, yes, Vodafone, Boots, Starbucks…..
Does tax avoidance dishonestly appropriate property belonging to another? I would suggest not. I would say it knowingly exploits uncertainty in the law to secure a pecuniary advantage, but that most of those doing it will have secured an opinion from a professional adviser before doing so that the action in question was legal, even if it had an uncertain consequence. And those opinions (which will not be publicly available, but which will be in the possession of the tax avoiding taxpayer) will be more than enough to show that the tax avoider had no intention of being dishonest, precisely because they had gone out of the way to make sure that they had an opinion to say they were acting legally, even if with dubious ethical intention.
And ain’t that a change? It wasn’t long ago that asking for a legal opinion was proof perfect of avoidance. For why ask if you’re not trying to avoid?