Article
Economics
Politics
1 min read

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.
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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
Culture
Film & TV
Politics
6 min read

Fear of the news means it needs to change

Here's how to rethink reporting.

Steve is news director of Article 18, a human rights organisation documenting Christian persecution in Iran.

A news cameraman holding a camera, stands back to back to a police officer.
Waldemar on Unsplash.

Several non-journalist friends have told me over the past few years that they have started to disconnect themselves from the news - in some cases entirely - so wearied have they become by the incessant gloom of our reporting.  

Meanwhile, new research from the Reuters Institute has found that people have been “turning away from the news” consistently across 17 countries tracked over the past decade - from the US to the UK, Japan to Brazil. 

And one of the primary reasons, the researchers discovered, is the “fatigue and overload” of negative news. 

Another factor was the declining trust in the media, which has again been something I have heard consistently from friends in recent years, with many telling me they are constantly reassessing who they turn to for news. 

Perhaps that is only healthy, but both trends suggest to me that there may be a problem with the way news currently is, and the effect it is having on us. 

One of the most regular examples of the “bad news” we journalists tell is the reporting of terror attacks, but whenever I hear news of an attack - whether here or elsewhere - I think not only of the immediate victims and their loved ones, but also those who may soon become victims by association. 

Perhaps the most obvious recent example here in the UK was the case of the Southport stabbings, a shocking incident that led to understandable - albeit misguided - outrage. 

As soon as it emerged that a “foreigner” - or at least someone who sounded like they might be a foreigner - was responsible, many jumped to the conclusion not only that he was an Islamist but also probably an asylum-seeker, and an illegal one at that. 

It later transpired, of course, that the 17-year-old who carried out the terrible attack had been born and raised in Wales - to “Christian” parents, no less. So not an asylum-seeker, after all, nor even a foreigner; and even though it later became clear that he had downloaded disturbing content including from Al-Qaeda, his inspiration seemed to come from a wide range of sources. 

Here was another example, our prime minister told us, that showed “terrorism had changed” and was no longer the work only of Islamists or the far-right but of “loners” and “misfits” of all backgrounds, common only in their sadism and “desperat[ion] for notoriety”. 

And yet, in the Southport case and no doubt many others, by the time the killer’s background and likely motive finally became clear, the horse had already bolted.  

In that particular case, the reaction was especially extreme, with mosques and refugee hotels attacked as part of widespread rioting. But even when there are no riots after such an attack, there can surely be little doubt that the minds of the wider British public will have been impacted in some way by the news. 

For some, perhaps the primary response will be increased fear - in general but also perhaps especially of those different from themselves. For others, on top of fear, might they also feel increased hatred, or at least mistrust? 

And such feelings will surely only increase with every new reported attack, especially when the perpetrator appears to be someone new to these shores, and even more so, it would seem, if it is an asylum-seeker. 

To ignore the reality that many attacks have been carried out by asylum-seekers in recent years is to ignore reality. But for those of us desperate not only to prevent the further polarisation of our society but also to protect the many legitimate refugees who wouldn’t dream of committing such attacks, what can be done? 

Perhaps it’s only because I’m a journalist, but in my opinion one major thing I think could help arrest the current trend would be for us to rethink the way in which we do news in general.  

Not in order to mislead the public or pull the wool over their eyes - if bad things keep happening, they must be reported, as must the identities of the perpetrators, as well as any trends in this regard - but by way of providing the necessary balance and context.  

For example, by looking into what percentage of attacks - here or elsewhere - have been committed by Islamists, foreigners, or asylum-seekers; or considering what percentage of the total population of such groups the attackers represent, and how this compares to statistics regarding other groups. 

The question we journalists - and those who read our words - need most to ask is whether we are doing a good job of informing the public about the world they live in. 

Might it also be helpful to undertake a general reconsideration of what constitutes news? Does, for example, bad news always have to reign supreme in the minds of those who curate our news cycle?  

A decade ago, I had it in mind to create a new app or perhaps even news service dedicated to rebalancing the news, such that bad news stories wouldn’t outnumber the good. Many others have had similar ideas in recent years, and several platforms have been launched, dedicated to the promotion of “good news” stories. And yet one could argue that such platforms risk being as unrepresentative of reality as those that tell only bad-news tales. Can’t a compromise be found? 

One of the first things you learn as a journalist, other than that sex sells, is that greater numbers of deaths, and especially those of children, always constitutes headline material. And one needs only to flick through today’s major news outlets to see that this practice remains almost universally upheld. But does it have to be so?  

And why is it that some conflicts and injustices will make our headlines, while others won’t?  

Take, for example, the Sudanese civil war or the recent beheading of 70 Christians in the Democratic Republic of the Congo. Why is it that these horrors don’t make our headlines, while tragedies in Ukraine or Gaza do? Who makes the call, and for what reasons?  

Another long-established principle in journalism is to consider first and foremost who your audience is. So, for example, when writing for a British audience, to consider what might be of most interest to Brits. Are Ukraine and Gaza, for example, simply more relevant to British interests - in both senses of the word - than what is happening in the Global South? And even were that to be true, just because such principles of journalism are long-established, must they remain unchallenged? 

At its core, journalism is about informing, so in my opinion the question we journalists - and those who read our words - need most to ask is whether we are doing a good job of informing the public about the world they live in.  

And in my view, while a lot of good journalism is of course being done, the question of whether the public are receiving a representative picture of their environment is less clear.  

Whether or not the best approach to redress the balance is to dedicate whole news services to telling good-news stories, there’s surely little doubt that such stories are chronically underreported.  

And if our duty is not only to inform but also, by virtue of that, not to mislead, mightn’t it be argued that in failing to sufficiently well inform society about the real state of our world, we are in fact misleading them? 

No-one wants to end up in a Soviet-style “paradise” in which murders are simply denied in order to maintain the status quo, but nor, surely, do we want to live in a world in which people become unnecessarily fearful and hateful towards others, in part because of the news we feed them. 

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