Blatant dishonesty

Just after I woke a couple of days ago I heard very loud talking in the street outside, and went to the window to see what was going on. A neighbour, from about a block away, was talking to another at the corner. He is naturally very loud so I could hear every word clearly, though had not heard the start of the conversation.
He owns a large guest house down the street, and on occasion coach-loads of tourists come to stay, though sometimes the coaches refuse to drive down the steep street so the guests have to walk down the hill. The gist of the conversation was that he had not yet erected a signboard outside as if he did he would have to start paying Council Tax on the guest house, but currently was only paying a nominal amount as a residence (Council Tax is very low here on domestic premises). He was complaining loudly about the tax rates, and was going to avoid them as long as he could.
I went down past his building today and he was outside and we started talking about a plot of cleared land opposite, which I though was going to be turned into another residence, but he said that he, and other neighbours, had cleared this to make a "leisure area" near the river, and allow for additional parking/turning (no doubt for the coaches, which have to reverse back uphill at present!). He invited me in (we are acquaintances) and he showed me round. Currently there are 18 en-suite rooms, with plans for more, and a large swimming pool almost completed, and he has a superb view over our small river.
He proudly told me that he didn't advertise much locally to keep "under the radar", but relied on external tour companies to bring guests to him. He also works as a local tour guide so has contacts with tour agencies outside the region. As well as not paying local taxes, he is not registered as a local business so pays no income tax either! This also means he is not covered by any health and safety measures, and I would also bet that he has no public liability insurance!
One of his neighbours is the Secretary for Tourism, working for the local government, and obviously is aware of the situation regarding non-payment of any taxation, but he also runs a local restaurant so benefits from this influx of tourism, and, in his opinion, any additional tourism is great for the town, so turns a blind eye.
What was ironic was that the guest house owner was complaining that he was having to fund some of the work to build the "leisure area", along with other neighbours, as the local council wasn't interested - appearing to ignore the fact that perhaps the council did not have sufficient funds if he, and others, were avoiding paying all their taxes!
I have always prided myself on my own honesty, have never, and would never, steal anything, cannot even walk out of a shop if I have been undercharged, or over-changed, would never try and evade my taxes (local or income), even if I felt they were too high (though I would protest through legal channels if I felt I was being treated unfairly in any way), and always try and be fair and honest in all my dealings, so seeing someone doing this so blatantly, and seeming so proud of the fact, really leaves a bad taste in my mouth.