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Published on February 20th, 2012 | by Glenn Coleman-Cooke
Image © [caption id="attachment_7937" align="alignleft" width="192" caption="Head of the Student Loans Company Ed Lester"][/caption]

I must admit that at first glance, it does seem a bit cheeky. Many of us, myself included, were probably not aware that as a senior public servant, you could simply register yourself as a company and drastically reduce your tax liability, and there is certainly something unpleasantly contrarian about people like Ed Lester, head of the student loans company, who are almost certainly fighting for more taxpayers money for their department year on year without contributing as much to those funds as others who earn the same do.

Attempts at damage control on this, to put it mildly, controversial story have been less than convincing. The best that Chief secretary to the treasury Danny Alexander could come up with was that he was “not made aware” of the tax implications of the contract agreed with Mr Lester, one of several public servants implicated. This plea of ignorance is however a rather self-defeating strategy, as it does somewhat beg the question of why we have a man lacking in basic knowledge of the taxation system as second-in-command of our nations finances.

Much of the public frustration with this policy seems to come not from the notion that it is inherently bad to try and reduce ones tax bill ,after all, how  many people do you know who pay more tax than they are legally obliged to, and how can someone be fairly criticised for working within the rules? Instead it stems from the fact that most of us do not have the luxury of such an option ourselves. Be it for political reasons- such as a belief that it is unfair that individuals must contribute such a large chunk of their income to for state spending, most of the results of which they don’t benefit from- or simply for financial reasons- such as a belief that coping with the recession might be easier if someone from the exchequer didn’t figuratively come round, pick you up and shake you by the ankles to see what falls out every time you make or spend any money-  virtually all of us would like to reduce our burden if we could, but having to take our money as it comes, we cannot.

While this is galling enough for those in normal jobs who have their taxes deducted from their wages without any opportunity for “efficiencies”, it    seems to be more so for those who find themselves in a situation in many ways similar to that of these public sector bosses. Genuine freelance consultants have drawn attention to the fact that when they attempt the same perfectly reasonable tax arrangement, they often have special legislation, known as IR35, used against them, which states that if their skills are provided “in a way deemed to be the same as employment” then they must pay a higher tax rate.

Those who criticise anyone who wishes to pay less tax constantly use the phrase “fair share”, knowing full well that it is one of those loaded political phrases that it is near impossible to argue against if you accept it’s prima facie meaning, like “progressive” on the left and “common sense” on the right. They always use this phrase however under the blithe assumption that paying ones fair share always means paying more, never less, and that no matter how much one contributes to the national coffers, even if it is many times the sum of the value of the services and facilities received from the state in return, it is not a fair share unless ones pipsqueak. The issue with Mr Lester, in my view, is not that he is failing to pay his fair share, for, while I do not have exact figures, I feel confident that has paid far more money than the average into the public purse, but rather that only a small group of people like him are able to ensure that they do not pay (too much) more than their fair share.

In light of this story then, I would suggest that the rallying cry of young people everywhere, in the face of a system under which most get far less out than they put in, should not be “more tax good, less tax bad”,  but rather the truly liberal and democratic  “equal tax avoidance for all”.

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It’s fair enough to be angry at Ed Lester, but only because you can’t do what he does

Head of the Student Loans Company Ed Lester

I must admit that at first glance, it does seem a bit cheeky. Many of us, myself included, were probably not aware that as a senior public servant, you could simply register yourself as a company and drastically reduce your tax liability, and there is certainly something unpleasantly contrarian about people like Ed Lester, head of the student loans company, who are almost certainly fighting for more taxpayers money for their department year on year without contributing as much to those funds as others who earn the same do.

Attempts at damage control on this, to put it mildly, controversial story have been less than convincing. The best that Chief secretary to the treasury Danny Alexander could come up with was that he was “not made aware” of the tax implications of the contract agreed with Mr Lester, one of several public servants implicated. This plea of ignorance is however a rather self-defeating strategy, as it does somewhat beg the question of why we have a man lacking in basic knowledge of the taxation system as second-in-command of our nations finances.

Much of the public frustration with this policy seems to come not from the notion that it is inherently bad to try and reduce ones tax bill ,after all, how  many people do you know who pay more tax than they are legally obliged to, and how can someone be fairly criticised for working within the rules? Instead it stems from the fact that most of us do not have the luxury of such an option ourselves. Be it for political reasons- such as a belief that it is unfair that individuals must contribute such a large chunk of their income to for state spending, most of the results of which they don’t benefit from- or simply for financial reasons- such as a belief that coping with the recession might be easier if someone from the exchequer didn’t figuratively come round, pick you up and shake you by the ankles to see what falls out every time you make or spend any money-  virtually all of us would like to reduce our burden if we could, but having to take our money as it comes, we cannot.

While this is galling enough for those in normal jobs who have their taxes deducted from their wages without any opportunity for “efficiencies”, it    seems to be more so for those who find themselves in a situation in many ways similar to that of these public sector bosses. Genuine freelance consultants have drawn attention to the fact that when they attempt the same perfectly reasonable tax arrangement, they often have special legislation, known as IR35, used against them, which states that if their skills are provided “in a way deemed to be the same as employment” then they must pay a higher tax rate.

Those who criticise anyone who wishes to pay less tax constantly use the phrase “fair share”, knowing full well that it is one of those loaded political phrases that it is near impossible to argue against if you accept it’s prima facie meaning, like “progressive” on the left and “common sense” on the right. They always use this phrase however under the blithe assumption that paying ones fair share always means paying more, never less, and that no matter how much one contributes to the national coffers, even if it is many times the sum of the value of the services and facilities received from the state in return, it is not a fair share unless ones pipsqueak. The issue with Mr Lester, in my view, is not that he is failing to pay his fair share, for, while I do not have exact figures, I feel confident that has paid far more money than the average into the public purse, but rather that only a small group of people like him are able to ensure that they do not pay (too much) more than their fair share.

In light of this story then, I would suggest that the rallying cry of young people everywhere, in the face of a system under which most get far less out than they put in, should not be “more tax good, less tax bad”,  but rather the truly liberal and democratic  “equal tax avoidance for all”.

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