London mayoral candidate Ken Livingstone today insisted he had not avoided paying tax, claiming he was victim of a "smear campaign".
Mr Livingstone, who has campaigned against tax avoidance, has come under attack in recent weeks amid claims he was paid via a company so he was only liable for corporation tax at 20%.
Today, the former London Mayor, who is taking on the Conservative Boris Johnson in May, said his tax affairs were perfectly in order as he employed a number of people to work for him.
One of his employees was his wife, who had spent hours in their attic typing up his autobiography, Mr Livingstone told the BBC's Andrew Marr show.
Mr Livingstone said: "I am in exactly the same position as everybody else who has a small business. I mean, I get loads of money, all from different sources, and I give it to an accountant and they manage it.
"You pay corporation tax. If you then take out spending yourself, you have to pay more. What I am not doing is paying income tax on the money I use to employ other people."
Mr Livingstone said no-one paid income tax on money they used to employ staff. He said that amongst his staff was a researcher and somebody responsible for media relations.
He added: "Everybody who is not directly employed by someone has to have somebody to manage their accounts. You set up a company, the money comes in, the accountant sorts it out. That's what you do.
"I have never had vast amounts of money from one organisation. I do after-dinner speaking, I do TV stuff and all of that. It all comes in and you have to have it properly managed by an accountant.
"And at the end of they day, I end up paying the same amount of tax as I would do if I had taken the money out myself in income tax but I employ people.
"No-one is paying income tax on the money we use to employ people. If we did, unemployment would double in this country.
"I have paid all the tax on the money that has come to me but I am running a small company. I employed my wife for three years to sit in the attic and type up my autobiography to 700-pages and organise everywhere I go.
"The simple fact is, and the hypocrisy of all this, is Boris Johnson has exactly the same arrangements to handle his earnings from television. Almost everybody in the media, who is not employed directly, has exactly the same arrangements.
"I am not off-shore. I am running a small company, just like hundreds of thousands of people. (It's) a smear campaign currently being run.
"In the last 12 months I have earnt £55,000 and I have paid the full rate of tax on all of that but I am nowhere near the top rate of tax."