Tax and its payment, or non payment, is in the news; it’s this weeks hot ‘theonomic’ topic.
Stanley Fink suggests that ‘everyone is at it,’ ( i.e. tax avoidance) and that he was only involved in ‘plain vanilla’ tax avoidance. HSBC is under the spotlight and so is HMRC. Mega corporations have also been criticised for using elaborate corporate structures, domiciled ‘offshore’ to avoid paying U.K. corporation tax.
I don’t think we need distinguish between individual and corporate tax avoidance because at law the corporation is held to be an ‘artificial citizen.’ The corporation can also be thought of as a community of individuals. The senior individuals in a corporation (its leaders) are expected, in the jargon of business ethics (my old subject) to act as ‘moral agents,’ avoiding ‘moral hazard.’ So, we have every right to judge their behaviour using our own, moral, reasoning.
Pope John Paul 11 provided (in Centesimus Annus) a fantastic definition of the corporation:
‘The purpose of a business is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavouring to satisfy their basic needs, and, who form a particular group at the service of the whole of society.’
So what should a Christian approach be towards tax; its payment and avoidance?
I think first of all we need to take a step back and look at a wider, theological pair of questions:
Are we (individuals and corporations) designed to be, as materialist economists might have us believe, autonomous individuals driven by a desire to maximise our own individual benefits (interesting that proponents of this school of though start with an appeal to design or creation and human nature), or are we designed to be interdependent, making decisions on the basis of the wider, common good?
I belong to the school of thought that believes that we ought – normatively – to be concerned with the common good. Yes, we might have fallen below the standards the book of Genesis asks of us but nonetheless we must seek in our economic behaviour to ‘return to Eden.’
One of the contributors to Theonomics (a book I co-edited, published by Sacristy Press), Nick Bion who manages a highly successful industrial business has thought long and hard about what it means to be a successful Christian businessman. Here are some of his thoughts and comments:
‘I do not see the company existing solely for my benefit and that of the other shareholders. As the majority shareholder, I hold the company in trust during my tenure, just as the owner of a piece of land or a famous painting may consider themselves to be holding it in trust for others. Buying a famous painting may give you the right to own it, but this does not make it the right thing to do.’
Nick, under the ‘materialist economic’ scheme would have every right to use the business and its assets to maximize his own benefits, or levels of satisfaction. But, he doesn’t see the economic world in this way. Applying his theological convictions to his economic behaviour he stresses concepts such as trust, stewardship and, responsibilities.Nick suggests that the corporation is one environment where the Christian leader is required to lay down, if not his life, then certainly some of his or her preferences. The business in Nick’s mind is a fertile ground for the propagation of Christian ethics.
So what is Nick’s attitude towards tax?
‘Other than providing products and services that are needed, the company’s responsibility to wider society is met, in the most part, by paying the taxes that are charged on it’s business and employment as rates, corporation tax, VAT, national insurance, and PAYE. The company also tithes its profits, giving money to various charities. These contributions to society amount to something over £1 million, or over £30k per person employed in the company, a figure which is in excess of take-home pay and dividends. In this respect we can see that the company is more of a benefit to society in purely monetary terms than it is to its employees and shareholders.
Whenever I re-read the last sentence in the paragraph above I feel ever so slightly ‘wowed.’
Here is a businessman, a successful businessman, suggesting that the rationale of the company is not to maximize individual gains, but to contribute, above all else, to the common good and that the payment of tax is one way this is achieved. Furthermore the business also tithes its profits. Nick recognises that we all have duties (the payment of tax) and discretionary obligations (charitable giving). Such an approach stems from his faith, or theological, convictions.
Tax avoidance, because it is concerned with maximizing individual gains, at the very real expense of others can not be regarded as virtuous and Godly. The payment of tax, by the wealthy, is a duty or an obligation and, therefore the avoidance of tax is wrong, if not legally, then ethically and morally.