Finance Minister Michael Noonan has being doing his best
to dampen speculation about a giveaway budget next week.
He has insisted
that people will not be throwing their hats in the air over the
taxation measures in the budget for 2017.
The very next headline
reported the highest number of homeless people ever were sleeping rough
in Dublin.
While everyone hates paying taxes and most feel they pay
far too much, those juxtaposed news reports and the recent Apple
controversy illustrate that in a developed society, people must pay to
support services and, especially, those in need.
“Our taxes are our way in sophisticated societies for
caring for each other,” says Fr Michael Shortall, lecturer in moral
theology at St Patrick’s College, Maynooth. “If you’re not paying your
taxes you are not following through on your responsibilities to care for
others and in particular to care for those who are most vulnerable like
the sick, the young, the old who all require pensions, education and
hospitals.”
Demands
So what does Christianity teach on taxes?
Jesus’ reply to the pharisee “Give back to Caesar what is
Caesar’s and to God what is God’s.” (Mk 12:17) is a good starting point
representing the two main pillars of Church teaching. Firstly, ‘Give to
Caesar’ signifies the reasonable demands of paying tax in a way that
enables everyone to flourish, especially those most in need. This is
part of what is called ‘the common good’. The second ‘Give to God what
is God’s’ represents the perhaps more important commitment to faith.
Catholic teaching on taxation as part of the common good,
is contained in the Catechism, the Compendium of the Social Doctrine of
the Church and notably the Vatican II document, Gaudium et Spes which
says the obligations of justice and love are fulfilled by each person
contributing to the common good “according to his own abilities and the
needs of others”.
It continues: “Yet ..many in various places even make
light of social laws and precepts, and do not hesitate to resort to
various frauds and deceptions in avoiding just taxes or other debts due
to society.” (GS, 30)
Civil law distinguishes between tax avoidance and tax
evasion. Tax avoidance is an accepted legal means to keep down your tax
bill. Tax evasion refers to the the illegal non-payment or underpayment
of tax. “Certainly, those who do the latter must be held accountable in
justice,” says Fr Shortall.
Within a corporation, moral accountability is assigned to
people with responsibility, like managers, leaders and accountants but
people working within corporations “do have the moral duty to raise
concerns if they feel the ethical responsibilities in relation to tax
are not being adhered to”, he adds.
It is morally wrong not to pay just taxes and it’s a sin,
says Fr Shortall, although he admits it is one to which few confess! “A
lot of it has to do with the distinction between tax avoidance and tax
evasion. One person’s tax avoidance is another one’s tax evasion.”
He agrees that the sinfulness of not paying taxes should
be emphasised more. Would be penitents could add to their examination of
conscience: “Am I following the law and doing what is required of me?
Am I paying promptly? Tax delayed is as good as tax not paid,” says Fr
Shortall.
Corporations should also pay their taxes for “as a body
they also benefit from the conditions of the common good that are the
purpose of good government,” says the lecturer in moral theology.
Justice is part of the common good too. Catholic social
teaching says that tax must be paid in a manner that is fair: those with
more should pay more, and this also applies to corporations.
Professor of Economics Dr Ray Kinsella says the Church’s
teaching confirms the importance of supporting the marginalised and
“that means a progressive rate of tax especially in an era when
austerity still casts a very long shadow”.
On the vexed debate over the €13 billion in claimed back
tax from Apple, he says he is “unequivocally” of the view that multi
nationals could play a “much more important role in supporting social
spending in the countries in which they are located”.
Multinationals cannot be viewed in a different way to the
rest of the economy. “It is wrong economically and wrong in social
justice to have one enclave in the economy that has incredibly
favourable advantages and the wider economy deprived of the resources
they should be paying into in that country,” he says. His views are
echoed by the Director of the Nevin Economic Research Institute (NERI),
Dr Tom Healy. “The notion that large multinational corporations can use
Ireland or another jurisdiction to avoid paying tax is quite simply
morally repugnant,” he writes.
From a moral point of view, justice demands a level
playing field, no secret tax deals and what is open to one should be
open to all, says Fr Shortall. The Church can advise on
the common good but the ‘art of politics’ belongs to the political
realm. “You have to balance having low tax and high jobs. In an Irish
situation the Government feels that it is in the best interests of our
common good to keep Corporation Tax low in order to attract jobs.
That kind of discernment is part of the ‘art of politics’ and is not
about Church teaching,” he says.
However, while in times of austerity it may be legitimate
to ask the poor to contribute something, like the Universal Social
Charge (USC), in good times “there would be a moral imperative that the
USC should start going down for those who cannot pay.”
Tax rate
Last week, the Irish Tax Institute noted the rapid
escalation of tax here, with those on the average industrial wage of
€35,000 paying not twice the tax of someone on half that salary
(€18,000) but eleven times the tax as at that level the rate jumps to
40%.
The ‘squeezed middle’ feels that for years it has been
paying more than its fair share of tax.
According to Dr Healy people
often think of ‘middle income Ireland’ as being people earning around
€30,000 but from his research, there are a huge number of people earning
between €12,000 and €15,000 (students/ pensioners). “The real middle is
actually a bit lower than people think it is,” he says.
“When people talk about the ‘squeezed middle’ you have to
stand back and look at the bigger picture which is that in the absence
of social welfare people would be much poorer. It is estimated in fact
that about 49% of the population would be at risk of poverty. So in
Ireland we rely on taxes and welfare to bring about a somewhat more
equal distribution of income.”
Irish priest, Fr Brendan Purcell, adjunct professor of
philosophy at the University of Notre Dame Australia says there is
nothing wrong in a person trying to reduce their tax liability.
“I see
nothing wrong with people trying to minimise their tax payments,
provided, if they can afford it, they put money directly in the hands of
NGOs that are helping the poor, especially the ones with a policy of
empowering people themselves.”
Governments tend to waste too much in administration, he
adds, while trusted NGO’s have staff whose idealism puts those most in
need first.