Bono, operating at the margins

Well a little bit of hypocrisy is the tribute vice pays to virtue. And we know Bono is very, very virtuous.

Oct. 16 (Bloomberg) -- Bono, the rock star and campaigner against Third World debt, is asking the Irish government to contribute more to Africa. At the same time, he's reducing tax payments that could help fund that aid.

After Ireland said it would scrap a break that lets musicians and artists avoid paying taxes on royalties, Bono and his U2 bandmates earlier this year moved their music publishing company to the Netherlands. The Dublin group, which Forbes estimates earned $110 million in 2005, will pay about 5 percent tax on their royalties, less than half the Irish rate.

"Among the wealthiest people I suppose it's the norm,'' Jill Cassidy, 23, said on South King Street near a plaque marking the site of Dublin's Dandelion market, where U2 played some of its earliest concerts. "In U2's position, it does come across as quite hypocritical.''

The tax move has tainted the image of Bono, nominated for the Nobel Peace Prize, and U2 at home. Now promoting a new DVD, book and album, the band is fighting back. Lead guitarist David Evans, known as The Edge, earlier this month defended the publishing company's move as a sensible decision for a group that makes 90 percent of its money outside Ireland.

"Our business is a very complex business,'' Evans said Oct. 2 on Dublin radio station Newstalk, breaking the band's silence after weeks of public criticism. "Of course we're trying to be tax-efficient. Who doesn't want to be tax-efficient?''

As residents of Ireland, members of U2 remain liable for personal income taxes. Any Irish-based companies they control will pay taxes on their profits.

"Poor Example"

Principle Management, U2's management company, declined to comment when Bloomberg asked for a statement from Bono.

Dublin-born Bono has been mentioned as a candidate for Nobel Peace Prize since 2003. The Norwegian Nobel Committee on Oct. 13 awarded the 2006 prize to Bangladeshi banker Muhammad Yunus and Grameen Bank for advancing social and economic development by giving loans to the poor.

Bono, 46, has toured Africa, established the pressure group Debt AIDS Trade Africa and become one of the most vocal supporters of the Make Poverty History campaign. In July 2005, he helped persuade world leaders to double aid for Africa to $50 billion a year by 2010 and erase the debt of the 18 poorest countries on the continent.

"I can see no connection between what he is doing and Make Poverty History,'' said Richard Murphy, a director at U.K.-based Tax Research Ltd. and author of a book called "Money Matters: Artist's Financial Guide.'' "He is setting a poor example by his tax affairs.''