Last Friday night as I watched U2 play Glastonbury on TV, the stream of hatred on Twitter was relentless. A torrent of unforgettable ire. I’ve long known that Bono and his band excite very mixed reactions, but this seemed to take things higher. Their music is not to everyone’s taste but on this occasion the bilious flood stemmed from the band’s attitude to taxation, or rather to tax avoidance.
U2’s presence at Glastonbury inspired a small demonstration from Art Uncut, which was quickly smothered by the concert organisers. But of course the organisers could not suppress the outpouring of righteous anger on the internet. How dare Saint Bono preach his anti-poverty rhetoric while greedily and irresponsibly avoiding the very taxes needed to fund international aid? There are no crumbs for the poor from the U2 table, they blogged. It’s so cruel, people tweeted.
Bono’s hypopcrisy is a very obviously a bad thing. Except that it is, in fact, a good thing.
It’s easy to get confused on this because so much of the discourse on Twitter is deeply superficial. Layer upon layer of triteness is laid down in such quick 140-character strokes that the real issues can get buried.
But at the same time, not all of the exchanges mis-lead and I’m grateful to @gimpyblog, @giagia, @nettycox and @aoifemcl among others for the debate I ended up having on Twitter, which spurred me to find out more about U2’s tax position and the wider question of the intersection between tax laws and international development. I hope this blogpost might continue my education.
Since the band’s formation over thirty years ago they have benefitted from a tax regime in Ireland that looked favourably on artists because it did not tax royalties on their work. The primary aim of the legislation was to encourage the arts by providing relief for struggling artists. But the law was a relatively crude instrument since it also benefitted artists who had struggled all the way to globe-conquering success.
U2 have always had a head for business and did particularly well under this tax regime because —unusually in the music industry — they retain the rights to all their music. But they weren’t the only beneficiaries: many British artists including Sting, Frederick Forsyth, and the BBC’s John Simpson moved to Ireland to take advantage of the lighter taxes.
In 2006 the Irish government decided to limit tax-free earnings on artistic royalties to €250,000. With this cap the tax benefit was better targeted to needy artists, though it was still relatively generous*. But the move would have taken a big bite out of U2’s millions so they upped sticks and moved their business to the Netherlands, where the tax regime for royalties is now one of the most favourable in the world: the rate is reckoned to be about 1.5%. It is no coincidence that The Netherlands is now also home to the royalties of the Rolling Stones. If you want delve into the details of Dutch tax law and rock’n’roll profits, I can recommend this thorough article from The New York Times.
It is U2’s ruthless drive for tax efficiency that has attracted the attention of Art Uncut and other commentators, who see it as totally at odds with Bono’s anti-poverty campaigning.
And they are right. Aren’t they? Well, sort of, but the issue isn’t black and white.
For a start, Bono and his band mates have done nothing illegal. U2’s actions certainly deprive the Irish government of tax revenues that they could use for international aid, but the band are acting entirely within their rights as a business that operates within the EU.
Moreover, U2’s and Bono’s financial affairs are private and we don’t have the right to know what they are. Nor to we know much about how Bono spends his earnings. He may or may not donate generously from his own income to charitable causes, but he doesn’t say, so we don’t know and it’s a bit pointless to speculate.
There can be little doubt, however, that Bono’s work to campaign against poverty and disease is effective, whether it be via the RED label or the campaigning group ONE or by his endless badgering of presidents and prime ministers. As in science, the impact of his efforts are hard to assess in detail and some people scoff. But those who have seen him operate are impressed.
None of the above eliminates the stinging charge of hypocrisy, however much the band might argue back. There is a case to answer, though it is not one that should be solely centred on Bono and U2. We need to take a hard look at the tax regimes of countries that allow rich businesses equipped with smart accountants to avoid their duty.
But thanks at least in part to U2, perhaps all that is about to change.
I may be mistaken but I don’t remember any outcry when U2 were based in Ireland and benefitting from lighter taxes than they now pay in the Netherlands. It was only when they jumped ship from Ireland that the cries of hypocrisy went up. And those cries only went up because Bono’s tireless campaigning against poverty has been so effective at drawing attention to the plight of developing nations. Were there howls of protest when the Rolling Stones moved their money to the Netherlands, depriving the British government of tax revenues that could be used for development? I didn’t hear any. Curiously, it takes a hypocrite to get people excited.
But to what end? It’s now a week since Glastonbury and the anger has faded away. The passionate intensity so quickly whipped up on Twitter has dissipated just as speedily. And what is the point of passion if it doesn’t lead to action?
If only more people had Bono’s ability to stick with an issue and work at it, the world would probably be a better place.
*Since Jan 2011, the cap has been reduced to €40,000, presumably as a result of the troubled state of the Irish economy.
Postscript: I have dithered a while over this post. My views on these issues are coloured by my experience so I’m not sure how clearly I am seeing things. I grew up in Northern Ireland and got into U2 and their music almost as soon as they appeared on the Irish music scene, as I’ve written in another post. I could well be biased. Also, I’m no economist and don’t really understand the full implications of how the tax games that EU countries play affect the broader landscape of international development. So all insights on that topic will be gratefully received.