Russell Long, the southern Democrat who was long-serving chair of  the Senate Finance Committee, composed the ditty ‘don’t tax you, don’t tax me, tax the fellow behind that tree’.  When politicians explain that public budgets will be balanced without pain through the elimination of waste or an assault on tax avoidance, you know that they are not serious.  There is plenty waste and much tax avoidance:  but if eliminating them was easy or painless, it would already have happened.  No cache of revenue ‘behind that tree’ is available to avoid hard tax and spending choices.

Maya Forstater has done valuable service in puncturing the extravagant claims of campaigners that the lives of the poorest people could be transformed by money from behind the tree. Some of these arguments are simply laughable.  Christian Aid has claimed that the import of 66 million refrigerators to Spain from China in 2002 at an average price of 38 cents represents a shift of €8 billion out of China.  ‘The money lost could be used to provide schools, hospitals and better living conditions worldwide’.  I have always tried to teach students that the most likely explanation of a startling statistic is that it is wrong:  but, it seems, to no avail. There are only 18m households in all Spain.

        Oxfam’s CEO, Winnie Byanyima, has asserted that the millennium development goals could be achieved ‘twice over’ by the proceeds of an attack on avoidance of tax in developing countries by multinational corporations. This is barely more plausible than the 38c fridge. Most tax avoidance by multinational companies relates to developed countries, not developing ones – the biggest victim of these strategies is the United States.  The main impact of such avoidance on lower income economies is felt, not by the poorest countries – the states of sub-Saharan Africa where global poverty is concentrated– but in the large emerging economies which are active in global trade – Brazil, China, South Africa. 

        George Osborne is right to attack both artificial avoidance schemes and outright evasion, although his fine words are undermined by less publicised measures to beggar our neighbours by encouraging multinationals to report profits in the UK rather than elsewhere. But Jeremy Corbyn’s fantasy that austerity could be avoided by money currently behind the tree is indeed  a fantasy. Calculations of the scale of tax avoidance and evasion, like estimates of ‘tax expenditures’ from reliefs and allowances, assume that, in all other respects, behaviour would remain unchanged if tax which is currently avoided or evaded were collected. It would not. Many relevant transactions would not occur at all. It is an open question how much additional company tax could actually be collected by poor countries without discouraging the external investment essential to their development.

But one need not believe in pots of gold behind the tree to be concerned about tax avoidance.  More thoughtful tax campaigners – and HMRC -have defined tax avoidance as a situation where most reasonable people would agree that, if the facts are as described, tax ought to be payable whether or not it is legally payable. 

       Tax is thus a moral issue.  Not because we should take pleasure in paying tax –The Joy of Tax, the recent  book by Richard Murphy, tax justice campaigner and adviser to Jeremy Corbyn, will be on few Christmas wish lists.  But because the behaviour of well off people, and large corporations, should conform to the expectations of most reasonable people.  It is not just the rule of law, but a sense of shared values, which makes economic and social life possible in the modern state.  And that is why multinational businesses should not engage in transactions without real commercial substance and why celebrities faced with large tax bills as a result of failed avoidance schemes deserve what they get.