If we are lucky enough to live comfortably, why wouldn’t we share some of what we have? Two key ways of sharing financial resources are through philanthropy and taxation, and I frequently blog about philanthropy, but this time let’s talk about tax.
Personally I see tax as a good thing, and I am willing to pay more. I also think that here in Aotearoa New Zealand, and around the globe, we need more taxes, and that this increase needs to come from those of us who lead financially comfortable lives.
Here are three reasons why we need more taxes:
- We all win when basic services like health, education, welfare and infrastructure are appropriately funded. But currently many of the services we expect and benefit from are stretched to breaking point – for example our overloaded and stressed health system.
- We all win when we have a more equitable society. Why is it OK for 16.3% of children (and 17.8% of Māori children) to live in poverty? Increased taxation for wealthier people is a good way of addressing inequality and distributing financial resources more fairly.
- We all win when our country has the resources needed to meet the new challenges we are facing, for example climate change adjustment and an aging population.
And here are two reasons why we need to re-imagine our tax system so those who can afford to contribute more:
- Our tax system is “upside down.” Poorer New Zealanders pay an unusually large amount of tax, because GST is levied on almost everything, and, unlike our Aussie cousins and many other countries, there is no tax-free band for very low incomes. On the other hand, high income earners pay less income tax than their Aussie and UK counterparts, and we don’t really tax other forms of income, for example capital gains and inheritances.
- We are a low tax country compared to our peers. Aotearoa’s tax take is lower than the OECD average at about 32% of GDP.
What might a re-imagined tax system look like? There are many options, including changing the way income is taxed and/or implementing various forms of taxation on wealth. The first step is to build support for the principle that tax is a good thing, and that those who can afford to pay more tax, including of course businesses, should do so. The practicalities of choosing and implementing the most effective tax solutions can then follow.
The good news is that there is a growing movement internationally and here in Aotearoa to re-imagine taxation as a positive contribution rather than a burden, and for wealthy people to pay more tax. A great example of this is the letter signed by millionaires from around the world, including some from Aotearoa, with the very clear message: “Tax us. Tax us. Tax us. It is the right choice. It is the only choice. Humanity is more important than our money.” More locally, organisations like Tax Justice Aotearoa and commentators like Max Rashbrooke are looking at ways to grow this movement here, and I am pleased to be part of some of these conversations. If this is something you are interested in, please feel free to contact me or Tax Justice Aotearoa.
In summary, sharing wealth for the benefit of all is good. Philanthropy is good. Taxation is good. Let’s have more of both.