Churches and poverty charity call on Government to make tax fairer

The Baptist, Methodist and United Reformed Churches and charity Church Action on Poverty are urging the Chancellor to make overhauling the taxation system a priority in Tuesday’s emergency Budget.

The Budget is expected to include painful tax hikes and cuts to public sector spending as the Government gets to grips with Britain’s massive deficit.

The Churches and CAP are asking George Osborne to make a “thorough revision” of the taxation system a “central” part of the Budget, one of the most stringent in nearly three decades.

The group hit out specifically at present income tax levels. Under the current system, the poorest pay around 46% of their income in taxes, while the wealthiest pay around 34% of their income.

“An equal sharing of this tax burden is the very least that fairness demands,” the group said.

Osborne is expected to announce an increase in VAT from 17.5% to as much as 20% and a 1% increase in national insurance contributions for employers and employees earning more than £20,000 from next April. Top earners are likely to see a 2% increase in their national income contributions.

Banks will be hit with a levy on their balance sheets, while capital gains tax is likely to be increased to levels similar to income tax. Tax on alcohol and cigarettes is also set to rise.

John Marsh, moderator of the general assembly of the United Reformed Church, said: “It’s clear that our country’s fiscal deficit should be tackled and I have no doubt that deep cuts will be announced in Tuesday’s budget. There are only two way to reduce the deficit – increase the money coming in and reduce the money going out – and we urge the chancellor to consider the moral dimensions of both.”

Paul Morrison, policy adviser for the Methodist Church, said: “We believe that paying fair taxes is the moral duty of all. However, it’s possible legally to side step that moral obligation.”

He pointed to the example of England footballers who have part of their earnings paid into ‘image rights companies’, thereby avoiding UK income tax on their wages.

Jonathan Edwards, general secretary of the Baptist Union of Great Britain, added: “It is the duty of the government to levy taxes fairly on those who can afford to pay and it is the duty of those who can pay, to pay their fair share.

“There are many legal ways to reduce a tax bill but we are asking, when public services are being cut and many are losing their jobs, is this ethical? Are these measures legal? Yes, perfectly. Is it fair? Absolutely not!”

CAP is about to embark on a research initiative looking into the effects of the spending cuts and tax rises. The Fairness Test will consider questions such as whether the people affected by cuts are those who benefitted from the boom and whether people affected can afford the cuts.

Niall Cooper, national coordinator for CAP, said: “Raising fair taxes puts justice and morality at the heart of domestic economic policy, not only protecting the essential services that the most vulnerable members of our society rely on, but also rectifying the inequalities built into our taxation system.”