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Diary of a (Maybe) Retired Pastor

Tag: tax

  • Ancient Economics For Modern Times

    mayberetiredpastor

    Ancient Economics For Modern Times

    6 This is what the Lord commands concerning the daughters of Zelophehad, “Let them marry whom they think best; only it must be into a clan of their father’s tribe that they are married, 7 so that no inheritance of the Israelites shall be transferred from one tribe to another; for all Israelites shall retain the inheritance of their ancestral tribes.

    Numbers 36:6, The Bible, Old Testament

    So, at last, we have a half-way sensible budget! Last week, the UK Chancellor delivered her first budget. Thankfully, the neo-liberal rhetoric of the general election was just that – rhetoric. What was actually served on budget day was a clear expression of traditional Labour values. Half-way sensible because General Election promises has meant the Chancellor resorting to raising employer national insurance contributions – a maybe dubious move. But, at least there was a return to common-sense economics – you get what you pay for! Someone has to pay in order to restore public services to good health and for investment in the economy. The new government has decided that it should be businesses.

    What the Chancellor’s first budget demonstrates is that the economy of a society is determined by the ethical framework that is applied. The social ethics of the Bible as expressed in the law of the Jubilee (1) are usually considered irrelevant and unworkable in a modern capitalist society but the underlying principles are, in fact, directly applicable. As encapsulated in the biblical quotation above the gift of the Promised Land is for the people of Israel – not just a ruling elite. It insists that every family possesses an inalienable right to their own parcel of land.

    What we see here is the delineation of society’s stakeholders as the people. The social ethics of the Bible lay down the principle that each and every stakeholder in society should have the same inalienable right to the economic resources necessary to support themselves and to flourish. In modern economies land is not the basic resource we use to measure and allocate economic resource that role is taken by money. Applying this fundamental biblical principle thus means that every individual should possess appropriate financial resources to support themselves and to build their lives. The idea of a universal basic income/universal basic wage sometimes discussed amongst economists is thus not so far-fetched if you are keen on seeing biblical principles applied in modern society. This is the idea that every adult receives out of general taxation, as a right, an income that would enable them to live at a minimum standard.

    Many Christians when first encountering this notion feel that this is something for nothing and a recipe for laziness. But this is exactly what it was in the Bible – inalienable land by right for nothing! But they still had to work their land wisely. In the same way, people receiving a universal basic income could choose to do nothing, but to prosper and be fruitful they have to work and use their basic income wisely. For the state, the advantages seem numerous: welfare support, welfare benefits, state pensions etc. all  become unnecessary. Administration of a universal benefit is simple and inexpensive (no need to means test or assess eligibility). Taxation becomes simple as all earned income  can be taxed directly at some appropriate level without the exemptions and allowances that bedevil most taxation systems and which create cliff-edges when benefits/exemptions are removed/reduced as earned income increases.  People would still be able to prosper and, for some, become rich, but inheritance tax (the year of the Jubilee) will ensure that excessive wealth accumulated by individuals is returned to the wider economy and thus to every stakeholder.

    The law of the Jubilee and its underlying ethical principles might have been originally decreed for an ancient agrarian society, but they can be applied directly to great benefit to modern society. For Christians this must surely be a good thing.

    1. The Most Hated Tax, Diary of a Maybe Retired Pastor, 25.10.2024

  • Why Is Tax Bad?

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    Why Is Tax Bad?

    4 for [government] is God’s servant for your good. … 5 Therefore one must be subject, not only because of wrath but also because of conscience. 6 For the same reason you also pay taxes, for the authorities are God’s servants, busy with this very thing.

    Romans 13:4-7

    41 He sat down opposite the treasury, and watched the crowd putting money into the treasury. Many rich people put in large sums. 42 A poor widow came and put in two small copper coins, which are worth a penny. 43 Then he called his disciples and said to them, ‘Truly I tell you, this poor widow has put in more than all those who are contributing to the treasury. 44 For all of them have contributed out of their abundance; but she out of her poverty has put in everything she had, all she had to live on.’

    Mark 12:41-44

    This week’s political headlines in the UK have been dominated by the accusation that the Labour party’s spending plans would result in families having to pay an extra £2000 in tax. Apart from the dubious method of calculation and the sleight-of-hand  trickery to  make it seem as bad as possible, the real question it throws up is why should this be considered a viable method of attack by one party against another? That it is so considered is clear, Kier Starmer and the Labour Party have been vehemently denying this claim all week.

