I haved written previously in this blog about tax, and most especially about unfairness in the tax systems around the world.

The BBC have just published this report, which seems like a rather poor attempt to shed some light on the issue of tax havens and tax avoidance. It is interesting mainly because of the assunmptions that it documents, and because it misses the main point.

The first person interviewed is obviously an apologist for tax havens, as he is chairman of the Cayman Islands Stock Exchange. He makes some statements about the issue, but sheds no light at all. His arguments seem empty or circular.

The second person interviewed in the piece is the founder the Tax Justice Network, which campaigns against tax havens, so his allegiance is clear. He says something quite staggering: "Suppose we have a company that is registered in the Cayman Islands, but which trades in the UK. If the UK wanted to ask a question about that company, first of all it has to find a good reason why it needs the information, and secondly the Cayman Islands have to have a good reason to link that company to the UK". Well yes, I should hope so. If you want non-public information about any person or organisation, whether within a jurisdiction or cross-border, you most certainly should be required to provide a reason; the same rules as if you want to search a property or tap a phone. Any tax cooperation rules that erode this basic right to have to justify intrusive investigation (spying) are most certainly not acceptable. It is worrying that the Tax Justice Network seems to think otherwise.

British Member of Parliament, Margaret Hodge actually seems to be onto something when she says that tax avoidance has hit a raw nerve, but seems to have misread the root of the issue of public opinion, in my view. Yes, of course, everyone thinks it is unfair if they are taxed, and other people avoid paying tax. Right there is the key: "fair".

People think that tax should be fair, and right now it is very far from fair:

• Rich people can pay less tax than poor and middle-class people;
• International companies can pay less tax than other companies, but if they don't use these legal loopholes, they end up being penalised (paying more) just because they are international;
• Internationally mobile workers are similarly penalised, having to pay tax in multiple jurisdictions, and then claim one tax bill as a deduction against another (getting the money back a year or two later);
• The assumption of guilt until innocence is proven (the police may not but the tax man may!).

Fairness of the taxation system is not only a reasonable expectation, but a legal right. It is also a precondition for companies and individuals to come clean and play by the rules. Make the rules fair, and people will stop looking for loopholes and using tax havens; try harder to enforce unfair rules (e.g. by closing down tax havens) and people will find new tax havens and new loopholes.

Remember, almost every reader of this blog has engaged in tax avoidance (claiming deductions against your tax bill), so maybe it is not such a heinous sin after all.