Welfare, community and taxation in troubled times

Quote

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”  Jean-Baptiste Colbert, Finance Minister to king Louis XIV.

News

France and Spain’s announcements of austerity plans reported on Wednesday include raising retirement ages, increasing taxes on the most wealthy, and easing restrictions on the labour market – to rely on structural adjustments more than spending cuts to curb deficits.

Cutting public spending and increasing indirect taxes, such as VAT, make poorer households relatively worse off.  A more equitable way to reduce the government deficit is to raise higher rates of income tax.  In the UK, the top 5% of earners pay 44% of income tax revenues; in contrast, the lower 50% of the population contribute just 11% of revenues.  However, increasing the tax burden on the well off is frequently counteracted by more tax avoidance or evasion; in Greece, it is estimated that tax evasion could amount to 25 billion euros a year (82% of its annual public deficit).

One of Europe’s strongest historical values is solidarity, by which all members of a society, according to their means, and through relational networks such as family and church, ensured that their fellow citizens who fell on hard times were supported.  However, with the state taking over most welfare provision in the last 60 years, people have become increasingly indifferent to the plight of the poor and needy, and bought into an individualistic vision of society. 

The present crisis affords us an opportunity to reconnect with one of the relational values which shaped European civilisation, and which could help us rethink our approach to welfare and community in the coming days of austerity.

Read on...

A Cambridge paper was published in 2001 by our colleagues at the Jubilee Centre, entitled “Render unto Caesar? The dilemmas of taxation policy”.  Although the statistics and policy described are a little dated, the paper provides a clear introduction and overview of the topic, and underscores the different responsibilities of the individual, the family, the community and the state.  Find it here: www.jubilee-centre.org/document.php?id=33   

Walk the talk

If we accept our role and responsibility as citizens of the country in which we live, and enjoy the benefits that derive from its government, then fiddling our tax returns, no matter how commonplace, is not just dishonest, it betrays a fundamental value of our society.  In the end, it will make everyone poorer, both relationally and financially.

The last word

From the Bible, Luke 20: 21-25.  "Teacher... Is it right for us to pay taxes to Caesar or not?" Jesus saw through their duplicity and said to them, "Show me a denarius. Whose portrait and inscription are on it?" "Caesar's," they replied. He said to them, "Then give to Caesar what is Caesar's…"