    We have a very poor and corrosive attitude to tax in our political culture. Even amongst Christians it is generally held as a bad thing, at best a necessary evil. Yet the New Testament clearly defines it as a something required by God. Taxes are to be paid in order that the authorities can work for our good. Of course, the tax burden needs to be shared fairly across the population and it is very much the case that the tax burden is very unfairly shared in the UK. But none of this alters the fact that taxes in principle are to be welcomed for the benefit of all, as required by God.

    Fairness is an important principle in the levying of tax. One consequence of our corrupt attitude to tax is that government resorts to hidden taxes so that we cannot easily see how tax is being raised. So, the tax-free allowance has been frozen for the next several years by the present Conservative government and this will not be changed if the Labour Party were to be elected in July. It means there will be a significant increase in tax raised over the next few years, but those paying more tax will be those currently earning less than £125,140 a year. Everybody above that will not be paying any more tax! Similarly, proposals by the present Tory government to abolish inheritance tax (estate duty) only benefits those wealthy enough to have more than half-a-million pounds to pass on, those that don’t wouldn’t pay inheritance tax anyway.  Once again, the wealthiest carry less of the tax burden.  

    If we were able to have open and dispassionate debates about tax and spending we could see much better how the tax burden was being shared across society. But as it is, the Tory Party seek only to relieve the very wealthy of their obligations to the rest of society – and to do so in a way that the rest don’t notice it – and the Labour Party is too scared to address the issue openly.

  • When Is A Tax-Cut Not A Tax-Cut

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    When Is A Tax-Cut Not A Tax-Cut?

    But speaking the truth in love, we must grow up in every way into him who is the head, into Christ …

    Ephesians 4:15

    When is a tax-cut not a tax-cut? When it’s a Tory one! We are in the throes of general election hype and spin. The Conservative Party has announced that if voted back into government the state pension will never be taxed even if it increases above the current tax-free threshold of around £12,500. They are presenting this as a tax-cut, which it isn’t because the state pension does not currently exceed the tax-free threshold and won’t for a good few years to come, so nobody’s actually paying any tax on their state pensions! Setting that aside, in itself it’s not a bad idea and certainly worth considering. I was pleasantly surprised at the amount  I received in state pension (currently around £800 a month) but it wouldn’t be easy to survive on it if it were all the income you had as a pensioner. So, to have the assurance that it will never be taxed would reassure those who do rely wholly or mostly on it.  But it isn’t a tax-cut.

    Which brings me to Rachel Reeves and Labour. On Sunday, she ruled out any increases in income tax or National Insurance if she were to be Chancellor in the next government. Instead, she reassures “us” (which “us” would that be I wonder?) that Labour is the natural party for business and will “grow the economy” in order to raise funds for the spending plans of a future Labour government. Nonetheless, she concedes that she would have “difficult decisions” to make on spending! Meanwhile, Keir Starmer has pledged to hit the 18 week waiting time target for NHS consultations within five years of assuming power. So, I wonder how is Labour going to do that – closing all the prisons and releasing all prisoners into the community perhaps, maybe this is the “difficult” spending decision Rachel Reeves will make? It would certainly save a lot of money which could be diverted to the NHS!

    Our political culture is one in which the major protagonists refuse to be honest. We cannot have an honest debate on tax and spending, instead of setting out the alternatives and the costs and consequences of the various alternatives we are fed sound bites intended to lull or deceive into acceptance. Why can Rachel Reeves not say I have to raise £x billions to ensure that we can hit the 18 week NHS consultation targets which may mean raising taxes by  x%, but if the economy grows by a  certain amount it may be less? Why do the Tories have to dress-up a proposal worth considering as a “tax-cut” when it is nothing of the sort? The Bible teaches us to “speak the truth in love” but as a society we seem incapable of doing this. Unfortunately, this simply opens the doors to Satan, the father of lies as Jesus famously described him, with the terrible consequences that we see and hear about all too frequently.

  • Here’s A Thought

    mayberetiredpastor

    Here’s A Thought

    Now, here’s a thought. Like everyone else I suppose, I get advertisements on my Facebook Feed. Unlike some, perhaps, I don’t particularly mind them, in fact, quite often I learn about useful things on the market I might not otherwise have known about (I’m a sucker for those useful looking gadgets that claim to be able to solve that very problem you didn’t know you had until that ad!) so, I hardly ever block ads.  

