Article

Ambition

Comment

1 January 2024

3 min read

Hopes and fears for the year

Standing on the cold threshold of a new year, Graeme Holdsworth recalls past audacity and whether his aspirations are too timid.

Graeme Holdsworth

Graeme is a vicar of Marsden and Slaithwaite in West Yorkshire. He also cycles and juggles.

A starry night sky below which a signpost is silhouetted.

Luca J on Unsplash.

Standing in the Vicarage garden, under the clear winter sky, I feel cold to my bones, as though Jack Frost has thrown his coat over my shoulders. I’ve been successfully shedding body-fat since early October when I began to cut out ‘added sugar’ foods from my diet, but it has come with a downside: I need some third-party insulation, preferably lightweight, breathable, wind, and waterproof. I love cycling under clear night skies, pausing away from towns and lights to let my eyes adjust sufficiently to see stars more in number than the sands of the sea, but my enthusiasm for winter riding is dampened by this bitter cold.

My first truly long-distance bike ride was an overnight cycle across the North Pennines, about 300km. A good friend had turned 40 and invited me to his party at a nightclub in Glasgow. I lived in Teesside at the time and thought it would be great fun to cycle there. I loaded my bicycle bags with party clothes, a change of shoes, and an appropriately expensive bottle of whisky as a gift, then set off into the early evening sunshine. By Bishop Auckland it was raining. Passing across Yad Moss to Alston at midnight, it was snowing.

I’m older now and experienced enough to know that there is a point where the discomfort of endurance tips over into the endurance of pain, but I still long for the adventure. Like Tolkien’s elderly Bilbo Baggins torn between the comfort of his hobbit hole, and his yearning to see mountains again: my mind returns to summer cycling and riding through the night in shorts and short sleeves. Bilbo’s first journey was one of inexperience and unpreparedness, but he faced his dragon and returned home with tales to tell. Moreover, he didn’t do it alone, he also shared the journey with those who were older and wiser, those who knew what to expect but travelled anyway.

Will I limit my resolutions for the new year to those that can be achieved beside my metaphorical fireplace?

As I reflect on this, I think about our church community: those whose faith has been tested by experience, and those who are afraid to take their first steps into a wider world. A mixture of people who tell stories of spiritual wonder and joy, and others who seek comfort and refuge in the familiar. I’m also reminded of the people in this local community who have needed comfort during times of suffering. My soul has become filled with experiences, and I know that there are more frightening ‘dragons’ out there than those I encounter on a long bicycle ride.

As I stand in the Vicarage garden, shivering, I wonder if I’m at risk of becoming timid. Do my experiences, and those I’ve learned from others, teach me to tread more carefully in the year to come? Will I limit my resolutions for the new year to those that can be achieved beside my metaphorical fireplace? Do I hang up my cycling shoes for those furry lined Crocs my son bought me this year?

As I type this I realise, I have no desire to surrender to slippers just yet: my aspirations for the year ahead are to fly recklessly in the face of my own painful experiences, to embrace boldness in cycling, faith, and ministry once again. I pray for joy in my heart, and youth in my soul. I hope that my faith filled foolishness will be infectious in our church and our community as I stand hand in hand with the Divine, on the edge of eternity… and jump together. And as for wisdom born of experience: next time I take the dog into the garden, I’ll put a jumper on.

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.