Taxing stuff

09 December 2009 0

The Guardian is asking for the help of tax experts among its readership to help unravel Tony Blair’s finances. He’s earned millions since leaving office, through what the paper delicately describes as “an unusual mix of income streams”. Others, it claims (not sure who) have described his finances as “opaque” and “Byzantine”.

I’m not that interested in Tony Blair’s finances, but I think this is a brilliant idea. In the past, big corporations and the super-rich have been able to obscure their financial dealings quite nicely because they have the resources to set up absurdly complex schemes, hire all manner of expensive lawyers, and not respond to requests for information. The press, on the other hand, have to do their best with the services of a few tired hacks with all sorts of other things on their plates, and whatever specialist advice they can afford/wangle.

Last year the Guardian got sued by supermarket giant Tesco over an article about tax avoidance. The paper admitted its errors, and after hundreds of thousands of pounds worth of legal costs were racked up, the case was settled with the paper printing a correction and apology, and making an (undisclosed) donation to a charity of Tesco’s choice. The supermarket hired the notoriously aggressive libel lawyers Carter-Ruck (with whom it had another run-in this year over Trafigura) and sued not only for libel but also malicious falsehood – accusing the paper of “lies” and claiming it suffered a direct effect on its finances from what was printed.

In a piece for the New York Review of Books in January this year, the Guardian’s editor Alan Rusbridger sets out in great detail what went on, and where it went wrong. Understandably, he was anxious that the important lessons of the incident might get overlooked once the Guardian had admitted it got the story wrong. Yes, the report was wrong, but is that surprising? And aren’t there bigger issues at stake?

Rusbridger wrote: “The more complicated tax avoidance measures indulged in by major companies are largely ignored by the British press, with the consequence that there is virtually no public pressure on corporate boards to behave otherwise… After the Tesco legal assault, it is fairly safe to predict that almost no British paper will investigate in any detail how companies today increasingly fund and structure their overseas expansion with an eye to avoiding tax… The truth is that the advanced tax planning undertaken today by most global companies is as intelligible to the average person as particle physics. This state of incomprehension extends to most journalists, editors, parliamentarians, and, importantly, company directors themselves – executive and non-executive.”

So, for its next investigation, the Guardian has called on the expertise of the good people of the internet, in the hope that there’ll be someone out there who actually gets this stuff. It’s a nice example of old and new media making friends, and in the absence of any reform of British defamation law, it might offer a way of relieving the “chilling effect” that cases like this risk having on the reporting of matters of public interest.


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