A slash and burn approach to taxation is the wrong answer
It seems as though everyone’s avoiding tax. Well, everyone who can afford to that is.
Facebook is the latest large multi-national company to make the news for avoiding paying any corporation tax in the UK. They do this in part by funnelling revenues through Ireland to take advantage of much lower tax rates.
Michael Noonan, the Irish Finance Minister, has promised to close the loopholes enjoyed by multinational giants like Apple, albeit under intense international pressure. But he seems set on promising tax cuts in his forthcoming budget.
The Conservatives, during their party conference, told us that, if they were re-elected, they would give us all tax breaks. This despite the fact that they spent the last four years banging on about how all-important deficit reduction is. The Tories, however, can’t even tell us where the money to make the cuts is going to come from – beyond promising to squeeze still more out of benefit recipients of course. And here’s the problem with this whole debate.
The more you take a slash and burn approach to taxation, the more you portray it as a ‘burden’, a ‘cost’, something to be cut or avoided wherever possible, the more you eat away at the whole fabric of the social contract.
Those at the top start to resent handing over ‘their’ money for public services they have no need for – precisely because they can afford private services of their own. Those in the middle start envying those above and resenting those below them. Private sector workers, insecure in their temporary posts, ill-paid and overworked, start resenting public sector workers, because public sector workers are apparently so ‘feather-bedded’. At the same time public sector bosses seek to get around workers’ protections through the use of temporary staff and zero hour contracts. Those at the bottom of the scale, in receipt of welfare payments, face being incessantly told they are spongers and scroungers; how could they not come to feel alternately humiliated by and resentful of everyone ‘above’ them?
The Tories, like so many parties of the right, like to portray themselves as capable of taking ‘tough’ decisions. So how come they have decided to make these deeply irresponsible promises to the electorate?
Irresponsible, because the majority of us need public services. It is public money that pays for the education of our children; public investment in health care that assures us, if we fall sick, we will receive medical care; that keeps us safe in our workplaces and homes, that gives us a chance of justice through our legal system, regardless, at least in principle, of whether we are rich or poor.
You want to give the electorate something to vote for? Promise them the sort of society where we all chip in so that, if we hit hard times, there’s a system in place to look after us; the sort of society where you offer kids not an unfunded tax break, but the best possible education and training, so they’ll be able to go out and innovate, and build the companies of the future. As American Democrat politician Elizabeth Warren puts it, “You built a factory and it turned into something terrific or a great idea - God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
Tough decisions? Who, among our leaders, has the true courage to come out and defend the idea that what really counts in the long run is not narrow self-interest, but the common good?
Belfast Telegraph Digital