The Prime Minister should have registered his offshore fund – but he shouldn't resign

If the worst that can be said about the Prime Minister’s investment in a tax haven is that he has handled the communications badly, we could pronounce briefly on a media kerfuffle and move on. He has indeed handled the disclosure badly, starting with his spokeswoman’s saying of his father’s offshore fund on Monday, “That is a private matter,” and ending with Thursday’s admission that he had sold his investment in the fund for £31,500 in January 2010. There is more to it than that, though.

It would have been better if David Cameron, presenting himself as an alternative prime minister, had not held offshore investments. It was all within the law and he paid his taxes, but that is too minimal a defence.

He also chose not to declare the investment in the House of Commons Register of Members’ Interests. This was not specifically required, but a leader of the opposition determined to assure people of his propriety should have had regard to the general requirement “to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament”.

It would be reasonable to think that, in making policy on tax havens, a politician might have been influenced by an offshore holding worth more than the average annual household income. Questions of tax avoidance – and more broadly of the equitable sharing of the burden of deficit reduction – were not trivial at the time.

It is protested on Mr Cameron’s behalf that the purpose of his late father’s fund was not to avoid tax. In which case, why was it registered in Panama and operated in the Bahamas? Plainly an advantage for the fund was sought from the different tax and legal regimes, even though individual UK shareholders would have been liable for tax on dividends or sales of their shares. Our view is that Mr Cameron should have registered the holding.

Mr Cameron himself has, in effect, made that case since disposing of the investment and since becoming Prime Minister. He and George Osborne have said that merely abiding by the narrowest interpretation of the law is not good enough. The Blairmore fund, set up by Mr Cameron’s father, was in no way an example of the “aggressive tax avoidance” described by the Chancellor as “morally repugnant” in his 2012 Budget speech, but there are ethical gradations here. This Government’s record in the unending struggle to reduce tax avoidance and evasion is not terrible, but its credibility is undermined by Mr Cameron’s pride and carelessness.

In our view, therefore, the Prime Minister should be reprimanded for failing to register his offshore fund, but calls for his resignation go too far. Indeed, it would be to devalue the currency of demands for resignation were the official opposition to add to them.

On a purely practical level, the Prime Minister’s resignation would in any case be against the national interest. If it took effect immediately, it would probably mean that Mr Osborne took over until a Conservative leadership election could be held, at which point Boris Johnson would become Prime Minister. Whether or not that happened before the referendum on 23 June, such turbulence would only assist the cause of those who want to break up the European Union, and thus possibly the United Kingdom too.

Raging at the Prime Minister’s hypocrisy might make some people feel better, but it will do nothing to make global tax regimes more transparent. Some of the other policies that have been much touted this week are equally beside the point. This newspaper has always been in favour of openness, but requiring politicians to publish their tax returns would, by definition, do little to curb the use of tax-avoiding vehicles. Publishing the tax returns of all citizens, as they do in Norway, Sweden and Finland, might be an even better idea in principle, but again would disclose only income and assets that were liable to tax.

In the end, there is no alternative to the hard and unglamorous work of international negotiation. If Mr Cameron has been embarrassed into redoubling his efforts at next month’s tax conference, so much the better.