Friday Night Theology

Tax avoidance

5 March 2010

Lord Ashcroft is no stranger to controversy and this week while his donations to the Convervative Party have been deemed legal (BBC News), he has once again been accused of "systematic tax avoidance"(The Guardian).

The central issue to the debate surrounding Lord Ashcroft is his "non-dom" status, meaning he only pays the UK Treasury tax on his UK income. The current accusation of tax avoidance relates to an opinion poll he commissioned prior to the last General Election. It has been alleged that he instructed the polling company to send the invoices to one of his overseas company, allowing him to avoid paying VAT.

Tax is unavoidable and unpopular. It is an often controversial subject which can reveal people's ideological differences. And, none of this is new! The Gospels reveal that on more than one occasion people questioned Jesus about tax (e.g. Matthew 17:24-27 and Mark 12:13-17).  However, when we seek to discuss tax and theology we are entering the highly complex field of economics with all its mind-boggling theories, and opening up potentially divisive political ideologies (e.g. Big or small government). With that in mind, here are a few simple thoughts to stimulate conversations this weekend!

Redistribution of wealth: An idea central to the tax systems of most countries, including the UK's income tax, is the idea of the redistribution of wealth. This in itself can be a point of contention! Some would suggest that if you've worked hard to earn more money than someone else you deserve to reap the benefits. The principle 'a worker deserves his wages' can be found throughout the Bible (Lev. 19:13, Deut 24:15 and 1 Tim 5:18). Others would point out that many people with lower incomes work far harder than those on higher salaries. There does certainly appear to be a great deal of inequality if you compare salaries. Therefore, perhaps an effective system of taxation that redistributes wealth to ensure that all can benefit from public services from education and law enforcement to refuse collection and street lighting is a good idea? After all, the Bible has lots to say about helping the poor.

Responsible Stewards: We might be happy to pay taxes if the money was spent to ensure education, law enforcement, refuse collection and street lighting for all. However, that's only part of it. Our taxes are also being spent on a number of contentious items such as the war in Afghanistan and the infamous expenses for MPs. Although few Christians would promote the illegal option of tax evasion, many would make a strong case for tax avoidance. That is, ensuring that we're not paying any more tax than we absolutely have to*. The argument being that individuals can then ensure their money is directed to 'good causes'. Being a 'good steward' of our resources is a key Christian principle, so there may be something to this argument. However, this argument depends on us actually being good stewards of our money. Does the way we use our money benefit those in need more than the way the government spends our taxes? We are also fortunate enough to live in a democracy, therefore, with a General Election to be held in the near future, we have an opportunity to hold those in authority to account regarding the way taxes are spent.

Social Responsibility: As Christians we have a responsible to help those in need. We have a duty to pay our taxes and this may well be one way we can help the poor. However, I doubt the response "But I was honest on my tax return" will be an adequate response to Jesus' words, "…I was hungry and you gave me something to eat…I was sick and you looked after me" (Matthew 25:35,36)! There's so much more for us to do.

* There are many 'shades of grey' within the tax system, and there can be a fine line between tax evasion and avoidance. This problem is magnified when we consider the tax system for global corporations. Christian Aid believes that illegal, trade-related tax evasion alone is responsible for almost 1000 deaths of young children each day. Creating an appropriate system of taxations for global companies could save lives - unsurprisingly, they're fighting against such reforms as it would hit their profits. Perhaps that presents us, as individuals, with a challenge - should we desire to pay less tax, or should we fight for a fair tax system and do what we can to ensure that tax money is well spent?

Phil Green, Public Theology Research Assistant