Over the weekend I wrote a Tweet that said:
I get annoyed when tax professionals say that politics should be taken out of taxation. And then they have nothing to say about Rishi Sunak using tax to undertake class warfare on the lowest paid. That's because their tax politics is really all about maintaining privilege.
My reason was very simple: I had not noticed tweets, comment or press notices from tax professionals, firms or tax-related institutes that commented on what Sunak was proposing. To be very straightforward, the tweet was a comment made in good faith on what I observed.
Some tax professionals have now objected. Singular tweets from a number of them have been found that say that an NIC increase is not a good idea. But I have still to see a firm say so, or any comment from a tax professional body.
And what was still consistent was an absence of political awareness in what was said. The comments made were technical, without recognising the social dimensions to the issue. Things like freeports attract much comment and general excitement in the tax profession. The social consequences of an NIC increase for those on the lowest pay has, as I suggested, passed almost under its radar of concern.
Let's leave aside the individual comments right now though. Let me instead address my concern at the silence of the tax professional bodies - at least as far as I have registered it, and I note a lot of media comment on tax every day.
The professional bodies with a concern about tax - whether of lawyers or accountants or the dedicated tax profession - all have one thing in common. They supposedly exist to promote high professional standards in the public interest. I emphasise the last point.
Unfortunately, long ago the public interest was assumed to align with that of the professions themselves, and the only harm that the public was protected from was that of the corrupt professional practitioner who might otherwise bring the remainder of the profession into disrepute if not weeded out.
What the tax professions do not do - and again I stress I see a lot of commentary from them - is engage in public debate unless, it would seem, that the public interest is aligned with that of the wealthy of larger companies. Beyond that there is, by and large, a policy vacuum void.
I am, of course, aware that in staying this I lay myself open to having evidence presented that there have been some concerns raised. But those resorting to such claims are missing the point. Where is the heat and the anger within the professional bodies that is leading to comment that what is happening here is wrong and that better options are available?
Where to is the display of understanding that sometimes not taxing is the right thing to do because tax is only a part of the macroeconomic funding cycle?
And, come to that, why aren't the professions in the lead in issuing the costings that have really been required on this issue, and why aren't they laying out costed alternatives without necessarily advocating any one of them if they wish to be seen to be avoiding bias?
It's possible for the tax profession to engage in policy debate with your doing politics. But right now my allegation is that its silence is profoundly political. In the absence of comment the status quo and the prevailing narrative are maintained. That is what the taxed professions are permitting. And when what is happening is clearly not optimal tax policy that does them no credit.
It's time the tax profession acted in the public interest - and right now I am not at all convinced that it is.
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In case anyone is in any doubt as to what I mean this is a press release from a mid-sized firm this morning coming down firmly in the interests of the wealthy and against low earners:
7 September 2021
With the Prime Minister and the Chancellor expected to outline plans to increase national insurance (NIC) contributions to fund social care today (7 September), Patrick King, Partner at MHA says criticism of the government’s proposal on the grounds of fairness is overblown especially when you consider the alternatives:
“The cost of solving the social care crisis is eye watering, and an increase in taxation is inevitable if the government hopes to address the problem. Increasing national insurance contributions has less immediate effects on individuals than a tax rise because businesses will pay the biggest part of the increase. NIC is already a good source of funds for the exchequer, bringing in over £145bn in 2019/20, so it is a reasonable place to start. A 1% rise in both employee and employer contributions may bring in £10bn or more and this would provide the essential funds needed, so the sums add up.
“The suggestion that a NIC rise to pay for social care represents the wealthy being subsidised by the less well-off is a little unfair: the main beneficiaries of the scheme will be those on lower incomes. However, inevitably, some more wealthy individuals will benefit and the fact that pensioners do not pay NIC does give ammunition to those who think the proposal is unjust.
“A wealth tax, as suggested by the Trades Union Congress, would indeed target the asset rich, including asset rich pensioners, but such a tax is notoriously difficult to design in such a way that it is both effective and fair. The 80-year-old lady living in a modest house in London worth over £1m may be caught in the net but have little or no income other than a basic pension. Should she be forced to take out loans to pay such a tax? Given house price rises in the South East this might not be a rare situation depending on the tax level set.
“Many people do have significant asset wealth without necessarily much income. Farmers, for example, have large asset values but often very low incomes. Trying to get the asset rich to pay for this is fraught with difficulty and may prove less fair than making sure businesses pay most of the tax increase.”
“The downside is that this increases costs for businesses who are still reeling from the effects of the pandemic. It is a very fine political and financial judgement as to whether a tax increase at this point will stifle the nascent recovery in the economy.”
