Monday, May 31, 2010

Guest blogger: Reclaiming tax freedom day

Apologies for our relative lack of blogs recently: TJN's main bloggers were away for most of last week. This guest blog by Martin Hearson of ActionAid, focused on the United Kingdom, is only being blogged after the event. Still, it's a most worthwhile article:

Congratulations everyone! May 30 was ‘Tax Freedom Day’. Free-market think tank the Adam Smith Institute says this is the day on which we stop working for the government, and start working for ourselves.

But why the long face? Surely we should make the day a bank holiday, celebrated with street parties, gifts and a special episode of Doctor Who. A collective slap on the back for all the ‘hard-working taxpayers’ feted by politicians. Instead, from the ‘jobs tax’ controversy to this week’s dispute over capital gains tax, “tough on tax, tough on the causes of tax” is the prevailing political wisdom.

We wouldn’t have become the great nation that we are without taxes, which are “what we pay for civilized society,” as the quote emblazoned on the front of the Internal Revenue Service building in Washington, DC says. Too right. We should be celebrating the civilisation of our society, rather than bemoaning it.

The NHS, free education, roads, sewers and refuse collection - these things don’t come cheap, but together we stumped up the cash and paid for them. And aren’t they great? Sure, not everything is perfect, but then the very existence of these things that we take for granted puts us in such a privileged position compared to the world’s poorest people.

So why is it that they’re the ones congratulating themselves? In a couple of weeks Rwanda will celebrate its National Taxpayers' Day, which last year was marked by a rally in a packed football stadium, at which President Paul Kagame presented awards to the country’s “most compliant and exemplary taxpayers”.

Kenya goes one better, with a whole Taxpayers’ Week. The most recent was opened with a display of traditional dancing, which reportedly whipped the audience into such a frenzy that even “the unveiling of the new generation security-printed Logbook...was met with jubilation from the enthusiastic stakeholders.” Yes, really.

In many African countries, tax is a matter of national pride. The slogan of Kenya’s first Taxpayers’ week in 2004 was “Kulipa Ushuru ni kulinda Uhuru” (“pay your taxes and set your country free”). There’s even a Facebook group to promote it. “Taxation is key to increasing our legitimacy and ability to make our own decisions,” the head of Rwanda’s Revenue Authority, Mary Baine, explained to one of my colleagues recently.

This is all part of a conscious effort by African governments to build ‘tax morale’. By highlighting the biggest and richest taxpayers, they give the rest of the population more confidence that the system is fair. That in turn encourages people to be honest about their own tax affairs, and gives the government a mandate to gradually expand the tax base. Making taxes visible strengthens the social contract between people and the state, all the more important in developing countries where under-resourced public services reduce government’s visibility in people’s daily lives.

So why is tax such a dirty word in Britain, where every day we benefit from hundreds of the government activities it funds? Why do the ASI’s Tax Freedom Day and the anti-tax agenda of the Taxpayers’ Alliance touch such a public nerve? Much of it comes from the general malaise about politics in general, but I think there’s something else.

The plethora of high profile stories about tax dodging millionaires and corporations makes us feel like something’s not quite fair. These people seem to think tax avoidance is an entitlement, all be it one that only they can afford to take up. ‘Why should I pay my taxes when all those non doms don’t bother?’ is what people ask.

So here’s my three-part proposal. First, let’s get serious about tax havens: we need a new global information sharing agreement that lifts the veil of secrecy once and for all, and British multinationals should be forced to publish the taxes they’ve paid on a country-by-country basis. Second, follow the example of our Nordic cousins and publish everyone’s tax returns online. Then the Queen can bestow honours upon our biggest taxpayers.

Third, let’s stop moaning and enjoy Tax Freedom Day for what it should be, a celebration of the freedoms that arise precisely because we pay our taxes.

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