Stephen McGinty: Sit back as the cash rolls in Published on Saturday 23 June 2012 00:00 POLITICIANS have been quick to condemn Jimmy Carr's tax affairs, yet they are the very people who create and legislate the tax laws they condemn, writes Stephen McGinty SO WHAT are we to make of little Jimmy Carr? Well, to judge by his fellow comedians on 8 out of 10 Cats on Channel 4 last night then the answer is, mincemeat. As Sean Lock, a regular panellist on the comedy quiz show said: "we can all see why you work so hard now, cos you get to keep all the money." While as Carr himself explained to the audience: "I've been dishing it out for years, it's about time I got some. In my defence... no, I've got nothing. He then added: "I should probably say if the tax man is watching: "Hello, I'm Jimmy."" A while ago there was a lot of talk of how "comedy is the new rock "n" roll." I didn't know whether this meant comedy was where the young turned for anti-establishment rants or if it referred to the success of certain comedians at filling stadiums. But I do remember at the time pondering that a comedian's earning potential could easily outstrip a band's. Where a band must divide earnings among four (with the lyricist and song-writer keeping the lion's share) or, in the case of UB40, 8, a comedian needs only share it with himself. On tour, a band comes with an army of trucks lighting rigs, roadies and catering companies, while a comedian can, if necessary, drive himself and exist contentedly with but a mike stand and a single spotlight. However my ponderings on their earning potential was vastly outstripped by the facts as printed in the Sunday Times which revealed that, in 2011, Peter Kay earned £20.3 million, Lee Evans earned £12.9 million, Alan Carr £5.9 million and John Bishop £4.9 million. Jimmy Carr was absent from the list that year, but it was reported that he purchased an £8 million house in London, so he was obviously doing alright. So should we begrudge them the fruit of their talents? No, but when we learn that Peter Kay now secures a slice of the parking fees at his stadium concerts it should colour our view of his working class schtick. Can we listen to his tales of sliding on his knees on linoleum when he can, probably, afford his own private jet? He once named an earlier road trip the "My Mum Wants a Bungalow" tour, she may now wish to upgrade. So what has Jimmy Carr done wrong? In a legal sense. Absolutely nothing. He has accepted the advice of a clever financial adviser who has exploited loopholes in tax law in such a manner that his tax liability has been reduced from 50 per cent to just one per cent. Yet it is clear that such a deal comes at a cost, just not one due to Her Majesty's Revenue and Customs. Instead the cost is one that could be deducted from one's conscience and character. I write "could be" because it depends on what type of person you are. If, for example, you don't believe in the State providing a safety net to the most vulnerable in society or in the universal care provided by the NHS, if you genuinely believe in the Darwinian spirit that each is accountable for his or her own success and that the smallest government possible is best, you would be entitled to opt for such a deal secure in the knowledge that not only does it suit your bank balance but the content of your character. You will have acted consistently. If, however, you do believe in the nobility of good government and the necessity of the welfare state and the NHS and that the more you earn the more you should contribute to the benefit of others, a deal in which you, a multi-millionaire, can pay just one per cent on your income, while a cleaner will pay fifteen times more, starts to look rather uncomfortable. Then, there is the issue of your day job, which can involve mocking rich and affluent bankers for refusing to pay their taxes. Now, this can be side stepped slightly. Let us be honest - Jimmy Carr is a comedian. He will, and has, cracked jokes about rape: "what's the difference between football and rape? Women don't like football" if he thinks he will get a laugh and he is perfectly entitled to do so, we live in a free society where free speech, though eroding, is still to be protected. What I mean is, he will mine any situation or subject for a laugh. He is like a human version of those mathematical algorithims used by hedge funds but instead of scanning the markets for potential sources of untapped wealth, he scans modern life for gags. He is not, say, Mark Thomas, whose comedy is designed to make political points. Jimmy Carr's comedy is designed to make you laugh. Period. It has no other point. So, he could have stuck to his guns and, as he said at a gig on Tuesday night, insisted he would pay as little tax as possible and not a penny more. He could have defended his actions as entirely within the law and said that when the law is changed he will make alternative arrangements but until then he would prefer to keep his own personal tax rate at 1 per cent. However, financially, this would have been an exceedingly risky strategy akin to reading the early news reports but still deciding to give Bernie Maddoff one last chance. For the fact is that Jimmy Carr is entirely dependent on the goodwill of the public, the vast majority of whom have no choice about what level of tax they wish to pay. In the age of twitter and social networking it doesn't take long for a backlash to begin and if people began to perceive him as stealing from them then his brand could quickly become toxic. As Frankie Boyle tweeted: "If you're rich, don't look at it as tax avoidance, look at it as children's hospital buying you a pool table." So, in the long run, it makes better financial sense for Jimmy Carr to pay more tax now and so maintain his lucrative career, than pay almost nothing until that geyser of used notes comes to a juddering halt. I doubt very much that Carr has undergone a Damascene transformation in the past few days, but instead made an astute financial call. So, let us now turn our attention to David Cameron who was swift to brand Carr's behaviour as "morally wrong." Was he right to do so? I'm not so sure and, like Ed Miliband I am rather uncomfortable with politicians telling us what is, or is not, "morally wrong," but if he intends to do so he must be consistent and so also brand as "morally wrong" the behaviour of Gary Barlow, a Conservative supporter, who has similarly benefited from a complicated tax avoidance scheme as well as his late father who sought to shelter the family fortune in an off-shore tax haven and a whole spate of Conservative cronies such as Lord Ashcroft. But then again who is ultimately responsible for the tax system of the United Kingdom? Step forward our Prime Minister and First Lord of the Treasury, Mr David Cameron. Over the previous few months I've tried repeatedly to appreciate the government's argument that a 50 per cent rate of tax is unenforceable and so must be rolled back to 45 per cent. What, in essence, the government is saying is that it cannot police the wealthy, as they are simply too slippery but has a comfortable strangle hold on the rest of us. However you phrase it or explain it in a manner that by reducing the tax rate you will actually bring in more money to HMRC it just doesn't seem fair and that is what most people want, a system that is fair. In many ways this is impossible as we live in an unfair world, but it should, at least, be a target at which the government takes aim. This is why there is so little public support for our striking GPs, the single greatest beneficiaries of the Blair Years and the best-paid public doctors in the world, for the fact is that the public thinks it only fair that they should pay more and work longer for their fabulous pensions. It is the government's responsibility to simplify the tax laws which currently take 11,500 pages to list in Tolley's Tax Handbook and which has led to a rise of 51 per cent in the number of registered tax accountants. George Osborne has already described the tax system as a "spaghetti bowl" but he has done little to straighten it out.