Ken Livingstone insisted he had not avoided paying tax, claiming he was victim of a "smear campaign", during the BBC's Andrew Marr show.
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%.
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."
Boris Johnson launched his mayoral re-election campaign with a colourful attack on his "tax dodging" opponent Ken Livingstone.
The Mayor of London accused his predecessor of being a "hypocrite" as well as a "glove puppet" for trade unions.
Mr Johnson, addressing a Conservative Party spring forum, said: "I see a risk that City Hall will be recaptured by a bunch of semi-reformed Trotskyist, car-hating, (Venezuelan President) Hugo Chavez idolising, newt fancying, tax dodging, bank bashing hypocrites and bendy bus fetishists."