    Over the last year or so, I have started seeing ads. for private healthcare plans. For about £23 a month they appear to guarantee no waiting times for hospital procedures should you ever require them. I’ve not gone into the fine print so don’t really know what sorts of procedures are covered and what aren’t, doubtless there are many caveats and conditions, certainly they talk about surgery and operations, but this set me thinking.

    It’s no secret that the NHS is suffering from long waiting times for elective procedures, and reducing if not eliminating the waiting times is a major political goal for every party. These private health care ads. are basically suggesting that the cost of eliminating waiting times is £23 a month. If we multiply this up by the UK working population of around 33 million (1) this  comes to £9.1 billion a year. So, at the cost of £9 billon a year waiting times in the NHS could be eliminated, or so these ads. imply.

    But wait a minute, I hear you cry, the population of the UK is something like 67 million people, why have you multiplied by only 33 million? Well, not everybody requires hospital care all at the same time and these healthcare companies must have done the sums as to what would it cost to have zero waiting times for those willing to pay and for them to make a (probably) excellent profit. So I think multiplying by the working population will give us a reasonable stab at what it would cost to eliminate waiting times in the NHS. And, it’s just a thought!

    How much extra tax would we all have to pay to do the equivalent of taking out this monthly healthcare plan for zero waiting times in the NHS? The annual cost of the healthcare plan is £276. Average income according to the Office for National Statistics is around £35,000 (2). Taking into account the tax-free allowance this means an average tax increase of 1.2%, of course, some would pay less and some would pay more. It would be the government’s job to balance out the tax increase fairly between the less well-paid and the more well-paid, but an average 1.2% doesn’t seem much of an ask to eliminate waiting times. And that’s the beauty of doing this kind of thing through tax. By sharing the burden, all of us can benefit at a cost we can afford. A private scheme only benefits those who can afford it.

    £9 billion just happens to be the amount of surplus the Chancellor apparently had at this year’s budget. What did he choose to do with it? Devote it to eliminating the waiting times in the NHS? Of course not, he decided to use it to reduce the National Insurance  rate by 2%! What this means is that, going forward, the government has £9 billion less annually to spend on the NHS and, as a result probably, waiting times will get longer! Just a thought.

    1. https://researchbriefings.files.parliament.uk/documents/CBP-9366/CBP-9366.pdf
    2. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2023  acc. 23:32, 12.4.24

  • I Don’t Do Gift Aid Anymore

    mayberetiredpastor

    I Don’t Do Gift Aid Anymore

     This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. 7 Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honour, then honour.

    Romans 13:6-7

    We are in the fortunate position of being able to make donations to various charities. Of course, we give to our church and have always Gift Aided it, but we also try to support other causes. Lately, I have ceased ticking the Gift Aid box on the donation forms. Gift Aid is an option to include the tax that you would have paid on the donation so that instead of going to the government it goes to the charity. It occurred to me that the more we Gift Aided, the less of our taxes would be retained by the government and, hence, less would be available to fund public services. At a time when all our public services are financially compromised the government needs all the taxes it can get to keep them going! So, I have stopped adding Gift Aid to our donations.

    We need a different national conversation around tax. Our major political parties are locked into a “reduce taxes at all costs” paradigm. As a result, we see our public services crumbling and the government constantly finding new ways to increase tax revenue without appearing to do so. Consequently, our tax system is unfair, unbalanced, and inadequate. And it is opaque in the extreme! Certain sections of the media will stridently trumpet the historically high rates of taxation we are experiencing but (with the exception of one or two bodies) fail to point out that our taxation is no heavier than the average of similar European countries even at these historically high rates. The only winners of our tax system are the extremely wealthy.

    Our politicians treat us as children believing that we cannot hold an intelligent and mature conversation about the cost of public services and the amount of tax that needs to be raised in order to have good public services. They believe that we can be fobbed-off with constant reductions in general taxation and not make the connection with failing public services. Taxes have to rise and the extremely wealthy have to pay more in taxes.  This has to be done openly and transparently (i.e. income tax) and not through Faustian mechanisms designed to obfuscate and deceive. Of course, restoring public services and improving public services after years of deliberate financial starvation in order to fund tax-cuts cannot be done overnight. The Junior Doctors’ dispute is testament to that – restoring a 35% cumulative loss in pay is not feasible overnight but the present government, dogmatically wedded to reducing taxes, cannot provide a long term path to restoration that  might resolve the dispute.  But will the Labour Party, Keir Starmer and Rachel Reeves in particular, be bold enough to grasp the nettle and start to talk honestly about taxation and the cost of restoring public services? So far, the signs are not encouraging.