by Peter Goddard
Let’s play a game.
Add another word to the following to make a popular phrase… “Tax _____”
What did you answer? Burden? Evasion? Avoider? Loophole?
Whatever it was, the chances are you weren’t thinking anything positive. “Tax hero”? “Tax Embracer”? Unlikely.
The debate around tax, on both side of the political divide always seems to revolve around who isn’t paying enough, who is benefitting too much and inevitably, who is cheating.
But whilst the activities of UK Uncut and their ilk play a valuable role in exposing corporations and individuals who are paying far less than their perceived fair share, are we missing a trick on the other side of the equation?
When I donate £25 to Save the Children, I receive an effusive thank you and the assurance that I have bought ‘safe birth kits’ for five women giving birth at home.
When I give £10 a month to adopt a leopard with the World Wildlife Fund, I receive an effusive ‘thank you’ from the recipients. I also receive regular updates about my newly-saved jaguar and, if I want, a cuddly toy.
And yet when I pay thousands of pounds each year to HMRC, what do I get? To stay out of prison.
Whilst I am a huge fan of not going to prison, it is hardly surprising that thousands of people and companies choose to minimise the amount of tax they pay, sometimes using the mechanism of giving money to charity to reduce their payments.
Either way, the individual is paying out, but at least with charity they have a feeling of wellbeing and a cuddly leopard to show for it.
So why is nobody making any attempt to celebrate the people who do indeed “pay their way”?
What is needed is a new, two-pronged approach to our attitude to taxation, combining vigorous and visible prevention of cheating with a celebration of and gratitude for contribution.
First, the prevention of cheating.
At its heart, paying tax is the foundation of social contract, the formal representation of the reciprocal altruism found in all human cultures.
However, as observed by evolutionary psychologists Delton, Cosmides, Guemo, Robertson, and Tooby of the University of California, Santa Barbara, “For collective action to evolve and be maintained by selection, the mind must be equipped with mechanisms designed to identify free riders—individuals who do not contribute to a collective project but still benefit from it.”
Interestingly, their research indicates that “When intentions were held constant, differences in contribution level were not used to categorize individuals as free riders “
In other words, we do not judge people by how much they contribute, but by whether we think they are cheating or not.
The debate on disability benefit is interesting on this matter. The case for maintaining disability benefit has been entirely focussed on the social need for this benefit.
Generally, this is pushing against an open door, as the other side is in agreement with the need, but claims that cuts have to be made and the rise in disability claimants of 2 million people between 1963 and 2009 means someone must be cheating. This conclusion may not be a correct, but the perception needs addressing.
In fact, if supporters of disability benefits really want to make a case that the other side might embrace, they would be more effective proposing new and alternative methods of policing the system.
The Conservative party have been allowed to promulgate a myth of a Britain awash with scroungers and benefits cheats. The solution is to not just offer the alternative view with different statistics, but to also promote a system of policing that gives the community confidence that cheats will not prosper.
Of course, this cuts both ways and the system should be equally robust at identifying tax cheats on the other side of the bargain.
The second and more overlooked element for repairing the social contract is gratitude. In the debate on benefits and government spending, much time and energy is expended talking about rights and entitlement.
This is quite right and should continue. This does not, however, exclude the possibility of introducing an element of gratitude.
Is this demeaning to the recipient? Research would suggest not. In fact, there is a plenty of evidence that showing gratitude actually has a positive effect on a person’s well being, much of which is documented in “59 Seconds”, by Professor Richard Wiseman
In one study, by Robert Emmons and Michael McCullogh, three groups of people were asked to spend a few minutes a day writing down their thoughts. One was instructed to list five things for which they were grateful, one group wrote five things that annoyed them and five simply noted down event that had taken place.
At the end of the study, compared to the annoyed and’ ‘events’ groups, those expressing gratitude ended up happier and much more optimistic about the future.
How we could introduce this gratitude is a difficult question, but it seems likely that an increased awareness of the tax people pay and the support that others received would go some way to reinstating the natural human tendency to say ‘thank you’.
In fact, it’s not just the recipients of generosity who benefit. Elizabeth Dunn from the University of British Colombia showed, “Those who spent a higher percentage of their income on others were far happier than those who spent it on themselves.”
This effect is supported by the work of neuroeconomist (yes, such people do exist) William Harbaugh, who gave participants a virtual bank account from which participants saw some of their money given to help those in need via mandatory taxation, and who were then asked to decide whether to donate some of the remaining amount too.
Brain scans showed activity in the areas of the brain that also show activity when we eat tasty food or feel valued by others, with more activity when the generosity as voluntary.
This suggests that by allowing the perception of tax as a burden and benefits as something to be expected, we are doing neither side any favours and are simply inhibiting an opportunity for both groups to increase their general well-being.
So what can we do?
For starters, HMRC could say ‘thank you’ as part of their acknowledgment of your tax payment and maybe give an indication as to how it is being used. At the budget some moves towards this were announced with the prospect of personal tax statements in a couple of years, though as ever it will all depend on the implementation.
But for Labour there are other opportunities. The party should be promoting and celebrating the people and organisations who stand up and do their tax duty, eschewing off-shoring and other tax avoidance measures.
This could be easily accomplished. Corporate Social Responsibility (CSR) is big business, but it seldom, if ever, addresses the tax contribution a company makes as part of this responsibility.
As well as naming and shaming tax avoiders, the Party should be recognising tax embracers, identifying and promoting the pillars of the tax-paying community.
A simple “good citizen” certification would give those companies a competitive advantage over their off-shoring, tax-sheltering rivals and, just as with the Fair Trade scheme, social factors above and beyond simple cost will become influences in the marketplace.
In addition, the party should ensure its own house is in order, making a commitment to transparency in the tax affairs of all of its candidates.
At heart, paying tax is a good thing and it should be celebrated as such. For surely being part of a society in which the fortunate willingly contribute to assist those less well off is something we can all be grateful for.
Peter Goddard is a sales and marketing consultant