You just can’t escape from tax as Parliament said to the Americans just around tea time.

I am writing this from Boston on the glorious 4th of July.

Over the past few days of walking around the City’s historic sites I have been reminded of the importance that tax plays in determining public sentiment. Now given what I do for a living it doesn’t take much to set the old tax antenna vibrating and I have been saturated in “tax alerts” in my time here. Tax certainly played a pretty big part in driving the events that led to American independence with the signing of the Treaty of Paris in 1783. Although not the only factor leading to revolution the series of taxing acts, including the Stamp Act, the Tea Act and the Townshend Acts, were significant in building anti-English sentiment to a fever pitch. The media, it seems, also did its fair share to fan the flames of indignation and revolution.

England needed the money to repair public finances seriously damaged by the 7 years war and America resented having to pay tax to and buy tea from a country where they had no direct representation in parliament.

And the rest is history… So to speak.

And although history isn’t exactly repeating itself in the same way or to the same extent, some of the key components in the time leading up to revolution are at play now in many countries and especially in the UK.

There’s certainly tax inspired resentment. The key difference in relation to taxation and public sentiment in the UK right now is that, back in 18th century America, the resentment was directed at the British Government seeking to raise the tax whereas in 21st Century Britain the (Government, Public Accounts Committee and media inspired and supported) resentment is aimed at those who are perceived not to be paying their fair share in these straightened times.

So the same public indignation, just directed at a different target.

And there’s also a strong Government motivation to tax to repair public finances (due to the effects of the financial meltdown, as opposed to the 7 years war)… and to be seen to be doing something to assuage public indignation. The take away points for financial advisers is that people care about tax and that the Zeitgeist in relation to tax avoidance and even tax planning has changed – possibly for ever, at least for “the foreseeable”.

This means that it’s pretty much compulsory to know about tax, what can and can’t be done to legitimately pay as little of it as possible.

Being “knowledgeably tax proactive” with your clients should be an investment that yields a pretty decent return – for you and your client.

Enough of the history already!

Right, time for tea.

Happy Fourth!

Tony Wickenden

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