Tennis Anyone? Britain's Tax Debate Needs a 'Hawk-Eye' Replay
Tennis might be associated with some of the greatest sporting tantrums of all time - thanks in part to one of its most famous sons, one John P. McEnroe - but it's also a sport that largely avoids refereeing controversy.
The construct of the game - parallel and vertical lines and a symmetrical net - and the application of technology have almost completely rid the game of major disputes.
In is in; out is out. Questionable calls are settled within seconds and are incontrovertibly proven not only to the players, but to the stadium spectators and the broader television audience.
Players don't bother to "work" the umpires or line judges to try and eek an advantage over their opponent because to do so would be wasted effort: at the end of the day, what's correct and fair for one is equally true for the other.
If only we could apply the "Hawk-Eye" line judging technology to wider financial world and the concept of taxes and fairness.
British firms, we're told, could be hiding as much as £1bn from the taxman because of their aggressive use of avoidance schemes and accounting techniques.
The issue is incredibly emotive in a domestic economy that continues to wheeze from the costs of bank rescues and a wider European region staggering under the weight of the borrowing needed to offset falling tax revenues.
Only last week, Goldman Sachs, the bank the world loves to hate, was racked over the coals of journalistic righteousness after it was reported - never confirmed, mind you, but reported - to be thinking about delaying bonus payments until the new tax year when the top rate of tax will fall to 45 percent.
"Goldman misjudged the public mood," wrote Hugo Dixon, the editor-at-large at Reuters Breakingviews.
I seriously doubt anyone within the organization was dumb enough to assume that a tax-avoiding headline with the name "Goldman" on the top deck would have judged the mood "correctly", but I see what he's trying to say.
And that's the problem.
Tax policy shouldn't be based on mood, or perception or anything otherwise subjective and fleeting. It's bad enough we've tagged the current debate over income, corporate and wealth tax rules with the concept of "fairness". Adding the dimensions of "the public mood" would be - and will be - an economic disaster.
War and Peace
Britain's tax code is, famously and infamously, perhaps the most complicated in the world. The hedgerow of rules, caveats, rabbit-holes and carry-forward crevasses would make a seasoned organic chemist go pale with overwhelmed panic.
The fact that the very same UK lawmakers who left this snarl of over-regulation and absurdity fester for so long is one thing. To then castigate the firms that actually follow its 15,000 plus pages of rules - around 10 times more than Tolstoy's 'War and Peace' - to the letter is absolutely ridiculous.
Fairness in taxation and the consistent collection of revenues owed to the state are the cornerstones of any successful economy. That is beyond dispute.
But the goalposts of fairness must not be defined by the capricious mood of the economic times.
Is a civil servant earning £35,000 and paying 28 percent in taxes paying a more or less "fair share" than the small business owner who earns £65,000, pays 40 percent, employs five people and collects revenue on behalf of the government?
Should the bonus payments to a trader at a bank that never received a single penny of government support be hit with the same, higher or lower rate of tax than the same bonus paid to a state-rescued lender?
Why must a corporation - whose owners pay tax on income and earnings, whose employees pay tax on income, whose transactions are taxed, whose property is taxed and whose raw materials are taxed - be then excoriated for failing to pay a "fair share" of further tax when the annual books are closed?
Is there any other case in which a company can be "named and shamed" by lawmakers for following the rules those same lawmakers are in complete control of writing?
Testing questions for a tricky subject and best answered with a dispassionate debate that's led by the facts.
And that's where we get back to tennis.
It's hardly a stretch to suggest that there's a "home team" advantage in European football. In fact, an academic study found significant disparities in refereeing decisions that favoured the host - the clear implication being that officials felt pressure from the braying home fans. In a sport like football, where judgement calls dominate nearly every blow of the whistle - this seems relatively intuitive.
No such "home court" advantage exists in tennis, however, because of the common and objective application of both rule and the strict definitions of the game itself.
At present, UK tax policy is a hornet's nest of judgment and subjectivity. Tax officials can be "worked" by corporate bosses to wring favourable deals and the opacity of the tax code itself means there are likely no more than a handful of men and women in the entire world who could reasonably expect to understand its entirety.
Is it any wonder we're a £1bn short as a result - and that the home fans are screaming for more penalities?
We need a cleaner, simpler and more easily applicable tax code that will, like, Hawk-Eye, instantly allow for "in or out" decisions on tax policy that are transparent, binary and readily accepted.
After all, there's little point in debating the idea of fairness in a game where we can't even understand the rules.
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