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Governments don’t do it better

I referred to tax competition as a good thing because it puts some restraint on the predatory activities of politicians.  Without it many of them would raise taxes on those who create wealth and jobs in order to buy votes from those who do not.  Sir Michael Darrington, former head of Greggs Bakers, made a singularly unhelpful contribution to the debate on tax avoidance when he was interviewed on Sky TV.  He thinks tax competition is a bad thing because it restrains governments, apparently having rather more faith in politicians than I have.

He wants international agreements that prevent people seeking out low tax places to do business.  If he had his way there would be no escape because international laws would require all countries to impose high taxes.  I doubt that Sir Michael has any idea what this would do to the wealth-creating process, or to the world’s ability to use its resources to solve the problems that confront it.  Wealth has enabled us to enjoy better education, better working conditions, better health, more leisure and more ways in which to express and fulfill ourselves.  I can’t think that high taxes would be a good substitute for that, or that politicians can spend money better than private citizens can.

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