Do you want to be taxed in principle or by the letter of the law?

One of things that struck me about the whole MPs' expenses debacle was the double standards and hypocrisy at play.

You'll recall that most MPs sought to justify their expenses as being within the rules. "Sod the principles set out in the Green Book. Sod the high ethical standards you might want to expect of elected officials. We just focused on keeping within the rules." That was pretty much the attitude.

On the other hand when it comes to tax planning and tax avoidance the Government and HMRC have adopted a very different approach. We all know the difference between tax avoidance and tax evasion. The former is legal, the latter is illegal. Tax avoidance often exploits flaws and loopholes in the law. In this context Treasury MPs and HMRC talk about abusive tax avoidance and artificial tax avoidance. That is, tax avoidance which is legal but which is contrary to the intention of the law.

If the MPs were consistent therefore they would have to either:
a) condemn each other for exploiting loopholes in the rules that determine which expenses they can claim; or
b) accept that taxpayers are entitled to adopt exactly the same approach when it comes to tax rules.

In effect, either one refers to the letter of the law/rules or to the spirit and intention of the law/rules. You can't have it both ways. It is evidently hypocritical to adopt one standard for taxpayers generally and a lower standard for MPs.

I raised a similar question on this blog almost 18 months ago in February 2008: Is it one rule for MPs and another rule for the rest of us?

What do you think?