Why would anyone decent enter politics?

I am a huge fan of politics if not always of politicians.

So this is an interesting time for me, the endlessly fascinating US presidential candidate elections which are fought with a viciousness and brutality that leaves few stones unturned in the search for dirt, innuendo and scandal. The televised debates and rallies are just ferocious.

Here we have a potential Brexit; and according to polls held last week in both France and The Netherlands a potential appetite for a Frexit and Nexit (sorry the terms annoy me too). Particularly if the British electorate do the unthinkable for Brussels and do vote to completely distance themselves not just from the euro currency but also their membership and some pretty hefty contributions from the larger European project.

Just when Europe is struggling with moribund economies, a resurgent right wing, national indebtedness and an ever worsening migration and border control situation.

“It is pretty hard to really care for the EU elites.”

It is pretty hard for anyone outside of Brussels and Strasbourg to really care for the EU elites. Profligate, corrupt, self absorbed and self interested but our referendum gives us an opportunity to decide whether to stay and try really hard to help reform it from within or get out now and strike out on our own once again in the wider world.

Even this provides further political uncertainties as it is likely a vote to leave would trigger a crisis of the Union with Scotland and possibly Wales being more inclined to stick with Europe than the rest of the U.K.

As we move closer to knowing who the US presidential candidates will be in an ever increasingly personal and nasty battle and to the referendum on Europe here in the UK with the Prime Minister having to fight those within his own party really hard on the issue a whole new front opened up for him.

His finances, his investments and family tax tax planning specifically.

Hot on the heels of the the leak of a mountain of documents from Panama law firm Mossack Fonseca revelations have surfaced that his father used their services.

Further, that he himself is investing offshore and will benefit from a financial gift from his mother tax free should she survive seven years from the date of the gift.

The press and opposition politicians were beside themselves with righteous indignation. A concerted and pretty brutal attack was mounted by most of the usual left wing subjects and even some of the less usual right wing who feel aggrieved at the PM’s stance on remaining within Europe.

So it is worth having a proper look at what was done.

“Perfectly legitimate planning open to all.”

It appears after all the cat-calling and rhetoric that David Cameron, or possibly more accurately his father, has used perfectly legitimate tax planning via an offshore regulated hedge fund to arrange at least part of his investments and tax affairs.

Profits arising from this type of offshore fund which is a distributor fund are, hence the name, distributed to investors and are then declared on the annual tax return of the said investor. The modest profit made by the PM appears to have been properly declared on his tax return and the tax due was paid.

As this is an FCA recognised offshore fund marketed within the EU it will conform to reporting standards laid down by the regulator and the EU regulations designed to create a single market in financial services will also probably afford a common set of standards for protection for investors either via the FCA or the Irish regulator.

There is no real tax efficiency in this fund as it is a distributor fund. I am not familiar with this particular fund which is domiciled in Ireland but it will probably also be paying withholding tax on underlying investments. It will probably have a limited investment range thereby not benefitting investors from a wide range of funds and asset classes and will offer no deferrals on tax or top slicing opportunities. There is obviously more than one offshore vehicle available to those who wish to properly plan and investment and taxation strategy but this one seems sub-optimal somehow. Hardly some super sophisticated tax avoidance wheeze.

Further, he was given a gift by his mother for inheritance tax purposes, which if she survives for seven years, will mean no tax is paid on the gift. Unremarkable, perfectly legal and quite properly used by individuals up and down the country, both advised and non-advised.

A lot of this seems to entirely centre around the fact that it involves a public figure and in the current climate of conflating avoidance with evasion that is it somehow morally wrong for an individual to arrange his or her financial affairs to their own benefit and all in accordance with applicable law.

As a wealth manager, I wish more people organised their financial affairs legally to their own benefit so this seems to have been a very harsh week for the PM who, on the face of things at least, appears to have acted entirely within the law and used everyday planning open to all of the UK public.

All of this just got me wondering why anyone decent would enter politics?

A politician is damned if he does and damned if he doesn’t. If he or she acts within the law much of the press will just carry on with attacks as will the other parts of the political spectrum. Personal attacks on self and family must be very hard to endure.

We often complain about the political classes and their disregard for public opinion and what we think of them.

However, looking at the current vitriol being directed at them in the US, the UK and Europe and elsewhere no doubt why would any sane, decent, community spirited individual choose to become involved?

We end up with those who can withstand or even worse those who just don’t care what is said about them or what they say about others. Truthful or not they just keep on dishing it out and ignoring the incoming.

Surely this why we never seem to see great Statesmen in politics nowadays.

I suspect we have ended up with the politicians we deserve.

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