Tax is a good thing

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One of the depressing aspects of this election, as with others which have gone before, is that the parties feel constrained to argue about which of them will keep taxes lowest.  It’s an argument predicated on the assumption that tax is always a bad thing, and that people will always vote for the party which taxes them the least.  What it avoids is any debate about the nature and purpose of taxation.

Even when politicians do talk about the need to increase taxation, they do it in a cautious and hesitant fashion.  One very recent example was the Lib Dem promise to raise income tax by 1p to fund NHS and Social Care.  I’m not a fan, to say the least, of hypothecated taxes like this; saying that this penny of income tax is for the NHS, that one for Defence, the other one for pensions isn’t a particularly helpful way of managing government finances, particularly when circumstances change (as they always do).  It isn’t just the Lib Dems though – look at the hesitancy with which Labour talk about raising the top rate of income tax.  Even in the way in which it was presented, it was about those who would not face a tax increase under Labour rather than those who would.

That isn’t the only aspect of language used which colours debate.  Why is taxation, for instance, always described as a ‘burden’, with debate limited to who should bear this ‘burden’?  This sort of language evidences the underlying assumption that taxation is some form of ‘necessary evil’; but the idea that it’s an evil of any sort effectively concedes the ideological argument.  The argument that it is better for people to keep more of their own money and decide for themselves how to spend it is itself an ideological argument, not a statement of fact.  Why is it ‘better’; who decided that; what are the criteria being used to arrive at that judgement; and where is the evidence that lower taxation meets those criteria?

There’s another aspect to all this as well, and that is that the debate usually concentrates on taxes on income.  Part of the reason for that is that taxes on income are generally more visible – people looking at their payslips can see immediately how much has been deducted in tax.  VAT, on the other hand, is a lot less visible.  For sure, higher VAT leads to higher prices, but most consumers when purchasing items don’t distinguish between VAT and other causes of high prices; the question is only whether the total price is affordable.  So, whilst the parties get themselves worked up over whether or not VAT will be increased, it’s a tax which is a lot less visible to most of those paying it.

Taxes such as VAT are not only less visible than direct taxes on income; they’re also much less progressive or fair.  On most of the vatable goods and services which most of us buy, we all pay the same amount, regardless of means.  Any shift away from visible to less visible taxation is in effect a transfer of tax from the richer to the poorer.

There is, though, an alternative ideological viewpoint.  Tax is, in essence, a good thing, and the more it’s related to ability to pay the better.  Tax underpins civilisation.  Taxation is one way of ensuring that the economy benefits the many not the few, and enables the maintenance of a caring and compassionate society.  Seen from this perspective, any party claiming to be the party of low taxation is a party which is, in effect, promoting personal selfishness at the expense of community solidarity.

Rejecting the idea that taxation is something inherently bad, and defending and promoting the idea that it is central to any society which values all its members, is just one of the steps which are required if we are to reject the increasing division of society into haves and have nots.  Where, other than Sweden, are the politicians brave enough to make the case for taxation in a bold and assertive fashion?