Opinion  

I don’t want your tax break, George

Ashley Wassall

This week we have been mostly talking about tax.

I mean that in the most literal sense as well as figuratively: in addition to the swaths of articles we’ve published on the abolition of the pensions ‘death charge’ and coverage of wider Tory taxation plans, I also had the pleasure of hosting a fascinating conference on tax on Thursday (2 October).

A packed room heard from no less than nine speakers: the usual mixture of invited keynotes and sponsor presentations, covering everything from inheritance tax mitigation via business property relief, to tax-efficient investments such as venture capital trusts and enterprise investment schemes.

Unusually, the session that most arrested attention was one from a paying presenter, Dr Paul Jourdan, chief executive of Scottish small-cap manager Amati Global Investors, who devoted more than half of his allotted 20 minutes to a polemic on the ethics of ducking tax.

To summarise: with the aid of some startling numbers - did you know, for example, that even conservative estimates suggest up to $32,000bn is held in offshore tax havens on behalf of the already super rich - he argued that given the abominable state of the public finances, not just here but around the developed world, people had a duty to pay their way.

Of course Dr Jourdan didn’t suggest tax incentivised schemes such as EIS were wrong, but he did speak with conviction about the need for such schemes to genuinely honour the spirit of the rules and back entrepreneurs and businesses which will one day contribute to employment and the economy.

We’ve all seen the alternatives, such as VCTs which use the full breadth of the rules to back exclusively buyouts of mature businesses, and they stink.

In essence, he drew a line between supporting schemes which represent an ‘investment’ by the government and more craven efforts to reduce a tax bill. He implored the audience to ask before investing what the taxpayer would get as a return.

It was brave stuff; I was enraptured and inspired.

Earlier this week I offered some early thoughts on the Conservative’s financial model in the wake of the surprise move to repeal the 55 per cent tax charge on pensions on death and the associated measures to curb the deficit.

On the death charge cut, I will say again that I broadly support the move. Tax ‘relief’ on pensions is simply a deferred charge, so I don’t see why the government should take a huge cut of an accumulated pot just because someone has died before they could spend it.

Yes, the individual would also have benefitted from employer contributions and tax-free growth, but this is the incentive to save. Using Dr Jourdan’s language, this is an ‘investment’ from the government and others in ensuring we end pension penury and have a more sustainable future.