Article

Economics

Politics

24 October 2024

1 min read

How can taxes build a better society?

As we await Rachel Reeve's budget announcement, Laurence Fletcher wonders what positive tweaks can be made to our economic system.

Laurence Fletcher

Laurence is a journalist at the Financial Times.

Few doubt that Chancellor, Rachel Reeves, will be putting up taxes when she presents her first Budget on October 30. 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.

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 perspective that he believes offers some solutions.

He takes as his starting point a story in the gospels, 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 “completely ruined” by wealthy people from elsewhere buying second homes that used to belong to locals, 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 says.

“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.

Article

Assisted dying

Comment

Freedom of Belief

Politics

16 June 2025

5 min read

Holding an opposing view is not 'imposing' belief on the assisted dying debate

Opposing interventions from believers on dishonesty grounds is a sinister development in public debate

Nick Spencer

Nick is an author and Senior Fellow at Theos,a think tank.

A graphic shows a gallery of people with religious symbols on their clothing.

“There are some who oppose this crucial reform,” Esther Rantzen wrote recently of MPs who dared to opposed Kim Leadbeater’s Terminally Ill Adults (End of Life private member’s bill. “Many of them have undeclared personal religious beliefs… [do] they have the right to impose them on patients like me, who do not share them?”

This is a peculiarly common argument for those who support the right to Assisted Dying, which is surprising as it would be hard to come up with a less coherent case against religion in public life. The idea that elected MPs engaged in parliamentary debate are “imposing” their will on other people is odd. The idea that MPs have undeclared personal religious beliefs is strange too. I think it’s fair to say that most people know that Shabana Mahmood is a Muslim or Tim Farron is a Christian, and for those that don’t know that but do have access to Google, it takes less than five seconds to find out the religious beliefs of an MP.

Perhaps most tellingly, however, why is it that we should be alert to – read wary of – MPs religious beliefs? Do the non-religious not have beliefs of which we should be cognizant? If my MP is motivated by a philosophy of relentless, Peter Singer-like utilitarianism or vague, incoherent secular humanism I’d like to know.

In truth, Rantzen’s intervention in this debate, like that of a number of others – Lord Falconer, Simon Jenkins, Humanists UK, etc. – is part of a recent and rather dispiriting attempt to de facto exclude religious contribution to public debates by accusing them of being dishonest.

To be clear, secular voices have long tried to exclude religious ones, but the tactics change. Back in the New Atheist heyday of the early twenty first century, all you needed to do was splutter something about sky fairies or Bronze Age beliefs or mind viruses to close down any sort of religious intervention. If, as Richard Dawkins famously put it, faith was one of the world’s great evils, comparable to the smallpox virus only harder to eradicate, no sensible parliament could possibly want to heed what faith had to say.

Even back then, however, there were subtler arguments against faith, which usually came in the form of semi-digested Rawslian political liberalism, and demanded the religious participation in public debate had to obey the strictures of “public reasoning”, using logic and language that “all reasonable people” will understand.

There are quite a few holes in this particular away of thinking (who are “reasonable people” anyway?) but as a rule of thumb, it’s not a bad one to follow. It is quite right and proper, if only as a matter of pragmatism, to speak in terms that your opponents will get, just as it is right and proper, as a matter of courtesy, to be open about what ultimately motivates you.

And so that is what religious figures – MPs, leaders, institutions – do. Having read through pretty much all their contributions to the assisted dying debate, in parliament and beyond, I can testify that not many people, on either side of the debate, quote scripture or invoke papal teaching as a way of persuading, let alone commanding, others. (As it happens, parliamentarians haven’t really done that since the 1650s, but that’s another story).

Rather, they argue in terms of policy and principles. They talk about the risk of legislative slippage, of changing attitudes to the vulnerable, of the need for better palliative care, of existing pressures on the NHS, etc. This is quite right and proper. As James Cleverly remarked in the Common debate in November, “We are speaking about the specifics of this Bill: this is not a general debate or a theoretical discussion, but about the specifics of the Bill”. And so that is what they did.

Does anyone seriously think it is a good idea to compel a believing Jew to stand up in parliament and declare her faith before she were allowed to speak?

In effect, religious public figures, whether or not their beliefs are “declared”, do what they have (rightly) been asked to do by those who have appointed themselves as gatekeepers for our public debate. And so this has forced the usual suspects to pivot in their argument. No longer able to dismiss religious contributions for what they say (“don’t quote the Bible at me!”) they are now compelled to dismiss them for what they don’t say. Hence, the trope that has become popular among such campaigners – “you are not being honest about your real motivations”.

A new report from the think tank Theos, entitled, How much have your religious views influenced your decision?”: religion and the assisted dying debate, unpacks the various objections that have been levelled at the religious contribution to the debate, and then systematically dismantles them.

Some of these objections are old school in the extreme.

Religious belief is too intellectually inadequate or disfiguring for debates of this nature.

Religion is insufficiently willing to adapt and compromise for politics.

Faith is ill-fitted or even inadmissible in a secular polity or culture.

But the report majors on the newer objection, so clearly displayed by Esther Rantzen, what we might call “dishonesty” objection, that religious contributors are fundamentally dishonest about their motivations and objectives.

In truth, this is no stronger than the more tried and tested objections, and it displays a serious, possibly intentional, misunderstanding of what a religious argument actually is. To quote the political philosopher Jeremy Waldron, such secular campaigners “present it as a crude prescription from God, backed up with threat of hellfire, derived from general or particular revelation, and they contrast it with the elegant simplicity of a philosophical argument by Rawls (say) or Dworkin [and] with this image in mind, they think it obvious that religious argument should be excluded from public life.”

Contemporary arguments against religion in public life are slightly more sophisticated than Waldron’s caricature here, but not much. The idea that religio should be “declared” as a competing interest, so as to stop religious participants in debate from being “dishonest” is every bit as sinister, against both the letter and the spirit of plural, liberal democracy. Does anyone seriously think it is a good idea to compel a believing Jew to stand up in parliament and declare her faith before she were allowed to speak?

As the assisted dying debate returns to parliament for the final push, there will be much animated debate. That is quite right and proper. A democracy needs vigorous and honest argument. But part of that honesty involves opening the doors of debate to everyone, and not subtly trying to exclude those with whom you disagree on the spurious grounds that they are being dishonest.

Read the report

Support Seen & Unseen

Since Spring 2023, our readers have enjoyed over 1,000 articles. All for free.
This is made possible through the generosity of our amazing community of supporters.

If you enjoy Seen & Unseen, would you consider making a gift towards our work?

Do so by joining Behind The Seen. Alongside other benefits, you’ll receive an extra fortnightly email from me sharing my reading and reflections on the ideas that are shaping our times.

Graham Tomlin
Editor-in-Chief

Support us now