Tax equals citizenship

Let’s take a random self-made millionaire.  Let’s call him Tony.

Tony began his life with nothing.  His parents worked hard all their lives but never earned more than the minimum wage.  Tony had an older brother who grew up resentful, scorned school, bunked out, tried to make money the ‘easy’ way and is now serving time as a convicted drug-dealer.  Fortunately, Tony was sufficiently younger than his brother that he acted on his mother’s advice, paid attention at school and despite the distractions of his family losing their home as they struggled to keep up with mortgage repayments, Tony kept at it and won a place to university.

Though Tony received a full student grant, the money was not enough to pay for his rent, utilities bills, books, clothes and food, let alone the travel back to see his parents during recess.  Tony kept a part-time job going even as he struggled to fulfill all his study commitments.  He graduated.  Tony didn’t get a first class degree but he did graduate.

Entering the world of work, Tony found that without public school connections and without a wealthy father’s social network, he could not get the plum jobs that would have paid best.  Tony did not give in but worked for experience as much as for a regular salary.  There were challenges along the way: he got ill from stress and had to take some time off work, he was burgled and thanks to being mis-sold insurance and PPI, Tony lost a lot of what he’d worked for.  Tony kept working and as he gained experience, he developed an idea for a business.

In his personal life, there were ups-and-downs.  Tony rarely saw his brother who was now regularly getting lifted by the police.  Tony had been in-and-out of relationships but had recently found a soul-mate in Sharon.  It was Sharon who gave Tony the courage to try something different and together, they began their beverage company, supplying to trade initially before opening their first takeaway venture.  Though the banks offered little help and appeared at times to be charging for doing nothing more than receiving Tony and Sharon’s hard-earned money, the food and beverage company expanded.

One day, Tony is asked by his accountant, ‘Would you like to pay less tax?’

Tony looks at Sharon: they’ve always dreamed of that holiday in Asia, that cottage in the south of France, being able to take things a little easy and haven’t they worked for it?  Yes, they say.  When the accountant shows them how much they can avoid paying, they are at first shocked but then, having taken into account the fees for this service, they look at each other and ask themselves that one big question: ‘Haven’t we paid enough already?’

Tony and Sharon think no more of it.  They are invited to business functions where they can network and help their business opportunities grow.  They are invited to the sort of posh soirees that Tony had missed out on university because he had to work at his part-time job.  They donate money to charity.

One day, they see their names among a list of those deemed ‘morally repugnant’.  Though their tax affairs are supposed to be kept confidential, a government minister is saying that these are the sor tof people to blame for the economic malaise in the country.  Tony is outraged.  He has worked for his wealth and never exploited anyone?  Or has he?

Tony’s education – and his key to escaping the poverty that had blighted the lives of his parents – was paid for largely by the State.  When Tony fell ill, healthcare was always available and always free, provided by the State.  When Tony was burgled, the police did not issue him an invoice and when the burglar was caught, charged, sentenced and imprisoned, the State didn’t charge for that service either.  The Health & Safety regulations that added what sometimes felt like unnecessary cost to Tony and Sharon’s business have actually served to stop untold numbers of customers serving writs against them for food poisoning.  Trade regulations have ensured not only that his suppliers deliver exactly what was ordered but provided a means to ensure that trade customers paid him (reasonably) on time such that he could manage his finances and grow his business.  Other regulations ensured that when Tony’s business needed electricity for the ovens, that energy was there at the flick of a switch.  The roads that carried orders to his business premises and carried business away are funded and maintained by the State.   When, after a long day, Tony returns home to Sharon and they shut the door on their 8-bedroom city centre property, who is it that ensures they can sleep safe at night and not live in fear of someone trying to take from them unlawfully what they have earned fairly?

In paying taxes, we state very clearly that we are a part of a community in which we are actively engaged.  The success of Tony and Sharon’s business may be down to their hard-work but what made that possible if not co-operation with countless others who share their goals?  What made Tony’s dream possible is the countless unseen others who make our streets clean by sweeping them, who keep us healthy by ensuring a running supply of water or who work in hospitals, who toil at sometimes meaningless, repetitive tasks that must be done if any of us, let alone a small elite, are to enjoy the base necessities and comforts that ensure we do not suffer in a Hobbesian nightmare, red in tooth and claw.

When we do not pay a fair level of taxation, when we find ways to avoid paying a reasonable amount of tax proportionate to our level of income, we state that we do not wish to have this security.  Perhaps wealthy tax dodgers should be logged by the police so that when are in need of funds that are not readily available in our society, we might instead knock on these tax dodger’s doors and insist with threats that they give us what we need?

The State is not some Orwellian nightmare peering over your shoulder; it is simply the definition a larger community that reaches beyond the estate, the village, the town or the city where we live.  When we pay our taxes, we declare our participation in a society that will – without written, contractual guarantee – care for us if we should stumble, catch us when we fall but help boost us as we climb.  It will do this for our children too.

Of course, the opposite is equally true: if citizens are paying their taxes, if they are participating in society to the best of their ability then governments had better ensure that they deliver.  If the politics of austerity is a blunt refusal to participate in a social contract by cutting those services that ordinary citizens have paid for, what right does David Cameron have then to criticise those who avoid paying their full share of taxes?

Budget Day in Scotland

Will George Osborne help the Scots economy?

It’s Budget Day and while elsewhere in the UK there’s fevered speculation on what will happen – if anything – to the top rate of taxation, here in Scotland, the SNP administration is looking for funding for capital projects.

Let us be clear, the economic strategy of the Coalition at Westminster has left George Osborne with no wiggle room.  This will not be a giveaway budget.  For every concession offered to taxpayers, a service elsewhere will have to be cut.  This is just as true for the devolved administrations.

First Minister Alex Salmond is looking for £300m to fund capital projects in Scotland.  In a letter to Prime Minister David Cameron, the First Minister reminded him that when they met, there was sympathy for capital projects but that the Prime Minister would have to see a list of ‘shovel-ready’ projects .ie. projects that could start within the time-frame of one Budget year.

In his letter, the First Minister argued that: “The clear understanding was that if we could demonstrate that such projects could be taken forward in an appropriate timescale then they would be given proper consideration.

“This we have done and there is now no argument that some £300m of capital projects could be deployed in the coming financial year giving a vital boost to local economies around Scotland.”

The capital projects that the First Minister has in mind are infrastructure projects such as the renovation of the Kincardine Bridge and the Clyde Gateway developments.  Other projects include the development of the Centre for Virology research at Glasgow University.

During a time of austerity, people in Scotland may be wondering why the SNP are focusing on capital projects but in the same letter, the First Minister insists that additional investment would support more than 1,000 jobs.

By making public this request to prioritise investment in infrastructure, the First Minister is challenging the Conservative philosophy prevalent at Westminster of dealing with the public deficit first.

The First Minister has the numbers to make his argument work as Scotland continues to be in a stronger budget position than the UK as a whole according to the Government Expenditure and Revenue Scotland (GERS) 2010-2011 report published on 7th March this year.  These figures show that including a geographical share of UK North Sea oil and gas revenues, Scotland contributed 9.6 per cent of UK public sector revenue and received 9.3 per cent of total UK public sector expenditure, including a per capita share of UK debt interest payments.  Scotland’s population is 8.4 per cent of the UK total.

Quoting Jon Meeten, head of tax at KPMG in Scotland on the BBC News website, there appears to be support for First Minister Alex Salmond’s position: “The CBI has called for some limited, targeted tax breaks for business. We agree that focused assistance for business, especially in the area of capital allowances for infrastructure investment, would be extremely helpful in the current climate.”