There are two main questions about the recent budget. The first is whether the Chancellor, Rachel Reeves, was or was not misleading in her statements prior to the budget about the financial situation the government was facing. The second is whether the tax increases in her budget were or were not justified. In this article I shall be looking at how the Christian faith provides a framework for thinking about the second of these questions.
We must begin by thinking about the role of government, since the imposition and collection of taxes is a function of government. As far back as biblical times taxation is something that governments do, as can be seen in the question put to Jesus in Matthew 22:17, ‘Is it lawful to pay taxes to Caesar or not?’ Caesar has governmental authority and so taxes get paid to him.
The Christian faith tells us that in the world to come human beings will come under the direct rule of God in his eternal kingdom. As Obadiah 21 succinctly puts it, ‘the kingdom shall be the Lord’s.’ Human governments are thus an interim phenomenon until that day comes. However, based on New Testament passages such as Romans 13:1-7 and 1 Peter 2:13-17, Christians have consistently held that even though governments only have an interim existence and even though governments can become oppressive (see Revelation 13), nevertheless the existence of government as such is something that is positive and indeed God given.
A government’s role is not to do everything in society, since individuals, families and other social organizations (including the Church) each have their own proper role to play in enabling human well-being. Rather, as both Romans 13 and 1 Peter 2 emphasize, the role of government is to promote the well-being of human societies under God by performing acts of judgement in response to wrongdoing. The final coming of God’s kingdom will bring about a state of perfect justice through an act of judgment in which all wrongs are put right, and the role of government is to provisionally anticipate that final state of justice by undertaking acts of judgement in the here and now.
The acts of judgement performed by governments can be either reactive or proactive. They are reactive when they respond to acts of wrongdoing that have already been committed: as when someone commits a crime and is punished by the state. They are proactive when they are intended to prevent forms of wrongdoing that are foreseen.
These proactive acts of judgement can either be direct prohibitions of certain forms of action, or they can be ways of encouraging activity that will prevent a wrong occurring. For example, a government could tackle drug addiction by banning certain drugs, but it could also run an education campaign to persuade people that not taking drugs is a good idea. For another example, the payment of unemployment benefits is a way of preventing the wrong that would occur if people had nothing to live on while they were looking for work, and government financed job training is a way of preventing the wrong of people lacking the skills to engage in productive work.
In order to carry out their activities, governments need money. In a world like ours in which money is the primary means of exchange for goods and services (I give you money and you provide me with food; I give you money and you look after me when I am sick etc.) governments, just like individuals, families, and other organizations, require money in order to carry out their activities, by directly employing people to do things, by paying individuals and groups outside government to do things, and where necessary providing both with the facilities and tools they need to do things. For example, a government that has an army needs money to pay soldiers and to train, equip and deploy them. Likewise, a government that has responsibility for education needs money to employ teachers and other staff and to build, maintain and equip schools.
The need for money is the basic reason why governments need to raise taxes. Governments can, of course, borrow money, but the problem with borrowing money is that at some stage loans need to be paid back. Without tax revenues a government cannot pay its loans back and when this happens governments (and the countries they govern) are in big trouble - as the Greek government debt crisis between 2009 and 2018 amply demonstrated. Governments could also raise money through robbery by attacking other countries and stealing their assets, but this would be both highly immoral (it is a breach of the commandment against theft in Exodus 20:15) and economically risky (wars are very expensive).
As well as their basic function of raising money for governments, taxes also have a role to play in acts of proactive judgement by governments. This is because governments can use taxes to discourage people from engaging in certain activities, and tax incentives to encourage them to engage in others. For example, if it was judged that excessive use of private cars was contrary to the common good because it was damaging to the environment, a government could decide to raise taxes on private motoring as a deterrent and could give tax incentives to encourage people to use public transport instead. In similar fashion governments could raise taxes on unhealthy food to deter people from buying it and use tax revenue to subsidize healthy food to encourage and enable people to buy that instead.
The framework for understanding the nature and purpose of taxes I have just sketched out helps to understand how Christians should view the tax policy of any given government.
Christians are under an absolute obligation to pay their taxes. In the words of Paul, they are to pay ‘taxes to whom taxes are due’ (Romans 13:7) as part of their general obligation to honour the God given authority of government. As John Stott puts in his commentary on this verse, ‘Christians who recognize that the state’s authority and ministry come from God will do more than tolerate it as if it were a necessary evil. Conscientious Christians will submit to its authority, honour its representatives, pay its taxes and pray for its welfare.’
