Bono is a super accountant.

So, remember when I posted that thing about Bono and his awesome tax work?

Yeah, as convinced as I was that itznewstome.com is a super-duper-reputable news source, I stumbled across this article the other day.

It’s by a guy called Richard Murphy (founder of the Tax Justice Network, apparently, and included on Accountancy Age’s “Financial Power List for 2006”) and he has some enlightening theories.

Now, I’m gonna quote from it extensively, but you should feel free to read the whole thing.

Bono has accumulated personal worth of hundreds of millions (choose your currency, I think the answer is the same in dollars, euros or sterling). And many (perhaps most) people still think wealth comes with responsibility, especially when the owner asks for that responsibility from others…

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This makes Bono’s shift of his tax affairs from Ireland to the Netherlands all the more difficult to understand. As I’ve said before… Ireland is a tax haven. And amongst the absurd benefits it has offered is tax free status to artists. U2 have apparently exploited this to ensure that no tax has been paid on the royalties they have earned from their songs.

Now, in a slightly more enlightened moment Ireland has decided to cap the income which can be subject to this exemption at 250,000 euros per annum. This is, of course, income beyond the dreams of about 99% of artists, whatever their medium, and so hardly diminishes Ireland’s commitment to support the arts, if that was the intent of the exemption. But the change is apparently unacceptable to U2.

Let’s put this in context. At worst the change means that if their excess royalties were shifted into an Irish company they might be subject to 12.5% corporation tax. This is, because Ireland is a tax haven, one of the lowest corporate tax rates in the world. Except that the Netherlands, which as I’ve also noted before will get increasing attention from this site, offers an even better deal on royalties and hopes to improve still further upon it from January 2007.

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It’s important at this point to remind oneself why this is important. The reason is simple. Tax is a key component in the development equation. Development thinking started with aid. Then it moved to loans (which of course subsequently led to the whole debt issue), which in turn led to trade and the need to generate the income to repay the loans, but now tax is seen as the fourth component in the equation.

The reason is simple. Loans have not worked, as Bono is keen to point out. The resulting debt cannot be repaid. Trade remains an enormous issue, with the odds still stacked against developing countries. So aid remains on the agenda. But no one who is serious about development really sees aid as the long term solution to the development issue. Aid dependency is the outcome of it. And that does not result in the creation of viable independent states capable of supporting their own populations which has to be the objective of development. Only a country which can raise the tax to support itself can do that.

What this argument on tax and development suggests is that the two are simply inseparable. Not everyone buys this argument yet, but it is hard to see how its validity can be denied. This means that anyone who promotes development has to be serious about tax: more than that, they have to be serious about paying tax.

That attitude to payment has to be evidenced in two ways. The first is a personal commitment to paying the tax that is due by an individual or corporation on the income they have earned in the location in which it can be best determined that it has been earned. The second commitment is to the integrity of the tax system, nationally and internationally.

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But the example he provides is more important than that. What he proves is that for some people (and especially those with considerable wealth) the only acceptable rate of tax is no tax. However low the rate of tax a country offers, and contrary to all the arguments put forward by those who promote flat taxes, so long as any tax is charged some will try to avoid or evade them in denial of responsibility to the societies in which they live.

Dear Bono: BAM!

Love, Richard Murphy.