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The Scoop

Panamanian Pandemonium


The media attempts to get to the bottom of the Panama tax leaks are hampered by their inability to distinguish tax avoidance and evasion. The former is sensible and good, the latter is illegal and bad. The reporting repeatedly confuses the two. When I first started on this long and arduous journey many moons ago, the top rate of tax in this Country was 83% – and an eye watering 98% for earned income. The result – investors moved their money to various tax havens – perfectly legally. And who could blame them.

Now, politicians are marginally less stupid, and we can expect a top rate of tax of less ungodly proportions. And anyone with even a tenuous grasp of the subject will note that the laws have subsequently been tightened and Britons (and most of the rest of the world) now have very few offshore avoidance routes available to them.

But the media baying for the blood of anyone who arranges their affairs to avoid tax is a very dangerous path to go down. Because it includes anyone who has an Individual Savings Account. Because the sole purpose of an ISA is to save tax. And it has been proved in court again and again that an individual can and should arrange their affairs to pay as little tax as is possible within the law.