Tax should not be seen as punitive

In the U.K. we have an ever increasing tax burden – funding our modern-day needs has become increasingly onerous yet we rarely, if ever, celebrate the taxation process. The reverse is often true, tax avoidance is so deeply ingrained in culture that we don’t bat an eyelid at the weird and wonderful tax-dodging scams employed by the rich and famous. But we should.

For as long as I can remember, tax is used as a punitive beating stick, a way to leverage policy to effect behavioural change and whilst it might be effective in making change (eg reduced tax on diesel cars) it suffers from the long-term affect of negatively framing all aspects of taxation.

If taxation is viewed as a punishment (for doing wrong?), then how can we celebrate our regular, pay as you go tax that most of us pay? It’s highly likely that the negative framing of the whole taxation world hurts its image, reduces receipts, encourages avoidance, creates universal disdain, and turns the subject of taxation into political poison..

We should celebrate the tax mechanism. In the last hundred years years or so, tax receipts have funded some of the world’s most amazing achievements: stuff like universal healthcare, or putting a man on the moon would not have happened without large-scale, ubiquitous public taxation. Tax is a great thing.

Despite the enormous public benefit, or carrot, that comes from systemic taxation it’s still seen as an unsavoury stick, used to beat those that dont adhere to government policy. And that’s wrong, we should all embrace paying our taxes, much of it goes to help out those less fortunate and that’s a good thing, surely.

If taxation is so smashingly good, perhaps we should all pay more? In fact, looking at the public finances of most western countries, we should all pay a lot more in taxes – there are very few downsides to a paying more tax, except the increase in avoidance. So why, then, do governments shy away from ratcheting up the tax take? Maybe the historical negative framing of taxation makes it appear to be an indicator of doing wrong, put more bluntly it’s often seen as measure of how well governments are doing.

How crazy is that? Surely the role of government is to govern, to manage society and oversee advancement and regulate unfairness. That requires a mandate (the popular vote) and a mechanism to effect change, usually based around money.

Sadly, money is one of the poorest motivators of change and it’s use as the “stick” part of delivering “carrot & stick” policy is deeply flawed. Taxation is not a penalty to be avoided at all costs, it should be celebrated as fundamental part of fair society and a super simple way of redistributing wealth (or sharing the luck, as I like to call it).

Instead it’s a political hot potato that hamstrings public policy, restricts growth through capped public investment, and drives ever more “creative” macro economics (think PFI, mass privatisation) that more often than not rewards the elite and contributes little to wider society.

Before you start shouting “you Marxist” or “commie”, remember this is about taxation, and not a conspiracy to brainwash a nation. More money spent on our healthcare system, law and order, social services and pensions is universally accepted as a good thing. Conversely, poor public finances, mounting debt and the cost of borrowing is a bad thing.

It’s time that public taxation had a makeover, stop negatively framing its application and make “doing your bit for society” a good thing, something to be proud of – maybe the most altruistic thing the common man will do in their life.