The British public believe in fairness. Everyone has the right to benefit from society, and everyone has a responsibility to contribute to it. We see this sense of fairness enshrined in our public services. This has been especially the case in respect of our NHS where the same healthcare is available to all free at the point of delivery.
Yet there are some aspects of our community life that seem especially unfair, and one of these is our tax system. The simple fact is this: our tax system disproportionately favours the wealthy and harms the poorest in our society. Consider the following:
• In the UK, between £35bn and £90bn per year is not paid in tax that should be paid, almost all of this by the very wealthy.
• If you receive your income through shares, property or other valuable assets you pay a much lower rate of tax than if it comes from working.
• The poorest households pay around 9% of their income in Council Tax, while the richest pay just 1%.
• Taxes that affect the poorest most have increased over the last 30 years while taxes that affect the richest have been cut.
• Taking into account all taxes plus growth in the value of their wealth, the effective tax rate for the poorest households is just over 40%, while for the richest it is merely 18%.
• Tax loopholes and tax dodging deprive developing countries of up to $400bn per year – around 3 times the amount that is given in aid to those countries.
What does this mean in practice?
It means that the average cleaner in the UK is paying more in tax as a proportion of income than the average CEO whose office is being cleaned. It means the average security guard pays a higher rate of tax than the average executive whose building they are keeping safe. This is fundamentally unfair.
The British public think so too.
In our survey of over 1,000 working age adults 80% thought that tax avoidance was morally wrong. This belief was true right across the political spectrum from Conservative to Labour, from Remain to Leave. It was true in every age group and across genders. It is very unusual for the British public to be so united on a single moral issue. Yet this is what we found. And when asked why they thought it was wrong, it was the issue of 'fairness' that was top of their list, with 75% stating that we all need to pay our fair share.
So why does fairness matter? Because contributing a fair share is how we create a fairer world.
A sense of equality and justice is at the heart of who we understand ourselves to be. We believe that everyone is equal, that no-one is above the law, that if there is a rule – such as pay your taxes – then everyone must follow it. From a Christian point of view, this idea reflects the equality that is ours by virtue of being created in the image of God. In the ancient world, the concept of the divine image was reserved for the supreme ruler, but in the pages of Genesis the divine image is conferred on everyone. Under God, we are all of equal worth and dignity.
This is why our scriptures repeatedly find ways to encourage the sharing of resources for the benefit of all. We see this in the Jubilee principles when every 50 years all debts were to be cancelled; we see it in the Early Church (Acts 2) when people sold land and property and distributed proceeds according to need; and we see it in Paul's letter to the Corinthians when he tells them "the goal is equality".
At the same time, the Scriptures are also frequently full of condemnation for those who have made a god out of greed, selfishly hoard their wealth, exploit their workers and fail to pay what they owe either to the ruling authorities or their workers. The World Council of Churches, the World Alliance of Reformed Churches and others have conceived the idea of a 'Zacchaeus Tax', from the story of the tax collector who gave back four times over what he had cheated on the taxes he levied.
In response, then, Church Action for Tax Justice is calling for the following measures to be implemented to ensure that everyone pays their fair share, and so that we see a fairer world, one which is more equal and just, especially in this time of crisis:
• Put conditions on company bailouts – only those corporations paying their fair share of tax should receive government bailouts. This means that those who use tax avoidance measures, who fail to publish public country by country reports and who fail to publish the real beneficiaries of their corporate structures should not receive bailouts.
• Institute an excess profits tax – some companies have made exaggerated profits from the coronavirus epidemic. In previous times of crisis, the UK has implemented such super taxes to stop such profiteering and we should do the same now.
• Tax all income on an equal footing – it is not right that if you earn £20,000 from capital gains in shares or property that you pay less tax than if you earn the same amount from work. Taxes on all forms of income should be equalised.
• Actively consider an annual wealth tax – because we have failed for decades to tax growth in wealth adequately, wealth inequality has grown significantly. We need to reform areas where wealth is currently under-taxed, such as property, inheritances, capital gains, dividends and pensions.
• Stop the dodging – as indicated at least £35bn each year that should be collected in tax is not. We need to tighten the legislation to close the loopholes and in particular properly resource HMRC and Companies House so they are able to enforce those rules.
• Fund green investment - with the money raised from fairer taxes.
• Support poorer countries – the current global tax rules are under negotiation. The UK should support those measures now being discussed in international fora that would ensure poorer countries get a fairer allocation from the multinational corporations that do business in their countries, and close loopholes in UK tax laws and treaties that enable tax abuse.
For more information about Church Action for Tax Justice, visit www.catj.org.uk
