Rule of Law? Or Moral Blackmail?

Rule of Law? Or Moral Blackmail?

by Roger Helmer MEP

When I lived and worked in Korea, the country’s auto industry was exporting around half a million cars a year, and importing around 500. The reason was not difficult to find. The Korean tax code was notoriously vaguely worded, and well-heeled Koreans knew only too well that if they bought an imported car, they would be subject to a “rigorous tax investigation”. And given the ambiguity of the tax code, that meant an infringement and a serious fine. In other words, failure to make the tax law clear and specific had handed the government a weapon of threat and intimidation which it could use to enforce policies that were law in all but name. It was, quite simply, moral black-mail. Or perhaps immoral black-mail.

Conservative (small “c”) thinkers, whether Jefferson, or Burke, or Friedman, have known for centuries that the Rule of Law, and property rights and enforceability of contracts, are fundamental to a free and prosperous society. So it seems rather curious that Conservative ministers in our Coalition Government seem to have forgotten the point entirely.

Cameron is frequently described as “a pragmatist”. But in his case, I’m afraid, a pragmatist is one who lacks any fundamental principle, and so feels entitled to make up the rules as he goes along.

We see it all too clearly in relation to the tax affairs of multinationals. Cameron lambasts Starbucks, and Google and Amazon, over their corporate tax record in the UK, where they have paid little or no corporate tax. This has been played up into what amounts to a hate campaign in the media. But the companies argue, quite correctly, that they have precisely obeyed the rules as they stand: they have acted within the law and with complete propriety. And Cameron seems to forget that Starbucks actually pays rather a lot, when you add in VAT, emplyees’ National Insurance, and local taxes.

Cameron responds by claiming that they have “a moral obligation to pay their fair share”. But this has been quickly refuted by accountants Ernst & Young. They point out that far from having a moral duty to pay more tax, companies in fact have a fiduciary duty to their shareholders to pay the minimum tax consistent with the law — which is exactly what they have done.

If Cameron and Osborne think that these companies should pay more tax, then they should change the tax code. It’s for legislators to make the rules, and for companies to obey them. The Prime Minister cannot then come along trying to lay a guilt trip on companies that in his personal view ought to have paid more than the law required. The fault lies with our excessively complicated tax code, which inevitably creates loopholes, rather than with companies and managers who are merely trying to do their job and maximise shareholder value. Cameron should blame himself (and the Treasury) if the outcome is different from his expectation — not the companies, who are perfectly entitled to threaten to withdraw investment from the UK if they continue to be subject to unjustified vilification from the government and the media.

And it’s not just the corporate tax issue. “Communities Secretary” Eric Pickles is up-in-arms about Council Tax increases. He told councils that they’d have to have a referendum on any increase in council tax of 2% or above. Then he’s surprised and upset when councils increase the tax by 1.99%. What on earth did you expect them to do, Eric? You make the rules, then you attack the councils for obeying the very rules that you made.

The attempts by Cameron and Pickles to use moral blackmail rather than the law is not only counter-productive, It’s a genuine threat to freedom and the rule of law. While Korea is cleaning up its act and moving away from vague laws and moral blackmail, this Coalition is taking us in the opposite direction. Shame on them.

10 thoughts on “Rule of Law? Or Moral Blackmail?

  1. Some notes I sent to a local newspaper:

    I believe there is disturbing trend developing in Leicester. A gradual drift which is a growing inequity between public and private sector workers.

    A recent TUC report stated that nine in 10 public sector employees enjoy a pension scheme, compared with fewer than half in the private sector. This decreases dramatically for low-paid workers in the private sector who are also more likely to have lower combined employer and employee contribution rates, leading to an inadequate pension pot.

    Low-paid workers are more likely to have less holidays, less time off and less privileges than their public sector equivalents. The £7.45 an hour wage guarantee (or Living Wage) for council workers, greatly increases this inequality.

    Low-earners now face council tax rises due to Government funding cuts, but the council could have minimised the burden by axing functions normally associated with the private sector, charities and religious organisations.

    Big Government’s failure is that no matter how hard it squeezes the rich – it seems that it is always the working poor who end up funding it through regressive taxes. The very same people it was brought into existence to help. I don’t know where Leicester City Council’s priorities really lie, but a two-tyre community is definitely not the way forward.

  2. A good article, but in reality tax collection in the UK is indeed a very costly business indeed, with a large portion of the revenue being eaten by the public service who are required to collect it, I recall when I was working as a deliverly driver many years ago, I used to deliver to the tax office, it’s another one of those state hotel type affairs, subsidised food, generous
    pensions, and sick pay, collecting taxes in the UK is a very expensive affair,
    the whole system needs to be simplified, only last week I was listening to
    an article on DR, they are currently costing us millions in errors due to issuing incorrect tax codes and wrong NI numbers, the whole system needs a
    complete overhaul in order to simplify the bureaucracy, that is the only
    answer, Yes the Korean Cars are good, some of the engine designs
    were vertual copies of some of the best Jap engines made, a good buy!

  3. Good points in the article, but many councils are also going to use shaming tactics and impose sanctions on private firms who don’t adopt the so called ‘Living Wage’.

    ‘Sacrifice services and freeze tax, public tells councils.’

    ‘Nearly two thirds of voters are willing to see local services suffer in order to prevent a rise in council tax, a poll has found.’

    ‘Of those surveyed in the poll, 48 per cent agreed that the cuts could cause social unrest and 47 per cent disagreed.’

  4. Yes, but in truth no one can afford to pay council tax anymore, in many cases people are going without food or heating, and yet again only yesterday
    further council tax increase to pay for police. The people are totally broke,
    this is what must be understood by those prats who run the councils and
    the courts, no point in putting people in the dock when they have no money.

  5. Problem is in this area, they employ part time workers, in some cases they
    only get £16.00 for three hours work, then the government tells us, those
    earning that sort of wage are not going to be worse off than those on wealfare, there has to be some sort of safety net, they are using these
    people as an excuse to cut benefits, which on the face of it is not ethical
    or income of just £2,500 per year for someone in work is just to
    low, they claim because they are unable to afford a TV no one else can
    have one, does this mean we will see redundancies in TV manufacturing
    I wonder.

  6. But isn’t ‘moral blackmail’ a form of voluntarism, and is that not better than coercion?

    I would sooner have leaders with moral powers than legal powers. Just a thought.

  7. Ah – but the Korean example is not moral lecturing (and nor are the antics of our own rulers).

    If it was a Prime Minister or a President saying “please do this – or I will cry” it would be one thing, but it is NOT.

    It is a politicians and administrators saying “do X” – with an implied THREAT attached.

    All those vague regulations – that can suddenly have teeth whenever the government wants them to.

    This is why business enterprises employ lobbyists – it is not to control government (as the left suppose) it is because they have to. For example, Bill Gates used to boast that he employed no lobbyists in Washtington D.C. – that almost destroyed MicroSoft.

    Sadly if a company does not employ lobbyists (make contributions and so on), it is open to attack.

    That is one of the consquences of the decline of the supposedly “obscure” subject of jurisprudence.

    The “rule of law” no longer means a set of clearly understood principles – it now means whatever the will of the government says the law is (Thomas Hobbes rules – the Roman Empire is back), so one must try and keep on the nice side of government.

    Nothing moral in it.

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