Based on what a group of business leaders have discussed in a recent gathering, a comprehensive reform in the tax system is the most effective solution to the problem of tax avoidance.

According to a recently conducted comprehensive study on tax avoidance, the Institute of Directors (IoD) has signified its advocacy for the redesign of the entire tax system in order to remove the current artificial boundaries between things that are considered as close commercial substitutes.

The employers’ organisation has been insisting that a swift action on the problem is absolutely needed what with taxpayers getting more and more creative with regards to finding ways around the anti-avoidance legislation and the Government formulating an increasingly complex legislation as a response to these methods.

According to Richard Baron, IoD’s Head of Taxation, “Reforming the tax system would obviously not be an easy task. It would mean some drastic changes. However, the task may still be worth undertaking as the current approach is leading to an impossibly complex and confusing tax system.”

The IoD report emphasises the kind of moral ambiguity that is associated with the commission of tax avoidance. The report also acknowledges the arguments that are forwarded against avoidance like competition distortion (this is when a person who performs extensive tax avoidance pays less taxes than a person who does not). But even though it may be true that a business can present more avoidance opportunities compared to others the real fault still lies with the tax system.