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Opinion

OPINION: ‘Tax shouldn’t be taxing’

OPINION: ‘Tax shouldn’t be taxing’

Monday 22 May 2023

OPINION: ‘Tax shouldn’t be taxing’

Monday 22 May 2023


The tagline ‘tax shouldn’t be taxing’ was used to encourage people to file their tax returns on time by HMRC in the UK.

A series of TV adverts ran for a while, and online guidance opportunities etc were provided to help anyone with the forms.

Jersey also encourages its residents to file their returns in a timely manner and likewise provides guidance via gov.je.

We read this week that Treasury Minister Ian Gorst is proposing a hike in tax rates for the island's richest residents and also that the Health Minister is suggesting we will all need to pay more tax in order to fund health care. 

Ian Gorst.jpg

Pictured: "We read this week that Treasury Minister Ian Gorst is proposing a hike in tax rates for the island's richest residents."

I recently celebrated another birthday and now less than a year from reaching age 70.

I have been paying tax now since the age of 16, when I first began full time work, and continue to do so on my occupational pension and old age pension. I have never complained about paying tax as it is essential to fund our public services, and of course my civil and legal duty.

However, what has always caused me a little concern is how tax rates are set and what we might consider to be fair and equitable.

A progressive tax as used in the UK, is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate.

The term can be applied to individual taxes or to a tax system as a whole. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay.

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Pictured: "I have never complained about paying tax as it is essential to fund our public services, and of course my civil and legal duty."

The opposite of a progressive tax is a regressive tax, such as a sales tax for example GST, where the poor pay a larger proportion of their income compared to the rich.

A flat rate tax system is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base. It is not necessarily a fully proportional tax. Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount.

There are various tax systems that are labeled "flat tax" even though they are significantly different. The defining characteristic is the existence of only one tax rate other than zero, as opposed to multiple non-zero rates that vary depending on the amount subject to taxation.

A flat tax system is usually discussed in the context of an income tax, where progressivity is common, but it may also apply to taxes on consumption, property or transfers. In the UK for example there are taxes on capital gains and an inheritance tax, something we do not have in Jersey but one wonders for how much longer.

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Pictured: There has always been the argument that those with the broadest shoulders should be asked to make the largest contribution when it comes to paying tax.

There has always been the argument that those with the broadest shoulders should be asked to make the largest contribution when it comes to paying tax. Having additional tax rates for those earning over a certain sum does seem to suggest a sense of fairness.

However, it is also widely reported that those at the top of the earnings table also have access to the very best advice when it comes to mitigating tax, and use various means in order to reduce their overall tax burden, effectively paying less than you might think they should.

So how then can we all be certain that everyone who is liable to pay tax, pays what they should both in legal terms and as a moral imperative? 

The moral obligation of paying taxes stems from the virtue of commutative justice. This theory was originally based on a presumed contract or pact between the individual and the state. The tax is the price paid by the citizen for the services rendered to the citizen by the state.

There are a multitude of reasons why we live in Jersey, and we know that there are a number of economic challenges which the government needs to address, not least the high cost of living.

The question of course we need to wrestle with as islanders is, how do we pay for the services we need and how much are we all prepared to pay?

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Pictured: The tax is the price paid by the citizen for the services rendered to the citizen by the state.

Could the answer be that if we taxpayers are unhappy about our own tax rates that collectively or individually we should lobby members of our government and ask them to look again at our tax system, and consider if it needs a complete overhaul and review.

Perhaps, as the government loves consultations so much these days, they should consult each and every tax payer on what kind of tax system we want,  and how much we should all be expected to pay and on what?

Or, and as is more likely, this question will only be put to the elected assembly for them to discuss and decide based upon their collective assessment, preference or political ideology, as they cannot trust our judgment on this or worse still, that the answers given during a consultation period, may not necessarily be the ones they want to hear!

Personally I do not like special arrangements when it comes to setting taxes and believe the obligation should not only be universal but equitable. Obviously, there are exemptions and opportunities to negotiate when needs arise, and this must remain to ensure fairness.

However, it seems to me fairness needs to be impartial, and a just treatment for all our residents when it comes to all our governments fiscal policies, and that means without favouritism or discrimination.

Robert P Wareing-Jones
17 Les Freres
Le Chemin des Maltieres
Grouville
JE3 9LF

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