However, although Christians should accept that governments thus have a right to raise taxes and Christians have an obligation to pay them, this does not mean that Christians should approve of all forms of taxation that governments may decide to impose. Recognizing that Caesar has a right to demand taxes is one thing. Thinking that Caesar is right to require payment of a particular form of tax is another.
The reason for this distinction is that it is possible for governments, as fallible human institutions, to introduce taxes that are either (a) unjust or (b) ill-advised.
Taxes that would fall into the first category are:
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Taxes that are used as a way of obtaining money for members of the government and their supporters rather than to fund legitimate government activities.
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Taxes that are raised in order to buy the support of a particular part of society rather than benefiting the population as a whole.
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Taxes that are raised in order to pay for unjust forms of activity. From a Christian perspective for example, taxes could be seen as unjust if they were raised to pay for an unjust war, to support a LGBTQ+ social agenda, or to fund abortion or euthanasia.
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Taxes that are so heavy that they mean that people lack the money they need to ensure the well-being of themselves and their families. As we have noted, the function of government is to promote human well-being and from this it follows that a level of taxation that is so high that it prevents human well-being is unjust.
Taxes that would fall into the second category are those that may be well-intentioned but have negative unintended consequences.
For example, a government might decide to protect the agricultural sector of its economy by imposing taxes on imported food to make it more expensive. The imposition of such taxes might well benefit local farmers, but it could also have the unintended side effect of making the cost of food unaffordable to those on low incomes.
For another example, a government might decide to increase taxes on businesses. There is nothing wrong with this in principle, but a tax on businesses might be ill-advised if it had the unintended consequences of stopping businesses being able to afford to employ people, or forcing them to raise the price of their goods or services to levels that their customers could not afford to pay.
For a final example, a government might decide to impose additional taxes on the wealthiest members of society. Again, there is nothing wrong in principle about this idea since it is not unjust that those who can afford to pay more in tax should do so. However, a wealth tax might be ill-advised if the unintended consequence was for the wealthy to move themselves or their money abroad thus causing the government’s tax revenue to fall and restricting its ability to engage in just activity.
All of this means that while Christians may not rightly refuse to pay taxes, they can, and they should, critically examine the forms and levels of taxation imposed by any government, asking whether the taxes are just and whether they have harmful unintended consequences. If either is the case, they should argue for the government’s tax policy to change. Carefully examining a government’s tax policy may not seem a very exciting exercise to those who are not economists or accountants, but it is a necessary one if Christians are to seek the welfare of the societies in which God has placed them (Jeremiah 29:7).
In relation to the recent British budget, the two big issues that need to be considered are (a) whether the government needed to raise taxes in order fund its spending and (b) whether it was right to raise taxes to increase the level of welfare benefits.
Within the Christian framework I have set out above, the critical questions that Christians need to ask in relation to (a) are whether in fact the government was told by the Office for Budget Responsibility that there would be a sufficient increase in government revenue to cover government expenditure without raising taxes but decided to increase taxes anyway, and whether this then means that tax increases were unjust because unnecessary.
The critical questions with regard to (b) are whether justice required an increase in welfare benefits to increase the well-being of those receiving benefits, even if this meant a decrease in the well-being of those asked to pay additional taxes even though they are struggling financially, and whether this increase in benefits will have the unintended consequence of discouraging those on benefits from looking for work and therefore result in an increase in the number of people deciding to continue living off the state and, therefore, off their neighbours.
The Christian tradition has always held that those who can earn a living should do so rather than being content to live off others. That is the point of Paul’s declaration in 2 Thessalonians 3:10, ‘If anyone will not work, let him not eat.’ However, the question with regard to welfare benefits is how to uphold this principle in a way that does not unjustly punish those who cannot work, because work is not available, because they are physically or mentally unwell, or because they have full-time caring responsibilities, and whether the recent budget got the balance right on this issue.
In principle, therefore, it is right for Christians to critically scrutinize the recent budget and to be prepared to challenge it where necessary. However, such challenges must be based on a properly informed understanding of what the government has done and an informed Christian understanding of what taxes are for, what makes them just or unjust, and the danger of unintended consequences.
