Is Christine Lagarde a tax dodger?

While Christine Lagarde has been busy lecturing the Greeks about their chronic tax collection issues, it transpires the International Monetary Fund boss does not pay any tax on her own $467,940 annual salary - inflation-linked and topped up annually - plus $83k worth of extra allowances.

How is this possible?


Make her pay tax

Such arrangements are a very pleasant peculiarity for some people in international jobs, such as working for the UN or in many diplomatic roles. Many pay no or little tax. By the nature of their jobs such people are often rootless. If they paid tax then this money would have to be directed at a certain jurisdiction. Working that out could be complex and open to legal challenge.
%VIRTUAL-ArticleSidebar%

But a London tax expert had little time for this position: "Presumably it's done to attract the staff they need. They tend to live in different countries. I don't see why they don't pay tax. My personal view is that if you're living somewhere, you should contribute. You get the benefit of living in that country, you should contribute to the infrastructure. She' s [Lagarde] taking without giving anything back."
%VIRTUAL-ArticleSidebar%

Paying tax is just for the working class?

The acknowledgement that Lagarde pays no tax on her salary is something of a sideshow from the travails of Greece and Italy currently. But it does suggest paying tax is for ordinary wage slaves - or 'little people'. If Lagarde thinks paying tax is important - and there is plenty of evidence to suggest she does - why doesn't she pay any herself?

Working for the UN and other organisations brings other benefits - subsidised travel and rent expenses, for example.

One possible route to addressing this issue - surely you should contribute to the running costs of some jurisdiction somewhere? - in future could be to tax people where they have their main residence.

Media boss of the European Commission, Mark English, told AOL Money that all staff - including bosses - working for the EU do pay tax on their salaries. Which is the bottom line for most people wherever they live. Most people will likely think Lagarde's position is disgraceful.

5 PHOTOS
Five biggest taxpayer stings
See Gallery
Is Christine Lagarde a tax dodger?

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.


"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE


More stories

Read Full Story

FROM OUR PARTNERS