Explainer
Comment
Economics
6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?
a pile of coins.
Sarah Agnew on Unsplash.

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

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. 

“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.” 

Paul Williams

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 Biblical perspective that he believes offers some solutions. 

He takes as his starting point a story from the gospel of Matthew, 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, he says, “completely ruined” by wealthy people from elsewhere buying second homes, 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 said. 

“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
Art
Culture
Trauma
War & peace
5 min read

Forgotten soldiers and new narratives are shaping how we mark our wars

Writing our history of conflict is as much a war of images as of words.

Susan is a writer specialising in visual arts and contributes to Art Quarterly, The Tablet, Church Times and Discover Britain.

An actor reads a speech at a commemoration
Timothy Spall recites Churchill.
Sky News.

Heading into an intense summer of World War Two remembrance, with May’s commemoration of the 80th anniversary of VE Day followed by marking the end of war in the Far East in August, it is remarkable how well the essentially Edwardian model of honouring the war dead has stood the test of time. 

In The Edwardians Age of Elegance exhibition, at the King Gallery’s, a room is devoted to the passing of the extravagant turn-of-the-century era into the sombre age of war memorialisation, following World War One. George V commissioned traditional English artist Frank O Sullivan to paint the inaugural service for the Unknown Warrior in Westminster Abbey. The long canvas, with a domed frame at the centre to accommodate Edwin Lutyens’ freshly unveiled, lofty Cenotaph, captures the solitary King walking behind a flag draped coffin, mounted on a gun garage, as the parade passes the war memorial. Initially a temporary wood and plaster structure, Lutyens’ Portland stone monument commemorated over a million soldiers lost in the Great War, some buried near the battlefields near where they fell, and nameless others whose remains had been obliterated by mechanised warfare. 

Attended by widows, ex-servicemen and armed forces personnel, the 1920 Armistice Day ceremony marked a shift away from solely glorifying commanders and officers, placing the sacrifice of ordinary combatants centre stage. The monarch symbolised his gratitude to his people, rather the other way around. 

Ceremonial Great War gun carriages featured in the London VE Day parade on 5th May. And the King’s Troop, Royal Horse Artillery provides gun carriages and teams of six black horses for state funerals. Following World War Two, and complete mechanisation of artillery, George VI instituted a troop of horse artillery for ceremonial occasions, enshrining the continuation of practices from a previous era’s warfare. 

Layering memorialisation upon memorialisation was also evident in the 5th May ceremonies when actor Timothy Spall read an extract of Churchill’s Whitehall speech, given to the crowds when European hostilities ended.  

“In the long years to come, not only will the people of this isle, but of the world wherever the bird of freedom chirps in human hearts, will look back on what we have done and they will say do not despair, do not yield to violence and tyranny, march straight forward and if needs be, die unconquered.”  

Narratives around the present and recent past are codified with a focus on forecasting how future generations will view events when looking back.  

While Europe celebrated in early May 1945, the one million troops of the Fourteenth Army continued fighting the Japanese Army through Burma and the Pacific. Dubbed the Forgotten Army and the Forgotten War, their campaigns were underplayed in the Allies’ wartime narrative. Singapore’s fall to Japanese forces in February 1942 was seen as a shameful defeat. Remoteness from London of the Far East campaign, and the vastness of the theatre of war, made it near impossible to report on by radio and print journalists. Letters to and from the Fourteenth Army took months to reach their destinations.  Soldiers and civilians held as prisoners of war by Japanese forces were forbidden to make images or create records of their captivity, making contemporaneous images of their incarceration rare. But drawings of camps and hospitals by Jack Chalker hidden in hollowed out bamboo sticks, acted as preparatory works the artist to later make paintings such as his painting Medical Inspection, Chungkai Hospital Camp 1943, created in 1946, and now held by the Royal Army Museum. 

As traditions of commemorating the war dead evolve, new grey areas come to light, demanding space in the official narrative 

Contrasting the paucity of images of the war in the Far East, with the array of works depicting the Blitz in London - created with  American audiences in mind, in the hope of winning support for the Allied cause - together with photographic images of North African and Middle East operations, it is little wonder the Forgotten War struggles to be remembered. Veterans of the Far East campaign and POWs were far more likely to join ex services organisations such as the British Legion and Burma Star, than those who served in Europe. Marginalised from victory and peacetimes narratives, the Forgotten Army chose to remember together. 

Before Victory over Japan’s 80th anniversary is commemorated on 15 August, with the famous cover photo of an American sailor dramatically embracing a woman in a white dress showing on repeat, the 80 years since the dropping of atomic bomb on Hiroshima and Nagasaki will have to be faced. Mainly civilians died as a result of impact and sickness from the bombing of Hiroshima on 6 August and Nagasaki on 9 August, with estimates of between150,000 -246,000 deaths. Whether the only use of nuclear weapons in warfare was justified, as it prevented loss of life from not having to wage a military campaign to occupy mainland Japan, or the horrific sacrifice of so many civilians was a war crime, remains a morally grey area. 

As traditions of commemorating the war dead evolve, new grey areas come to light, demanding space in the official narrative. Actress Sheila Hancock wrote recently about the trauma and fear of being an evacuee, sent away from her London family as a small child, to an emotionally neglectful home in the ‘safer’ countryside. Forced adoption of children born to lone mothers, and the stigmatising treatment expectant women received at the hands of Christian denomination- ran mother and baby homes, is a wartime and postwar story now demanding to be heard. 

Lesser documented stories of marginalised civilians, and combatants in faraway places take time to emerge, fighting to be heard above familiar images of plucky cockneys in bombed out buildings and amorously celebratory sailors. Shaping a multifaceted history of conflict is as much a war of images as of words. And as families become more transnational, the search for a shared narrative can replace clinging to the right or official story. 

The idea of army chaplain, the Reverend David Railton, to commemorate an Unknown Warrior with honour, still resonates over a century later. Railton’s battlefield altar cloth, known as the Padre’s or Ypres Flag, covered the coffin on its journey from Boulogne to Westminster Abbey. 

Stretching and fraying to include the stories of groups previously overlooked, the Edwardian fabric of military remembrance is proving remarkably strong. 

 

The Edwardians: Age of Elegance, the King’s Gallery, until 23 November.

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