How can taxes build a better society?

As we await Rachel Reeve's budget announcement, Laurence Fletcher wonders what positive tweaks can be made to our economic system.

Laurence Fletcher

Laurence Fletcher is a journalist at the Financial Times.

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

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 perspective that he believes offers some solutions.

He takes as his starting point a story in the gospels, 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 “completely ruined” by wealthy people from elsewhere buying second homes that used to belong to locals, 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 says.

“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.

Article

Assisted dying

Care

Comment

Politics

7 May 2025

4 min read

Assisted dying is not a medical procedure; it is a social one

Another vote, and an age-related amendment, highlight the complex community of care.

Henna Cundill

Henna is a researcher with the Centre for Autism and Theology at the University of Aberdeen.

Graffiti reads 'I miss me' with u crossed out under the 'mem'

Sidd Inban on Unsplash.

Scottish Parliament’s Assisted Dying bill will go to a stage one vote on Tuesday 13th May, with some amendments having been made in response to public and political consultation. This includes the age of eligibility, originally proposed as 16 years. In the new draft of the bill, those requesting assistance to die must be at least 18.

MSPs have been given a free vote on this bill, which means they can follow their consciences. Clearly, amongst those who support it, there is a hope that raising the age threshold will calm the troubled consciences of some who are threatening to oppose. When asked if this age amendment was a response to weakening support, The Times reports that one “seasoned parliamentarian” (unnamed) agreed, and commented:

“The age thing was always there to be traded, a tactical retreat.”

The callousness of this language chills me. Whilst it is well known that politics is more of an art than a science, there are moments when our parliamentarians literally hold matters of life and death in their hands. How can someone speak of such matters as if they are bargaining chips or military manoeuvres? But my discomfort aside, there is a certain truth in what this unnamed strategist says.

When Liam McArthur MSP was first proposed the bill, he already suggested that the age limit would be a point of debate, accepting that there were “persuasive” arguments for raising it to 18. Fortunately, McArthur’s language choices were more appropriate to the subject matter. “The rationale for opting for 16 was because of that being the age of capacity for making medical decisions,” he said, but at the same time he acknowledged that in other countries where similar assisted dying laws are already in operation, the age limit is typically 18.

McArthur correctly observes that at 16 years old young people are considered legally competent to consent to medical procedures without needing the permission of a parent or guardian. But surely there is a difference, at a fundamental level, between consenting to a medical procedure that is designed to improve or extend one’s life and consenting to a medical procedure that will end it?

Viewed philosophically, it would seem to me that Assisted Dying is actually not a medical procedure at all, but a social one. This claim is best illustrated by considering one of the key arguments given for protecting 16- and 17- year-olds from being allowed to make this decision, which is the risk of coercion. The adolescent brain is highly social; therefore, some argue, a young person might be particularly sensitive to the burden that their terminal illness is placing on loved ones. Or worse, socially motivated young people may be particularly vulnerable to pressure from exhausted care givers, applied subtly and behind closed doors.

Whilst 16- and 17- year-olds are considered to have legal capacity, guidance for medical staff already indicates that under 18s should be strongly advised to seek parent or guardian advice before consenting to any decision that would have major consequences. Nothing gets more major than consenting to die, but sadly, some observe, we cannot be sure that a parent or guardian’s advice in that moment will be always in the young person’s best interests. All of this discussion implies that we know we are not asking young people to make just a medical decision that impacts their own body, but a social one that impacts multiple people in their wider networks.

For me, this further raises the question of why 18 is even considered to be a suitable age threshold. If anything, the more ‘adult’ one gets, the more one realises one’s place in the world is part of a complex web of relationships with friends and family, in which one is not the centre. Typically, the more we grow up, the more we respect our parents, because we begin to learn that other people’s care of us has come at a cost to themselves. This is bound to affect how we feel about needing other people’s care in the case of disabling and degenerative illness. Could it even be argued that the risk of feeling socially pressured to end one’s life early actually increases with age? Indeed, there is as much concern about this bill leaving the elderly vulnerable to coercion as there is for young people, not to mention disabled adults. As MSP Pam Duncan-Glancey (a wheelchair-user) observes, “Many people with disabilities feel that they don’t get the right to live, never mind the right to die.”

There is just a fundamental flawed logic to equating Assisted Dying with a medical procedure; one is about the mode of one’s existence in this world, but the other is about the very fact of it. The more we grow, the more we learn that we exist in communities – communities in which sometimes we are the care giver and sometimes we are the cared for. The legalisation of Assisted Dying will impact our communities in ways which cannot be undone, but none of that is accounted for if Assisted Dying is construed as nothing more than a medical choice.

As our parliamentarians prepare to vote, I pray that they really will listen to their consciences. This is one of those moments when our elected leaders literally hold matters of life and death in their hands. Now is not the time for ‘tactical’ moves that might simply sweep the cared-for off of the table, like so many discarded bargaining chips. As MSPs consider making this very fundamental change to the way our communities in Scotland are constituted, they are not debating over the mode of the cared-for’s existence, they are debating their very right to it.