Article

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General Election 24

Politics

18 June 2024

5 min read

The tale of two Hindu Prime Ministers

June 4th told a brief but bold story of Modi’s India. July 4th will reveal the mind of the UK.

Rahil Patel

Rahil is a former Hindu monk, and author of Found By Love. He is a Tutor and Speaker at the Oxford Centre for Christian Apologetics.

official surround an open case containing an electronic voting terminal and cables.

Indian election officials unpack a voting machine.

@BruceDGilley on X.

After 44 days of voting across India, 640 million people entered 5.5 million election booths to choose who would be their next Prime Minister.

Finally, on June 4th the result was announced, and India had chosen the devout Hindu incumbent PM Narendra Modi.

But wait for the twist! Mr Modi announced way ahead of the elections that his ruling BJP party would win a significant majority of 400 seats out of the 543 in the Lower House. Many of the pollsters felt this was possible, among them Axis My India, the country’s most prominent polling company. Data-driven pollsters and an action-filled mass-media told the world that Mr Modi would have his thumping majority for a third consecutive term. Bafflingly not…

When the results were counted on June 4th it turned out that Mr Modi’s BJP managed a disappointing 292 seats, dropping it short of the majority needed to continue the status quo of Indian governance.

Pradeep Gupta, Founder and CEO of Axis My India, wept in front of media cameras, revealing to the hundreds of millions of voters that even after accurately predicting so many national and state elections, he can also get things terribly wrong.

The world media was largely shocked but couldn’t hide its glee. The Economist told readers on its front cover that Modi’s ethno-nationalist shortfall was a “triumph for democracy.” The Financial Times told its readers that Modi was “weakened”, and other headlines across the globe revealed that even the “most popular world leader” can be humbled.

Even though it was startling to most of those who kept an eye on this mammoth undertaking of democracy I was strikingly surprised to notice that no one claimed that the election was “rigged” or that there was “Russian interference” (or Chinese in the case of India)! It was simply accepted…alliances were struck and, within a day, 1.4 billion people in India moved ahead with Mr. Modi still as its PM, now heading the National Democratic Alliance parliamentary grouping. The smoothness of the political system after such a seismic surprise is quite astonishing to a “westerner” like me. In our “sophisticated” part of the world we seem to be confused as to who has won an election or even a referendum for that matter.

“Democracy” to many millions in India simply means, “elections” and in some towns and cities people queued for six hours to vote.

Mr Modi lost in the city of Ayodhya! This is where he consecrated the controversial Hindu temple on top of the ruins of a sixteenth century mosque that Hindu nationalists demolished in 1990. A disapproval by the people of the Hindu hub of Ayodhya is like saying that the Taliban have now decided to wave the rainbow flag… or that the state of Texas is now officially going full on vegan.

It’s interesting that no politician or media outlet echoed the chants and mantras of western elections or referendums in recent years and roared, “the people don’t know what they’ve voted for…so let’s do the vote again!” Quite strange for a nation whose GDP per capita is only $2,300…

350 million people in India live below the poverty line and I would go as far as to argue that 450 million of its inhabitants do not even know what the United Nations is let alone what it stands for. “Democracy” to many millions in India simply means, “elections” and in some towns and cities people queued for six hours to vote. Human Rights, Freedom of Expression or Religion are alien ideas when all you need is a meal.

It is humbling not just for Narendra Modi as the mass media have said in the west but even for keen observers here such as myself. That’s the first lesson.

The second lesson from this stunning outcome is to never ignore the people you think you can easily ignore…

It was the poor (even Hindus) whose homes were blatantly demolished to build the Hindu Temple in Ayodhya that went against Mr Modi. It was the farmers who protested for months for their financial security that decided that their leader is not really a man of the commoner but of the corporates. At least that’s the image Mr Modi gave them. About 55 per cent of India’s population receives an income related to the agriculture industry.

Finally, the Dalit (lowest caste) community didn’t vote the way the BJP expected. Even though their PM is from the lower Ghanchi caste they didn’t see in him any action suggesting that he is one of them.

At the beginning of his decade of rule Mr Modi cunningly utilised the fact that he is from a low caste background, a simple tea-selling family and not educated at Oxford or Stanford. And it worked.

But now the very people he cast a net over are beginning to peer through his fickle facade. “The axe convinced the trees in the forest that because its handle was made of wood it was one of them” is a Turkish proverb that comes to mind. Eventually, the trees catch on. When you fool people time and again, eventually they get the antibodies.

UK Prime Minister Sunak is also a devout Hindu who often uses the Hindu term dharma when he talks about ‘duty to his nation.’ And yet he is quite the opposite on many other accounts. Sunak is from a very educated and wealthy background. He went to Winchester School and then on to Oxford and ran a hedge fund before entering politics. He is liked by many world leaders and admired by HM Treasury, the government department he used to run. A ‘technocrat’ in every sense of the word and yet he is facing the same doubts and demands from the electorate – about integrity. I do not wish to isolate PM Sunak on the integrity chart but leaders and those with tall responsibilities attract a higher demand. Wisdom in the Christian Bible says, “to whom much is given, much will be required.”

June 4th told a brief and bold story of PM Narendra Modi’s India. July 4th will reveal the mind of the United Kingdom. How will we treat the people or politicians we disagree with? Dutch theologian and professor Benno Van Den Toren once told me that the minute you laugh at an idea you disagree with, is the exact moment you lose access to understanding what the individual or idea is trying to say. Will we seek to understand? Or simply win? The ruling class in India won for a decade whilst ignoring their opponents and as a result eventually lost their majority. As important as the result on July 4th in the UK is what happens after, how we steer our hearts and treat those who didn't vote as we did.

That is the humbling lesson to learn from the 640 million voters of India.

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.