Salute Bono for his good works, but he does have one taxing issue

But the situation changes somewhat when Bono takes it upon himself to chastise the Government over the amount of foreign aid it devotes to Africa.

That’s our tax money he wants to spend, but he is limiting his own contribution to the well from which he wants to Government to draw

BONO’S good works for Africa haven’t bought him a free pass when it comes to answering questions about his financial behaviour in Ireland.

Things came to a somewhat embarrassing head last Friday when he attended a special meeting of the Irish Hunger Task Force at University College Cork.

At a press conference afterwards, U2’s lead singer was asked how he could demand increased Government spending on aid for Africa when his band had avoided the payment of millions of euro in tax to the exchequer in Ireland by moving its publishing empire to Holland. Cue an embarrassing moment for hosts and guest.

Let’s be clear here that Bono has done nothing illegal and nor has U2 the commercial entity.

There is a distinction between tax avoidance and tax evasion. The first is legal; it breaks no laws, but merely ‘shelters’ capital and income from a liability to tax. The second is illegal; it involves hiding money so that due taxes remain unpaid. Bono and U2 had always enjoyed special tax status in Ireland and with careful reinvestment, it has given the four band members and manager Paul McGuinness a combined worth of an estimated €1 billion.

Even better for the band, it was able to avoid taxes legally because of the special designation granted many years ago to performing artists and composers by former Minister for Finance Charles Haughey.

It wasn’t brought in for them, but it benefited them by allowing U2’s members to remain resident in Ireland when some others with their wealth had decamped to tax havens.

It meant that the members of U2 could spend as much time as they liked in their home country while others watched the calendar for fear they would spend too many days in Ireland and end up paying tax here on their worldwide income.

That all changed last year, however. Mindful that the original intention of the tax laws — to help struggling artists keep their income and have enough to live on — was no longer as applicable to people such as U2 who were enjoying major international success, the Government changed the laws. It said that any income above €250,000 per annum for those qualifying artists would be taxed as normal.

Clearly, this brought U2’s members further into the tax net (as they would have been paying tax already on all other “normal” revenue streams).

So the band moved its publishing base to Holland where the taxes on royalties apparently are minimal. U2 were well within their legal rights to do this, even if many would not approve of the ethics.

Having made such a fortune already, how much more do they need? That is essentially a private matter of course, and some people might even describe it as enlightened and rational self-interest.

Why would anyone with the right accounting advice give more money to the State than legally required? Wouldn’t anybody else do the same if given the opportunity? And wouldn’t Bono be able to put it to better use, rather than have the Government waste it?

But the situation changes somewhat when Bono takes it upon himself to chastise the Government over the amount of foreign aid it devotes to alleviating illness and poverty in Africa.

That’s our tax money he wants to spend, but he is limiting his own contribution to the well from which he wants to Government to draw.

Bono’s reported response to the questions he was asked at UCC suggests that he tied himself up in knots in trying to answer awkward, but legitimate and fair, questions.

“Our tax has always been not just to the letter of the law, but to the spirit of the law,” he claimed. “This country’s prosperity came out of tax innovation, so it would be sort of churlish to criticise U2 for what we were encouraged to do and what brought all of these companies in the first place.”

Bono may be a dab hand for penning apt words when it comes to song lyrics, but he won’t find too many others joining him to sing off that particular hymn sheet.

There is no doubt but that low corporation tax has assisted greatly in attracting investment to Ireland, and that various tax reliefs have encouraged private domestic citizens to invest as well, but to argue that tax avoidance is somehow economically good is a step too far.

There are studies that the use of offshore tax havens by wealthy people and their companies have had averse economic effects for both rich and poor societies.

The Tax Justice Network, for example, has estimated that the funds held globally in tax havens could generated $255 billion in additional tax revenues.

This would be enough to finance the Millennium Development Goals, for example, a project that looks to halve extreme poverty, halt the spread of HIV/Aids and provide universal primary education by 2015. One of the key advocates of the Millennium Development Goals is Bono.

But I suspect that he, to misquote one of his own songs, is stuck in a moment that he can’t get out of.

“Anyone who knows me knows I wouldn’t ask anyone to do something that I am not prepared to do myself,” he said, and his reputation suggests that is right.

I imagine his own cash contribution to Africa, not to mention the time he has devoted to championing its cause, outweigh whatever taxes he has saved in Ireland. People can judge for themselves as to whether they would have preferred him to pay the taxes in Ireland first. Just because such an option exists doesn’t mean that it has to be availed of, however.

Bono may have had a problem in that he is only one part of a five-man business concern. He does not control U2 but is a partner with Adam Clayton, Larry Mullen, Dave Evans (the Edge) and manager Paul McGuinness.

It is entirely possible that Bono was outvoted when it came to this hard-headed business decision about moving the publishing empire to Amsterdam.

AND what cannot be denied is that Bono has been magnificent in forcefully advocating the unprofitable and often unpopular cause of demanding adequate healthcare provision for those with HIV and Aids, advocating the reduction of the debt of impoverished countries to rich nations, and promoting equitable global commercial trade.

He may do it all with the type of rock star shtick that repulses as many people as it appeals to, but it is hard not to admire the marriage of his idealistic intentions to his pragmatism in his dealings with the elite in world politics and economics.

Some people have alleged that it is all to feed his ego, this ready access to world leaders that would not be available to him in other circumstances, but that is to denigrate his obvious sincerity and belief in the cause he espouses.

There has been good reason too for him to hang out with these people, no matter how objectionable people on the left find them to be.

Bono realises that many of the tactics of the anti-globalisation lobby are futile and naïve. Ostracising and boycotting those in power makes protesters feel better, but it helps no one.

Bono has profile and that gives him access and power. Better that he uses it than he doesn’t. But it doesn’t, and shouldn’t, make him immune to criticism of his own conduct either.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM, Monday to Friday, 4.30pm to 7pm.