The Institute of Chartered Accountants in England and Wales's Tax Assembly on Friday was an interesting event - from which I tweeted, often.
I think it fair to say that a great many did not anticipate the format in which it was structured, which was far more participative than many expected. I also think I was not alone in being surprised by some of the moderator's comments, including the assumption put forward very early in the day that by discussion the differing opinions present could be reconciled to provide a single solution to the problem of tax - which problem was itself not defined. PWC partner Mary Monfries immediately agreed with me that not only was there no one solution, but that in a democracy just one was not desirable - a conclusion to which she referred in discussion later in the day. What the ICAEW wanted the day to achieve is harder to work out - most of us did not, so a response would be welcome.
The day did by itself provide useful insights. Zoe Williams made the key note presentation for the left, and was brilliant, amusing and persuasive, and was kind enough to credit me. Her best line was to declare 'tax beautiful of and in itself' for what it can achieve.
Rory Meakin of the Taxpayers' Alliance countered for the right but was such a poor presenter simply lost the audience and any point he wished to make.
Paul Johnson from the IFS sought to present a compromise view. He largely failed because he presented heroic assumptions as if fact, such as HMRC being right on the tax gap (on which issue he is curiously unquestioning) and the further absurd assumption that 90% of all tax comes in without any action required on the part of HMRC. That's a suggestion so ludicrous it challenges all assumptions about, firstly, the IFS's impartiality and secondly its judgement.
In the resulting audience response an intervention from a member of the Henry George Foundation both undermined the case for land value taxation and set a recurring theme for the day when many clearly and very obviously rejected the idea he presented that paying as little tax as possible was desirable and tax avoidance was socially useful. John Whiting confirmed to me afterwards that he shared my reaction to that comment.
So was there a conclusion? What I offer is tentative, personal, and, of course, biased. I would say there were several clear conclusions, at least. The first was that the idea that 'politics should be kept out of tax', whilst clearly expressed, gained little traction. Unsurprisingly the two were viewed by most present as inextricably linked.
Second, I think there was clear frustration with what might be called 'tax base tinkering', such as withdrawing allowances through the tax system when such actions create very high marginal dates of tax. But there was some linkage of this frustration to another feeling that more candour is required from politicians on all aspects of tax and better communication too on what tax was used for.
There was some clear frustration with tax avoidance. Evasion got surprisingly little mention.
But perhaps Rebecca Bennyworth, chair of the ICAEW tax facult, summed the day up best by suggesting at the end of the day that discussion during it had made her change her mind. As she put it, she now felt that:
We need to change tax from something that's done to people to be a social contract people engage in.
That's a sentiment I can readily endorse, not least because it changes the perception of tax from being a technical, money raising issue, into one in which tax plays a socially dynamic role in a fluid, necessary and advantageous relationship from which there is gain to both parties. If the ICAEW more closely represented that view it would be very useful, and a good day's work.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Sounds like it was a really interesting event Richard.
I was particularly interested to hear about the audience comment from the guy from the Henry George Foundation because it’s deeply frustrating – on one hand you have people like Carol Wilcox who are making a very well-argued case for LVT as part of a complete overhaul of the tax system to make it more progressive and to tap into a vast source of potential revenue, but unfortunately there are also LVT advocates who are right-wing nutters, which makes it considerably harder to get it taken seriously.
Agreed entirely
He was an embarrassment to the LVT campaign
I am really sorry to have missed this event.
What did the person say that harmed the LVT side of the debate? It would be helpful to know so that these concerns can be addressed.
Many thanks for the write up
His claim was all avoidance was good and we needed to live in a total laissez faire world
It did not go down well
Richard, I was interested that the Henry George / Land Tax advocate was arguing for less total tax take. I have encountered this before, and it is an additional reason why I am sceptical of LVT. But perhaps the primary reason to be sceptical of it is in the title of this post: there is no one answer to the question of tax. Even if there was I doubt if it would be LVT.
I agree
Sorry, I’m a bit lost by you here. Why exactly do you and Howard wish to “tap into a vast source. Of potential revenue”? Why do you see tax as a revenue?
It is a revenue
That’s why
Well no, not on your terms it isn’t. A “revenue” means a source of finance,funds to meet expenditure. You, however, realise that governments don’t need those funds – QE proves that, remember?
So, for whatever other reason we tax people, it isn’t it seems to raise revenue.
As I say, you have me confused.
