I suspect a lot of students in Britain, and young people in general, don’t know the ins and outs of the British tax system – well, neither do I, to be honest – but I believe I know enough to justify writing an article on this thorny subject. I am not, however, going to dissect every inch of Britain’s tax system as it is shrouded in complex mathematical equations, just like Britain’s banking system (coincidence?). But I am going to try to shine a light on particular areas of said system that I believe need to be more critically analysed by people, not just by students, who I’m sure have a long list of things scratching and wiggling about in their impressionable, young minds. I’m not going to propose the idiotic idea that there shouldn’t even be a tax system of any kind in Britain and elsewhere as I ardently and wholeheartedly believe in the importance of having and maintaining a progressive and fair tax system. Campaigning for the abolishment of all taxes is a fool’s game, and I am certainly no fool.
We all know taxes are universally unpopular and there are different reasons why so many people in so many countries don’t harbour favourable views towards being taxed by a central authority; after all, who likes seeing their personal wealth – no matter how miniscule – shrink after having earned every penny through many, many hours of hard work, right? And I suspect a lot of this anger and frustration emanates from the bitterness felt when some government or administrative authority forcefully takes (or “steals”, depending on how one looks at it) their hard-earned and hard-fought money. But I also believe that another major cause of the seething hatred against taxes that bubbles within an ocean of people is the widespread perception that the British tax system is systematically biased against people from the lower rungs of society (low earners) and biased towards people at the top of society’s ladder (higher earners). Others – mainly from the political right – insist that this is Britain’s way of rewarding those members of society who have become very financially successful by being creative and productive and encouraging those who haven’t to work harder in life so they, too, can reap the rewards of the British tax system. Whether you choose to embrace this logic or reject it is your personal choice.
Taxes have been around for a very long time – since the days of Ancient Egypt, where ruling elites discovered that they could live off of the sweat of the peasant masses; here, taxes mostly meant providing unpaid labour and handing over a percentage of agricultural crops. And they’ve existed in different forms ever since, not just in the form of paper currency. And I’m sure that the taxpayers of the ancient world equally loathed the mere mention of the “T” word as their modern-day counterparts do today.
There are a number of taxes that are imposed on the British people and on entities operating on British soil – income tax, capital gains tax, corporate tax, property tax, inheritance tax, value added tax (VAT) and poll tax are just some of them – and all these and other taxes do indeed contribute to the reduction of the personal wealth of individuals and entities. But one could argue that they also provide much needed revenue to the central administrative body of the land and that this much needed revenue is used for things like enforcing the law and public order, protecting property, maintaining vital economic infrastructure, providing educational and health services, as well as maintaining the function of government itself. Another major use of tax money (whether we like it or not) is on funding welfare programs for the most economically and socially vulnerable members of society (e.g. the long-term unemployed, at-risk youth, lonely pensioners, etc.).
I truly – and unashamedly – believe that taxes should remain as an integral part of a functioning society, primarily because taxes are used (maybe not in the most effective and efficient manner) to fund activities, groups of people and organisations that all play an extremely important and crucial role in helping to keep Britain going year after year. Without taxes, how would public services be provided? How would the national transportation infrastructure be maintained and modernised as the decades go by? How would the salaries of a multitude of professionals be paid? How would diplomatic missions abroad be financed? How would public utilities be maintained to a high standard? Without taxes, how would society even function? The questions can go on and on and on.
It’s perfectly rational to be frustrated, angry, bitter and confused about seeing your wealth reduce in size through taxes that have been levied onto you by the government. But I believe it’s absolutely irrational to want the government (or some kind of “people’s militia”) to dismantle the tax system because of some people’s ideological objections to a system that they perceive to be “immoral” and a “distorting” influence on market forces.
The legal obligation to pay taxes should be placed onto the shoulders of every person who reaches a certain age and who has a significant income, as well as on organisations that have a revenue stream. I believe in the need for Britain – and every other country in the world for that matter – to devise and implement what I like to call a common sense tax system: a system of taxation that will not place any more heavy burden on society’s lowest earners, but one that will also not strip away all the wealth of society’s highest earners. I am referring to a tax system that will successfully achieve a kind of equilibrium; such a system will never force a janitor to pay higher taxes than a school principal, or force a chauffeur to pay higher taxes than the multi-millionaire or multi-billionaire that he or she drives around. It’s a simple logic that I’m trying to push up to the surface: the more one earns, the higher taxes one should have to pay, [without] forcing this high earner to permanently move to another sovereign territory. Britain, nor any country for that matter, should ever plant the dangerous idea into its most successful and cash-rich citizens that they’re being “taxed to death” by a persecuting government that is hell-bent on leaving them penniless; such an idea, if widely accepted, can lead to the mass exodus of society’s most productive and important members, which will produce devastating short and long-term damage to the national economy and to society itself.
I have to stress that just because I’m advocating for a global tax system that will levy higher taxes onto high earners and lower taxes onto low earners doesn’t mean that I’m advocating for a global tax system that will be hostile to citizens who have achieved prosperity and personal satisfaction in life, because I strongly believe that many of these people occupy productive and vital roles in the respective professions and countries that they belong and greatly contribute to. I am an ardent proponent of guarding success and individual liberty – but not in allowing rich and powerful individuals and dynastic families to pay very little or virtually nothing into the national coffer while everyone else has to unfairly pay exorbitantly high rates of taxes that leave them in a more dire and/or financially insecure state of affairs than when they were at the beginning of the year.
There is a plethora of tax systems that have been initiated around the world, as diverse as the coral reefs that grace the ocean floor. Some have clearly been designed to act as a “cushion” for the world’s wealthiest, powerful and privileged individuals, families and businesses, while others have more progressive shades. We in Britain can learn a lot from examining the tax systems of other countries, and people in other countries can also learn from how we do things. Of course, this cross-exchange of influences, ideas and practises should transcend beyond the dreary world of taxes.
So when it comes to taxes, the questions shouldn’t revolve around whether they should exist or not – they should be about issues like how much should people and organisations be taxed and how does society go about in doing this in a way that won’t lead to the alienation of any side. I know I’m not the first to ask this two-part question, and I know I won’t be the last. The reform of the British tax system is urgent, much like the need for reforming the British banking system. And I take comfort in knowing that there are others, here in Britain and elsewhere, who also feel passionate about wanting to replace things that have so many exploitable holes with things that are more solid, complete and fair.