Article

Economics

Politics

24 October 2024

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.

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

Comment

Death & life

Politics

23 May 2024

5 min read

The careless conflation of independence, autonomy and dignity

As Jersey begins to legalise assisted dying, there’s keyword confusion.

Henna Cundill

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

A elderly women in a care home stands and places her hands on the shoulders of a seated woman.

Eberhard Grossgasteiger on Unsplash.

Reviewing Canada’s legislation on assisted dying, one article raises the concern: “Does it make dying with dignity easier than living with dignity?” This insightful question cuts to the centre of the debate: dignity. Or more particularly, the unwitting conflation of dignity with independence, and of independence with autonomy.

As Jersey becomes the first place in the British Isles to begin the process of legalising assisted dying, I feel that we should listen carefully as to how and where these terms are being used, both in the formal debate, and in the commentary that surrounds it. The States Assembly in Jersey voted to allow the development of assisted dying legislation for those with six months to live (or twelve months if their condition is neurodegenerative). A second vote to make assisted dying available more broadly to those who experience conditions that entail “unbearable suffering” was defeated by a narrower margin. Reading the flurry of press releases that followed the vote, these keywords, autonomy, independence, and dignity, are everywhere. But are we really thinking about what these words communicate?

People in positions of wealth and power have more independence and autonomy, more choices and freedoms, but it is we who ascribe dignity to those in that position.

The word dignity comes from the Latin word dignus, meaning ‘worthy’, and this is still the primary definition given to the English word dignity today. The OED dictionary has it as “the quality of being worthy or honourable”, immediately followed by reference to “honourable or high estate”. If this is so, then dignity is not something that can be bought, nor assumed – it is a status conferred upon someone by the esteem in which other people hold them. The haughtiest person in the world can still be esteemed undignified, as can the richest. Moreover, the opposite is also true: we are never prevented from conferring dignity upon, and esteeming the worthiness of, those who live the humblest of lives.

And yet, if we are honest with ourselves – do many of us not quietly associate the idea of becoming rich and powerful with becoming dignified? Do we not tend to assume the worthiness of those in high office – at least until we meet them and realise pretty quickly that they all put their trousers on one leg at a time, the same as the rest of us. This association happens because we have such a tendency to conflate dignity with independence (the ability to live without assistance from others) and autonomy (the ability to make one’s own decisions, and not have those decisions limited or interfered with). People in positions of wealth and power have more independence and autonomy, more choices and freedoms, but it is we who ascribe dignity to those in that position. It is society who sees the autonomy of those in high status, and esteems it as dignified.

Does this not unwittingly suggest that choosing to live in a state of extreme dependence on palliative care is, by implication, undignified?

Repeatedly ancient wisdom, in the Bible, warns us not to assume that dignity comes with the freedom of wealth or power. All the great ‘heroes’ of that book suffer their indignities. Fresh from the success of his Ark project, Noah gets drunk and exposes himself. Elated from a victory against an enemy, King David dances half-naked through the streets. These are just two examples of the catalogue of embarrassments and mishaps that beset nearly all the kings and leaders whose stories are told as part of the Christian story. One after another, they stumble and struggle with life and leadership. The apostle Paul explains that this is because God uses the foolish things of this world to shame human pride, “for even the foolishness of God is still wiser than human wisdom.” Therefore, Paul argues, God chooses to speak to us through the weak and the lowly things and people of this world. Never was this demonstrated so clearly as when Jesus was born in a draughty stable, lived a life of poverty, and died a criminal’s death on a cross.

But what has all this to do with the debate over assisted dying? Well, I am struck by how often the idea of losing one’s independence (through disabling or terminal illness) is conflated with losing one’s dignity, and so dying through personal choice (autonomy) is presented as regaining it. One campaign group that speaks to this debate even calls itself ‘Dignity in Dying’ – but does this not unwittingly suggest that choosing to live in a state of extreme dependence on palliative care is, by implication, undignified?

Independence is not possible for everybody, or not possible to the same degree. And dignity? Well, dignity is possible for anyone.

The Dean of Jersey, the Very Reverend Mike Keirle, has spoken of his concern that the change in legislation will make vulnerable people feel pressured to end their lives. Examples from Canada, where physician assisted dying is already available, show that his concern is not unfounded. In 2022, Canadian veteran and Paralympian Christine Gauthier phoned her caseworker to chase up the over-due installation of her new wheelchair ramp. She then describes how she was horrified to find herself being advised to consider assisted dying instead.

"It is remotely just what they're doing,” says Gauthier, “exhausting us to the point of no return. […] I was like, 'Are you serious?' Like that easy, you're going to be helping me to die but you won't help me to live?"

Gauthier is not alone – she spoke out when she learned that four other Canadian veterans had reported similar experiences. In these unhappy moments, one can see how dangerous the assumption can be – the assumption that no one would want to live a life of needing help. Here are disabled people who do want to live, and this assumption, this careless conflation of independence, autonomy, and dignity, leaves them fighting for their right to do so. Why should anyone have to fight or even speak for their right not to commit suicide? It is little wonder that disabled actress, Liz Carr, describes assisted dying legislation as “terrifying” for disabled people.

I respect that there are terminally ill people, and those who love them, who speak from a desire to end their suffering; it is clear that people on all sides of the debate need to have this difficult and emotionally charged conversation. But whatever the eventual outcome in terms of legislation, we must be careful that it is not based on careless assumptions, or on the conflation of one thing with an entirely different other. Independence is not possible for everybody, or not possible to the same degree. And dignity? Well, dignity is possible for anyone – it is a state that can be conferred whenever, and upon whomever society chooses to confer it. Autonomy is the matter in question – we are talking about autonomy in dying. And whatever happens, we should by no means legislate in a way that leaves disabled people esteemed unworthy, left open to the indignity of fighting for their right to live.