Have you ever wondered how much time you spend working for the government? No, not in an “MI5” kind of way – I mean how long you work to pay off your tax burden.
After all, governments generally do not make their own money; everything paid for by the state, whether it is defence, healthcare, policing or social services, is paid for using money taken from taxes of some kind. So how long does it take for you to pay off what you owe the state, and start working for yourself?
Well, it turns out the average Briton needs to work until the 31st of May before they start working for themselves, according to Adam Smith Institute. That’s a whole month more than the average American needs to work. That sounds like pretty bad value, if you put it like that. It would take the average Briton five months’ worth of solid work to pay off their contribution to the state.
Comparing the UK to the US isn’t that representative, though. The UK offers a significantly more comprehensive health and benefits package than the US. If we wanted to find out if our taxes represent relative value for money, we need to compare the UK to European states that spend a similar amount on their welfare packages.
Other European states don’t look like such good value for money, from that perspective.
The Spanish start working for themselves on the 12th of June, the Dutch on the 21st of June, the Germans on the 11th of July, and the French on the 28th of July. All of these European states provide relatively similar public services to their citizens. Suddenly our taxes look like less of a rip off!
Hang on, though – what about those public services we get? How do we feel about them, on a scale from “unhappy with them” via “taking them for granted” to “delighted”? The answer probably varies wildly in proportion to the particular service received, our political leanings and – most significantly – our sense of being well-served in recent encounters.
Compare responses to the NHS, for instance: it’s a given that its customers’ views are strongly swayed by that dependency we all feel with regard to those looking after our physical well-being (NHS satisfaction-surveys are often treated with that caution). Yet, for every happy – or at least relieved – patient there is a complainer lurking somewhere (sometimes reasonable… sometimes not: ask any nurse).
Our public services in general are well run; but most of us feel they could be run better. According to some voices, inefficiency is rife. And in any system, there will always be ample room for efficiency gains and simple ‘quick wins’ (a constant experience for SpringTide when we engage with companies).
So, in terms of spending taxes, the basic rule applies: we could be better, and we should be better. After all, the idea that you might spend the equivalent of 151 days every year working before you saw any personal benefit sounds daunting. Tax in the UK might represent relatively good value for money, then: but that is never an excuse for inefficiency.
Even if our taxes do represent good value compared to other nations, it does not constitute an excuse to raise taxes. Europe’s finances have been skewed by the 2008 global economic downturn and the subsequent Eurozone crisis, caused in part by sovereign debt. While governments have been “encouraged” by circumstance to reduce those sovereign debts, this has been against a counter-current of continental reluctance to adopt public sector cuts, alongside the upward pressure on benefit payments stemming from economic and political concerns.
Let’s look again at the world across the Atlantic and that one-month advantage. “Tax freedom day” comes significantly earlier in the USA than it does in Europe: yet even when the state offers fewer public services, there is sustained social and political pressure to lower taxes before increasing public spending. Again, the strength and sources of that pressure oscillate wildly, whether “over there” or “over here”: some is ideological, some circumstantial. Opinion will always be as divided as the population itself – especially when it comes to disposable income, in terms of how much we’ve got and where we’d like to see it disposed on our behalf.
The real clue to our attitude to Tax Avoidance Today, whenever it comes, is in the recent furore over “tax avoidance” and “tax evasion”. Most of us, it seems, despise those who evade payment of what they are fairly deemed to owe into the system (especially when they can well afford it). But, honestly: do you know anyone who would be really happy to pay in more than they actually owe?
The bottom line is: we all love a good deal and prefer an even playing field. In common with decent business: when we hold a stake in an enterprise, we want to engage with our suppliers in relationships that represent a win-win and give us a decent return.
Talking of returns… how do you feel about Tax Freedom Day?
