Thursday, August 13, 2009

Two More Nails in the Coffin of Legitimate Financial Freedom

Clameur de Haro regrets to see that two more blows were struck this week against the freedom of the law-abiding to deploy their legally-acquired assets in entirely lawful ways.
On Tuesday, as part of a Tax Information Exchange Agreement with Lichtenstein, HM Revenue & Customs cut a deal with the Principality’s authorities under which HMRC will “offer” limited penalties on unpaid UK tax liabilities originating from Lichtenstein bank deposits, but the Lichtenstein authorities will arbitrarily close the accounts of depositors who decline to volunteer details to HMRC.
It’s disturbing to note that the intensification of pressure on the Principality arose largely from the German Government being prepared to trade in stolen property, i.e. buying customer data stolen from a Lichtenstein bank by a former employee.
Then on Wednesday, the HMRC Special Commissioners delivered a ruling which means that some 308 national and international banks with operations in the UK will be forced to hand over details of customers with bank accounts offshore, in defiance of banking confidentiality.
If both of these initiatives are targeted solely at illegal tax evasion, then Clameur de Haro has no objection whatsoever. As he posted some time last Autumn –
Neither the slightest degree of opprobrium, nor the slightest taint of immorality, should attach to any private citizen, whether an individual or a corporation, who so arranges his financial affairs, by lawful means, as to minimise or avoid the appropriation of his wealth by the state. [Note the words “by lawful means” and “avoid” – and the latter’s important distinction from “evade” – for CdeH does not defend or attempt to justify in any way, and roundly condemns, the illegal evasion of obligations in contravention of the law of the land].
So CdeH welcome theses initiatives if they only counter illegal evasion and incidentally detect illegal money-laundering - the transgressors deserve what they get, because for freedom to function, it must mean freedom under the law.
But HMRC has recently started to adopt a much more aggressive, authoritarian approach to its remit, one not always in accordance with the settled law of the land. Two things in particular should be of concern: it has been deliberately trying to blur the distinction between legal avoidance and illegal evasion in the direction of treating any and all legitimate avoidance as being, by definition, evasion: and it has been increasingly adopting the position that actual tax law is not what is laid out in statute, as interpreted by the judicial process, but what HMRC consider the intentions of the framers of legislation to have been, irrespective of the actual wording.
In this context, even the law-abiding with legally-held accounts, with no connotations of evading UK tax liabilities, have reason to fear. When government purports to arrogate to itself the power to decide what the law is, we all have reason to fear.
In such ways do viscerally high-taxing states seek to eliminate, by threats and intimidation, the alternatives available to their citizens, rather than lowering their profligate spending, decreasing the tax burdens they impose to fund it, and so reducing the incentives for taxpayers to shelter themselves from it.
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