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
Community
Culture
Sustainability
Wildness
5 min read

Hedgerows are boundaries, but they don’t divide so much as abound

The lines we draw between land and lane connect us.

Elizabeth Wainwright is a writer, coach and walking guide. She's a former district councillor and has a background in international development.

A Devon lane lined by hedges.
Down in Devon.
Craig Cameron on Unsplash.

In May and June, the Devon hedgerows that hold the landscape outside my window are at their fullest, most colourful state of being. Walking the narrow lane that runs away from our house means walking between high hedgerows that rise like soft green walls either side, which really, means walking between ancient living things, because these hedgerows are old. Devon has some of the oldest hedgerows in the country, and so the world – older than the Parish churches whose towers I can see to the south, east, and west, which rise like old-growth trees out of a blanket of green fields.  

Early Bronze Age farmers had to clear woodland to make their fields, and sometimes they left strips of woodland to mark boundaries. These are our oldest hedgerows. They are often found on parish boundary lines, and can support over 2,000 species, also acting as important wildlife corridors for many of them. To roughly date a hedgerow, you count the number of species in a 30m stretch – one species equals 100 years. I have taken to counting random 30m stretches of the hedges that line the lanes near us, and have concluded that we are surrounded by hundreds, in places thousands of years of history – of braided hawthorn and blackthorn, hazel and oak, pink campion and bluebell whose bulbs hide in ancient earth banks that many of the hedgerows sit on.  

Now, in these spring hedges, hawthorn is in blossom, nettles overflow with prickly exuberance, and somewhere deep in the tangle a blackbird tunes its song. The hedges are thick with memory stitched together from centuries of hand-laying, stock-keeping, quiet watching. They are Devon’s old boundaries, but they do not divide so much as abound. Life spills from them: wrens and mice, vetch and violet, and so many more things unseen. These are not just boundaries that mark where other things like fields and roads begin and end then; they are living spaces in their own right. They are pathways for diverse life, they are structures that hold home and shelter, food and safety, they are corridors that contain history and story. They are not just edges, they are the centres of whole lives and worlds.  

Walking here one May morning, I find myself wondering about the lines we draw – between land and lane, but also between ‘us’ and ‘them’ – and whether these lines too might be porous like the hedgerows, which have lived for so long not through independence but through care and relationship.  

The hedges speak paradoxes that I am confronted with every time I go for a walk – of division and abundance, of separateness and connection, of containment and invitation. Lately, I am sitting with these and am coming to understand a threshold that the world offers me: between independence and interdependence. But the truth is I’m not very good at interdependence. I have so often retreated behind the wall of my self-sufficiency, but I am trying to pull that wall down and replace it with a porous and lifegiving hedgerow.  

We draw lines – around ourselves, and between people, nations, beliefs, social classes, politics. Sometimes these lines are for safety, sometimes for exclusion. But the hedgerows tell me that it is possible to hold a line and also to let light and life flow through it and shape it. They tell me that these lines are not end points but invitations to communion.  

In The Left Hand of Darkness, Ursula Le Guin wrote:  

“…I know people, I know towns, farms, hills and rivers and rocks, I know how the sun at sunset in autumn falls on the side of a certain plowland in the hills; but what is the sense of giving a boundary to all that, of giving it a name and ceasing to love where the name ceases to apply? What is love of one's country; is it hate of one's uncountry?”  

Le Guin’s work of science fiction is about otherness and connectedness, with different species having to learn empathy in order to collaborate and communicate. The darker the events in the book, the brighter the hope and relationship. The book feels like it was written for now, for this world.  

On my hedge-edged walks I am in the presence of lives so unlike mine – plants, creatures, the people who have tended and cared for these hedges through generations.

In a world whose people are persecuted, othered, tired, it is easy to believe that the way of things is division and separation. But hedgerows suggest another way to live: layered, porous, complex and interconnected, creating space not just for encounter but for new life through that encounter. This is how I picture the Kingdom that Jesus speaks about and so often found solace in: a world of intermingling and ever-growing aliveness. I think Jesus would have walked with the hedgerows had he lived in Devon. I think he would have used them to speak of boundary-crossing between heaven and Earth, clean and unclean, Jew and Gentile. I think he would have pointed to them and said, see the tangled beauty of these? They are what the Kingdom is like: held and open, living and lifegiving. This is what I want our future to be too.  

As I walk these old lanes, I am deepening into my hedgerow apprenticeship. I am learning to sink my roots in, to tend boundaries with care, to make space for life. I am also finding that there is nothing in the hedgerows that speaks of self-sufficiency. These ancient, interwoven green features that have defined this landscape are here because of relationships between species. It is easy to talk about the interconnectedness of everything, it is another thing to try to live it – to live like gifts, reciprocity, community, are things that might take the weight of our time. These old hedgerows give me a foothold though – they enliven the overused but hard-to-live idea of interconnection, they show me what it looks like and that it is an approach to life that is patient, strong, sustaining, real.  

When I reach out my hand I can usually find something edible or beautiful in the hedgerow depending on the time of year: blackberry, hazel, oxeye daisy, pennywort, primrose. Yesterday, it was the cow parsley that really caught my attention: its frothing, foaming flourishing. In a few weeks it will give way to what comes next, just as it has always done, just as this world will always do. On my hedge-edged walks I am in the presence of lives so unlike mine – plants, creatures, the people who have tended and cared for these hedges through generations. I am also in the presence of relationship, and of hope.  

Now, with so many crises bearing down on the world, and with anxiety and despair blooming, it is the hedges that remind me of other, older, wiser ways to be. It is the hedges that show me how to root deep into solid ground, and how to reach out to others, and to light, which are so often the same thing. 

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