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Middle East

War & peace

21 September 2023

4 min read

Cynical twists that make wars unjust

The dodgy deals and human shields of a past war still disgust George Pitcher, who questions if just war criteria remain fit for today.

George Pitcher

George is a visiting fellow at the London School of Economics and an Anglican priest.

A destroyed airliner lies on the apron of a war-torn airport.

A destroyed British Airways plane at Kuwait airport in 1991.

USN, Public domain, via Wikimedia Commons.

In the very early hours of Thursday 17th January 1991, I was despatched as a young journalist on The Observer to the dealing rooms of Smith New Court, a worthy firm of stockbrokers in the City of London, to witness how the markets reacted to the outbreak of the first Gulf War against Saddam Hussein’s Iraqi invasion of Kuwait.

A yellowing newspaper cutting shows I reported that, a little before 8am, Smith New Court’s chairman, Sir Michael Richardson watched prime minister John Major declare war on a TV monitor and then said:

“I had a nudge on the political line a little early, so I’ve been up all night. We have to keep things tightly under control.”

He did indeed say those words, but it’s not the whole story. Walking up to him on the dealing floor, I asked how we were positioned in the markets for war. Mistaking me for one of his dealers, my notes showed that he replied:

"Number 10 called me last night, so we could adjust our positions in oil. So we should be okay.”

It was a magnificent example of insider-dealing, in collusion with the government. A few minutes later a Smith New Court PR woman ran up to me to say that Sir Michael hadn’t meant that and even if he’d said it, I was a guest on the floor and everything said there was confidential.

Kuwait was always about oil. This was an insight into where the UK’s political and financial priorities lay. Richardson had been at the heart of Margaret Thatcher’s Government as an unofficial adviser to the Treasury. This was his dividend. Eventually he was to lose his dealing licence for making unsafe loans to an American entrepreneur. He died in 2003.

I’m reminded of this story today, Thursday 21st September, the United Nations’ International Day of Peace, because it reminds me of where governments’ priorities really lie, because these are the priorities that invariably threaten peace.

And it matters because over 300 people on board were subjected to unimaginable suffering as “human-shield” hostages.

I’m also reminded that only last week passengers and crew aboard British Airways Flight 149 are preparing legal action against the government for being treated as “disposal collateral”, as the aircraft was used to plant special forces in Kuwait in the early hours of 2nd August 1990, as Iraqi forces crossed the border.

Their claim is that the UK government and BA have “concealed and denied the truth for more than 30 years". The issue has come to a head now because documents released in 2021 show that the Foreign Office was warned of the invasion an hour before the plane touched down.

And it matters because over 300 people on board were subjected to unimaginable suffering as “human-shield” hostages over the following five months.

These stories have a common thread. Smith New Court, with the government’s help, was about money. The government, with BA’s help, was about protecting its Kuwait oil reserves. It’ll be proven that the lives of innocent people mattered much less against these priorities, if they win their case.

That should make us very angry indeed. The sheer hypocrisy of rhetoric that spoke of defending the people of Kuwait is one thing. The idea that they could simultaneously serve God and Mammon is quite another.

But it may be that just-war criteria have failed to keep up with the motivations of global late-capitalism.

The principles of the “just war” have enjoyed a long tradition in Christian thought. The foundations that were laid in the classical Greek school by the likes of Aristotle were built upon to provide a moral architecture for armed conflict by the Italian Dominican friar and philosopher Thomas Aquinas in the thirteenth century.

The just war tradition distils into two sets of criteria: jus ad bellum (the right to go to war) and jus in bello (right conduct within war). The former set contains consideration of “just cause” and rules out war as a simple means of recapturing things or punishing people who have done wrong. The second includes matters of proportionality. By these clauses, combatants must ensure that harm caused to civilians or civilian property is not excessive in relation to military advantages gained.

In the second war with Iraq, an adventure that prime minister Tony Blair started with US president George W Bush in 2003, neither of these criteria arguably were met, along with others besides. To paraphrase Wilde, they knew the price of oil and values counted for nothing.

But it may be that just-war criteria have failed to keep up with the motivations of global late-capitalism. Economic dependence on oil is now more usually something we hear about in the context of the green movement’s war on the climate crisis. Dependence on oil actually has a firmer grip on political control of the cost of living in western democracies.

These are not issues that occurred to hot-shot stockbrokers playing war games in 1991, nor to a privatised national airline allegedly being requisitioned for military purposes. But it’s surely not too much to hope that the senior actors in either instance should have summoned at least a religious folk memory to say: No, this isn’t right.

Explainer

Comment

Economics

29 October 2024

6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?

Laurence Fletcher

Laurence Fletcher is a journalist at the Financial Times.

Sarah Agnew on Unsplash.

Few doubt that Chancellor Rachel Reeves will be putting up taxes when she presents her first Budget on October 30th.

The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled.

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much.

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue.

But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society?

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play.

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver.

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive.

A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts Dan Neidle.

Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here?

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Paul Williams

So, what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a Biblical perspective that he believes offers some solutions.

He takes as his starting point a story from the gospel of Matthew, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans.

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God.

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system.

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one.

Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society.

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets.

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.”

Williams highlights parts of Devon and Cornwall that have been, he says, “completely ruined” by wealthy people from elsewhere buying second homes, leaving property “out of reach of anyone who lives and works there”.

Nevertheless, he believes taxation can be used in this area to help level the playing field.

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive).

“You want to disincentivise the way the housing market is used for speculation,” he said.

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.”

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds.

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets.

So, would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives?

Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy.

But he adds an important caveat: “the playing field is not level.

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.”

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start.