Monologue or soliloquy: that is the question. When Shakespeare’s Richard III – as opposed to the bloke of that name who has been illegally parked in Leicester for the last 500 years – first ambled awkwardly onto the stage back in Elizabethan times, he delivered a soliloquy. Now, a soliloquy is what I deliver when I think I am lecturing my teenage kids but am, in fact, talking to myself. “I, that am rudely stamped, and want love’s majesty to strut before a wanton ambling nymph” was Richard’s mischievous think-out-loud excuse for the other kind of obscene havoc he was about to wreak.
The great Laurence Olivier, making the part his own at the New Theatre in 1945, played that first scene differently. Walking onto the stage, he was about to speak when he hesitated, turned, walked to a door at the side, closed it firmly, walked back to the same spot and started: “Now is the winter of our discontent …” With that simple act he turned the soliloquy into a monologue. That kind of monologue is what I, mistakenly, think I am delivering when I am lecturing my teenage kids. The closing of the door meant that Richard was about to talk directly and secretly to the audience, extending the stage to the entire theatre.
You can get away with that kind of trick in the theatre, where the script is already written and leaks don’t matter. In real life, you are likely to end up with rotten tomatoes all over your face. Take Israel’s decade-old tax reform for example.
Ten years ago, on January 1, 2003, Israel abandoned its old bastardised territorial taxation basis for, what was then seen as, a more state-of-the-art personal taxation system. Remarkably for Israel where, similar to weeds, laws often grow overnight, there was plenty of warning. The legislation was published in May 2002 with various transitional provisions, to give the taxpaying public time to organize their affairs. So far, so good.
As is the wont of our calling, tax specialists from Dan to Beersheba had the wording on the dissecting table within 5 minutes of its hitting the newsstands. And, as with all new legislation, there were plenty of glorious loopholes. We might have been too busy to get home to our next of kin, but at least there would be guaranteed bread, meat and ale on the table for years to come while the tax authorities slowly caught up with legislative amendments. That, dear reader, is how we, of deformed profession, get our kicks.
Then, the Laurence Oliviers got going playing to the gallery.
Articles by the flotsam and jetsam (as well as occasionally sane and, hitherto, respected gurus) started popping up in the national press. Trying to up their profiles, these individuals published tax planning ideas arising from the reform. Austria, previously best known to Israelis as the birthplace of Hitler, became the place to set up a foreign holding company. The Netherlands, the previous hotspot for international holdings that the new CFC legislation had specifically sought to nuke, would actually survive. And the list went on.
I remember sitting in horror as articles were dropped on my desk (often by smirking audit people – Auditors are to Tax Consultants what the House of York was to to the House of Lancaster). But why was I worried? The Tax Authorities do not read newspapers, right? Wrong.
Thanks to all those egomaniacs, late in 2002, in what was probably a first for tax legislation in the State of Israel, an amendment to the new law was passed by the Knesset BEFORE it even had a chance to come into force.
Of course there was still plenty wrong – both from the perspective of the tax authorities and the taxpayers. What is really weird is that, despite protestations from all sides, there has been very little legislative change since. That is not to say that tax has been ignored by the Knesset. There have been plenty of other amendments – trusts, incentives, even a super-retro medieval pure territorial basis for new residents and old-timers coming home. But the great reform of 2003 is, ten years later, still pretty much the same.
We have a highly limited underlying tax credit system that all sides agree, distorts international structuring. CFC legislation misses its goal by a mile. There is a Participation Exemption that everyone has forgotten (I am only aware of it having been used once). Transparent Company rules were made dependent on the Finance Ministry drawing up regulations – we are still waiting. Setting off of foreign income against losses is barmy (a senior tax official once pleaded with me to find a loophole, as he agreed that the double tax my client was facing was totally unfair). And the list goes on.
The biggest irony is that the Knesset passes laws with frightening ease. In a unicameral (single chamber) system a law can go through 3 readings while most Knesset members are out to lunch. That is actually grossly inaccurate – if the Knesset were a theatre it would close down after 3 performances. Most of the time there is hardly anybody there to go to lunch.
There is, however, light at the end of the tunnel. The incoming Tax Commissioner is a career tax authority person with extensive experience in the international tax sphere and a real desire to get things done – King Henry VII, so to speak. Tax Break wishes him well.
Shakespeare’s most famous soliloquy was, of course, “To be, or not to be: that is the question”. The no-less-great-than-Laurence-Olivier, Richard Burton once related that, as a young actor playing Hamlet at the Old Vic in the 1950s, he began a performance to uncomfortable accompaniment. As he started his first speech he discerned a low growl coming from the audience. Looking down between the footlights he made out a rotund old man who, he soon realised, was reciting the lines by heart together with him. At the end of the play, as Burton sat in his dressing room with a whisky and cigarette, the old man suddenly appeared at the door. “My dear Lord Hamlet, may I use your lavatory?”, he lisped. Rather than telling him to get lost, Burton graciously agreed.
The rest of the conversation was not recorded for posterity but, it is to be assumed, Churchill was duly relieved.