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Economics
6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?
a pile of coins.
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. 

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Feminism
5 min read

Sarah Everard: she was 'exactly like us'

An anniversary of anguish deserves the miracle of our attention.
A woman looks down slightly, smiling.
Sarah Everard.
BBC/Everard Family.

This week, three years ago, we’d been shut in our homes for nearly a year and things were anything but normal. I don’t know about you, but when I think back to those locked-down days, it’s all a bit of a haze, those weird weeks tend to blur into one.  

Except this week, that is. This week, three years ago, was a wholly different story.  

We, the public, had just learnt that Sarah Everard, a thirty-three-year-old woman in South London, had been abducted, raped and murdered by Wayne Couzens, a serving police officer in the Metropolitan Police. And the news of this heinous crime took our breath away. Do you remember it? How you felt when you learned what had happened to Sarah?  I can remember the anguish of hundreds of people ringing out from Clapham Common, reaching every corner of the country. I can remember that, legal or not, nothing seemed to quell the outrage that was drawing people to the vigil being held there. All that grief, it had to go somewhere.  

The anger that night was so visceral, it feels like it’s still in the soil of the Common. The fear, so palpable, it still lingers in the air. And at that point, we didn’t even know the half of it. ‘She was just walking home’ - That’s the sentence, isn’t it? The one that haunted those days, weeks, and months.  

Three years on and we’re no closer to coming to terms with what happened. Not really. In the wake of the recent Angioloni Inquiry, which concluded that Wayne Couzens should never have been allowed to become, let alone remain, a police officer, the BBC released a documentary that follows DCI Katherine Goodwin’s story as she led the investigation. From first seeing the bulletin of a missing young woman, to hearing the ‘whole life’ sentence come down on Couzens – viewers are walked through the whole thing, step by step. What led up to Sarah’s death, and what followed it. It’s something that we should all see, even though we’ll immediately wish that we hadn’t.  

Because it would be hard to unsee the grainy footage of Wayne Couzens standing next to a handcuffed Sarah on the side of a busy road, abducting her while his hazard lights flash, all of it so sickeningly hidden in plain sight. It would be harder still to unhear the victim statement from Sarah’s mum, who admitted that every night, right at the time of the abduction, she silently screams ‘don’t get in the car, Sarah. Don’t believe him. Run!’.  

All of it, it’s just so hard to know.  

The details are hard to think about, and harder still not to think about. But that’s the point, I suppose. I remember what philosopher Simone Weil wrote,

that ‘capacity to give one’s attention to a sufferer is a very rare and difficult thing; it is almost a miracle… it is a miracle’.

I’m just not used to a ‘miracle’ making me feel so nauseous. In theory, Weil’s words are beautiful, in reality though – they ache.  

I don’t tend to acquaint a feeling of utter helplessness with the miraculous. Where my understanding runs dry, my answers falter, and my tears flow – those aren’t the places I expect to see anything of any use, spiritual or otherwise. 

But Weil goes on:

‘…it is recognition that the sufferer exists, not only as a unit in a collection, or a specific from the social category labelled ‘unfortunate’, but as a man (or woman), exactly like us, who was one day stamped with a special mark by affliction.’  

Sarah Everard – her memory, as well as the people within whom her memory is most vivid, and her loss most keenly felt – deserve the miracle of our attention. Then, now, and for many years to come. We continue to grieve her, the woman who never made it home, as if we each knew more of her than her name. And that’s a beautiful thing, a human thing, a sacred thing. Because Sarah was more than her name, and she was more than her death. And so, she must be grieved as such, with our eyes fixed on the beauty of who she was, and the tragedy of who she will never be.  

And it’s tricky, because you can’t tidy up lament, can you? There’s no silver-lining, nothing to polish. You can’t put a neat bow on despair or grief. 

And then there’s Weil’s ‘exactly like us’ line to grapple with. And grapple with it, we do. The knowledge that it could have been any of us is ever-present. As a woman, I feel it every single day. If male violence against women is a spectrum - 1 being a wolf-whistle as we walk down the street, and 10 being death – the truth is that most of us will only ever face experiences that sit on the lower end of that scale. And yet, we are ever aware that 10 exists and that we could encounter it at any point. So, we are on the lookout for it. We are alert, always.  

Sarah walked home a specific way that night; not the quickest route, but the best lit.   

That’s what we all do. ‘Exactly like us’, indeed.  

Lament; I suppose that’s what this feeling in my stomach is. And maybe yours too. It’s a feeling that goes beyond the rage I feel toward the monstrous perpetrator, and the institutions that failed to stop him, and so many others. It’s a kind of wordless grief that things are the way they are, agony that we live in a world that hurts this much, despair at how things could have been so different. I felt all this three years ago, when I heard about Sarah’s death. And I felt it last night, when my sister walked home from my house in the dark with her hood up so that she was less distinguishable as a woman walking alone.  

And it’s tricky, because you can’t tidy up lament, can you? There’s no silver-lining, nothing to polish. You can’t put a neat bow on despair or grief, and you can’t pull yourself out of it by your own bootstraps. And that’s not to be defeatist, or to relinquish our responsibility to enact justice and fight for change. On the contrary, lament is rooted in the knowledge that things can be, and should be, better. But to try and find a way to solve the outrage we feel when it comes to the death of Sarah Everard is to completely misunderstand it, and ourselves, and reality. 

Bad things hurt. 

So, although writing this piece has been hard, I’m at least comforted in the knowledge that it was supposed to be a hard piece to write. And that the queasiness I feel and the tears that are threatening my professional resolve are the evidence of some kind of miracle that I don’t fully understand.