Tax and justice

Thomas Baldwin reflects on a milestone anniversary for the taxation system and explores the relationship of faith, money and justice.

IT was in December 1798, 225 years ago, that Prime Minister William Pitt the Younger announced plans for a tax on income, which would help pay for the Napoleonic wars.

Prior to that, tax had been levied mostly on property – the National Land Tax of 1692, the Window Tax which was introduced in 1696 – and on goods. A tax on coal, for instance, helped pay to rebuild London after the Great Fire of 1666.

Britain’s first income tax – which began at two old pence in the pound on annual incomes over £60 – was inevitably controversial, and was abolished after only three years during the short period of peace following the Treaty of Amiens. It was reintroduced within the year when fighting resumed, but again stopped in 1816 after the Battle of Waterloo.

However in 1842 Robert Peel’s government, facing a budget deficit, introduced a new charge of 7d in the pound on incomes above £150. Income tax in one form or another has existed in the UK ever since.

How much our governments spend and on what, and who pays for it and how, have been contentious issues for as long as there have been governments. At a time of rising inequality, in Scotland, UK and the world, should tax be an instrument for reducing inequality and redistributing wealth? To what extent should it be used to modify behaviour, either for the good of the individual or the planet? Does taxing business depress the economy and make us all poorer? Are windfall taxes on excessive profits the way to go? Is it morally acceptable to withhold taxes if we feel they are unjust, or will be spent in ways of which we disapprove?

And, in the modern, international economy, how do we ensure that the tax system works fairly for people all over the world?

It has often been pointed out that the Bible has much more to say on the subjects of money, and fair distribution of resources, than it does on other topics about which churches traditionally tend to get more exercised. Jesus himself said that people should pay legal taxes – “Render to Caesar the things that are Caesar’s” is in all three Synoptic Gospels. St Paul, in Romans 13, says: “Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue...”

Maybe partly with this in mind, the Church of Scotland’s 2003 Church and Nation report on theology and taxation said that an ethical tax system was ‘one in which people give cheerfully in recognition of that which has been graciously given to us’.

However, while paying taxes cheerfully is maybe a lot to ask, the report acknowledges it would be easier if we saw our taxes contributing directly to a fairer society, calling for systems which ‘offer justice to all’ and allow all members of the community ‘dignity and equality of opportunity’.

In 2012, the Church’s Special Commission on the Purposes of Economic Activity, convened by Professor Charles Munn, published ‘A Right Relationship With Money’, which called for a more equal, poverty free, sustainable and balanced economy. It argued that ‘paying tax can be viewed as a social obligation akin to loving one’s neighbour’ but warned that ‘the taxation system in the UK is not working well: not all people are paying taxes in proportion to their wealth and income’.

It went on to warn that: “Administrative problems, weak policy decisions and increasingly aggressive efforts by individuals and corporations to avoid some of their taxes have diminished the ability of governments to meet their undertakings. Loopholes, especially in corporation and property tax, are allowing individuals and companies to escape their full tax responsibility, while other corporations have moved their tax domicile overseas to avoid paying British taxes despite having the main base of their operation in the UK.”

The report urged the UK government to end the UK’s support for tax havens, to support greater international tax transparency, and to develop a code of conduct on business taxation.

A follow-up report to that, ‘Common Wealth? – Sharing through tax and giving’, was presented to the General Assembly by the Church and Society Council in 2015. Under the heading ‘The Joy of Tax’ it noted that ‘equality, fairness and justice’ were the top three values identified by the Church’s consultation process during the independence referendum debates the year before, and that many of the responses had called for ‘radical redistributive tax systems’.

Without recommending a specific system, it explored moving away from the current Council Tax to a Land Value Taxation, as well as what it called the ‘cautious partial measure’ of a ‘mansion tax’.

“The taxation of wealth excites strong passions,” it states, “The rich regarding it as unjustified confiscation: the poor as the most direct means of redistribution. This largely explains why existing UK wealth taxation, such as inheritance tax, stamp duty, and Council Tax, is full of loopholes, favouring the ‘healthy, wealthy and well-advised’. This is a good reason for the churches to support wider political discussion of the topic.”

“ How much our governments spend and on what, and who pays for it and how, have been contentious issues for as long as there have been governments.

Most recently, the Church is part of the Poverty Alliance, which includes in its ‘key policy asks’ a call for the Scottish Government to ‘use our taxation powers to raise the revenue needed to tackle poverty’: “Fair tax reform should target wealth, while also making polluters pay, so that Scotland can invest in the actions needed to deliver a wellbeing economy for people and planet.”

The Church Action for Tax Justice campaign run by the Just Money Movement

(formerly Ecumenical Council for Corporate Responsibility) also calls for ‘a fairer, greener tax system’: “We believe that tax should not be seen as a burden; it’s a way of showing love for neighbour, care for creation and creating the type of society we find in the teachings of Jesus and the prophets.

In the context of increasing global and national inequality as well as unprecedented environmental challenges, it is now more important than ever that churches and individuals stand up for a more compassionate system.”

www.povertyalliance.org www.justmoney.org.uk