– Ends –
For further information please contact:
Richard Billinge +44 (0)7818 595 965 or Nick Richardson +44 (0)7580 849 673
Four Communications
MHAMacIntyreHudson@fourcommunications.com
About MHA
MHA is a network of independent accountancy firms, ranked the 12th largest accountancy group in the UK*. It comprises four member firms with a strong reputation for specialist industry knowledge, which collaborate and share best practice to provide outstanding client service. These include: MHA MacIntyre Hudson, MHA Moore & Smalley, MHA Monahans and MHA Tait Walker. The network has 136 partners and 1,375 staff across the UK.
The MHA Network is the UK independent member of Baker Tilly International, one of the world’s largest leading international networks of independently owned and managed accountancy and business advisory firms, operating across 148 territories.
The ‘little old lady with a big house’ is the classic political way to dismiss out of hand any thought of taxing wealth, or even the income from wealth.
Patrick King’s flippant characterisation of the alternatives to a NIC increase ( ‘overblown’), are so far from being the ‘properly costed alternatives’ which you ask the profession to provide, as to be an embarassment to the profession.
Exactly this AB, and the press release addresses it … the little old lady may be “caught in the net” [what an image!] but ‘Given house price rises in the South East’ Oh yes the injustice of not recognising the efforts of such hard-working people!!
The debate doesn’t need to be moved far. Only as far as her comfortably-off, middle-aged, middle-class offspring with homes of their own whose right to inherit that big house is protected by taxing the expletive out of those who can never hope to own their own home.
The professional middle class is always going to err on the side of big business and business as usual. The Billinge/Richardson comments are probably viewed by other PMC members as putting their heads slightly above the parapet but as you say none of them wants to be seen as erring towards any sort of original or even radical thinking so bound are they by the tradition of privilege, secrecy (wrapped up as confidentiality) and total unawareness of the lives of people in the lower deciles of society.
good point Richard
the accounting profession itself appears to have little understanding of political economy — not to mention the effects of inequality on our democracy
” lets look after our own ” would seem to be its sole rationale
would our democracy be in a better place should we close down accountancy firms & send their workers into the countryside to pick fruit & vegetables ?
We need accountancy
We need better accountancy
I am doing a lot of work around this right now….
as both a qualified accountant & a vegetarian i’d say we need fruit & veg more
The large professional bodies (ICAEW, ACCA, ICAS, Law Society, Bar Council, CIOT, etc) and larger professional firms (accountants, lawyers, etc) have wide and diverse memberships of all political stripes and viewpoints, so it is not surprising that they rarely take overtly political positions, rather than ones of a more technical nature. Most are not experts in any kind of economics, let alone macro.
And frankly most of them make their money from serving the interests of the relatively wealthy companies and individuals who can afford to pay for their services, so won’t bite the hand that feed them.
Some individuals and firms do engage in the debate (the press release above sets out one viewpoint: you and I might very well disagree).
On wider engagement, the CIOT for example has run a series of “public debates” for a number of years, in collaboration with the IFS: eg https://ifs.org.uk/events/1911 and https://www.tax.org.uk/how-high-should-the-corporation-tax-rate-be-tax-experts-give-their-view
Andrew
But when it comes to corporate interests they can get very excited….
And when it c0mes to debates the focus is very narrow – especially on social impact
Richard
Of course they all get interested when doing so in public might helps them market themselves to their clients!
The IFS is distinctly underwhelmed about today’s announcement. https://ifs.org.uk/publications/15597
I particularly noted their discussion of the thin gruel for social care: “At an average of £1.8 billion per year, this funding boost is equivalent to around 9% of what councils spent on adult social care services in 2019–20. However, the early-to-mid 2010s saw big cuts in spending, despite an ageing population and rising numbers of people with learning disabilities. And as a result, adult social care spending per person was 7.5% lower in real-terms in 2019–20, the latest year for which we have data, than in 2009–10.”
So it barely replaces cuts that have already been made.
Even the boosted NHS spending does not get back to the 6% annual growth seen from 1997 to 2010.
Thank you
Well said
The tax professionals do not make their money from promoting the cause of justice for the poorer elements of society. They get paid by those for whom they can game the system and save tax their clients might have to pay. The proposed NI increase does exactly that for their clients so it is little wonder that the firms and tax bodies that represent them have nothing to say about it.
The is plenty of talk of the “UK tax burden” having risen (eg https://on.ft.com/2WW47F0). I would be curious to know your view on this and what this measure means in practical terms for everyone given that we all experience tax differently. Is it a measure we can trust?
And many thanks for your informative articles and your campaigning.