I have explained the five reasons for tax herd, often
Go hunt them down
Raising revenue is not necessary in itself: it does ensure monetary balance (as far as us required to prevent unreasonable inflation ) in the economy
I’m rather confused by Ironman’s comment here – I can’t recall ever calling for the entirety of government expenditure to be funded by QE, and I don’t think Richard has either. I have advocated limited use of QE to fund a proportion of govt spending as an alternative to austerity cuts in the post-2008 economic slump, yes. But that’s something quite different.
The suggestion is an argument in absurdum – the favourite ploy of the dogmatic neoliberal
It appears almost impossible for them to realise that it is possible to have more than one strategy and all might be appropriate in the right place
A blog may be overdue on that issue
Thank you; so not “revenue” as per the common meaning of the word.
However, the source and quantity of tax take thwn becomes a matter of choice, which then begs the question: why are you talking about tapping into a vast source of potential revenue”?
A further and frankly more serious question concerns tax,er, revenues in Africa. Certain groups and their supporters , you amongst them, level the accusation that multinational avoiders destroy the tax base and cause poverty, starvation. There really couldn’t be a more serious accusation and in these circumstances the onus is clearly on the accusers to prove their point. If the tax base isn’t there to fund public expenditure then what is it for? Certainly the issue is development and growth; not redistribution. I personally would say that a business making an investment in a nation, introducing funds, employing people, is working for the good of that nation,especially if the smaller proportion of this isn’t actually needed as such.
See a blog being posted today
I agree – a good day of discussion and mututal learning – and I’m glad you engaged with your fellow ICAEW Chartered Accountants and others on your views. Answers were more difficult to come by but there was some emerging, if broad, consensus.
Michael Izza of ICAEW has summarised them here – http://www.ion.icaew.com/MoorgatePlace/post/What-would-a-better-tax-system-look-like-and-how-can-we-make-it-happen-
Graham
I reckon I got more out of the day than he did!
We agree on lack of discussion of evasion – which was worrying
Best
Richard
Ed note:
When, how and why I choose to respond to comments is my prerogative alone
It is called editorial freedom
Land Value Tax is still the best tax (along with taxes on pollution, monopolies and natural resources). Only when you have taxed those to the hilt should you start dreaming up other taxes. I don’t see why saying that counts as “right wing”.
For example, best tax on banking system is a tax on the value of their monopoly, which broadly speaking would be 1% or 2% of their gross assets (they can earn 1% or 2% in their sleep so this must be rental income or monopoly income). That’s easy to enforce and collect and discourages them from swelling their balance sheets. If that doesn’t sort them out, only then do you do easily evadable nonsense like FInancial Transactions Tax.
I can assure you, the way it wax presented was profoundly libertarian and deeply repugnant to most present
It may have been a presentational issue
But it seriously harmed the case for LVT on the day
It might also be called intellectual cowardice. I really would have thought a ‘tax expert’ and ‘political economist’ would have been able to swat my question regarding African tax bases away like a fly.
Oh well, I await the overdue blog that will clarify everything.
How about I have other things to do that are much more important than you?
Did your ego ever let you consider that?
Shoot the messenger?
I mean, there are right wingers who support income tax as a concept (they prefer it low and flat) and left wingers who support income tax (they like high marginal rates). Neither of those views is an argument for or against income tax as a concept, is it?
The same applies to LVT, so why not take the “politics” out of it and do a like-for-like comparison i.e. you can raise £160 billion a year in income tax (as at present) or you could scrap that and raise £160 billion in LVT instead (call it flat 2.7% annual charge on the current market value/selling price of housing).
Mark
Sorry: but I simply do not believe that LVT number
That’s the problem, and quite reasonably, no one will take the risk on it
Richard
Richard,
I presume you’ve read the ‘Taxes for Revenue are Obsolete’ piece (from 1946!)
“the policy questions with which we have to deal are these:
Do we want a [currency] with reasonably stable purchasing power over the years?
Do we want greater equality of wealth and of income than would result from economic forces working alone?
Do we want to subsidise certain industries and certain economic groups?
Do we want the beneficiaries of certain [government] activities to be aware of what they cost?
These questions are not tax questions; they are questions as to the kind of country we want and the kind of life we want to lead. The tax program should be a means to an agreed end. The tax program should be devised as an instrument, and it should be judged by how well it serves its purpose.”
http://home.hiwaay.net/~becraft/RUMLTAXES.html
That’s the usual incidence nonsense that made little sense then and absolutely none now