Hypothecation – the act of reserving a specific tax for a specific purpose – is making something of a comeback under this Chancellor. The question is how should Liberals respond?
The treasury only has one commandment “Thou shalt not hypothecate”. However, George Osbourne, forever a political Chancellor, has been busily pledging taxes for a number of worthy causes such as women’s charities (Tampon Tax) PE in schools (Sugar Tax) and flood defences (Insurance Premium Tax)
The Chancellor knows that linking taxes rises to specific benefits offsets some of the political damage caused by hitting tax payers in the wallet. It’s also good for voters and it helps keep the Chancellor honest, and makes sure that tax rises remain accountable to the electorate.
Conscience: Taxes for Peace Not War is an organisation that has long argued that the right of conscientious objection should be extended to tax payers. It seems that whilst our bodies are free from conscription, our finances are not. Every bullet, bomb and soldier trained and deployed in war-zones overseas are not there by accident, but because we paid for it.
For many this is a very real, and very serious violations of their rights as conscientious objectors. Liberals are keen to bang on about human rights, but are we prepared to uphold them?
The key argument made by opponents is that this would set a precedent in the tax system for a variety of pressure groups to declare they won’t pay for services that they ‘object’ to – like the NHS or Schools or the Police. For me this argument makes no sense – did the conscientious objection laws mean that anyone could be exempted from anything the state demands of you?
No it didn’t. It was for a specific type of service, that which primarily involved killing people, for which citizens received exemption. Paying for someone else to do this carries the same outcomes, and therefore, the same moral responsibility.
So what is the answer to this? To put it simply: hypothecation.
Ruth Cadbury MP, a Quaker whose ancestors were conscientious objectors, will be tabling a bill in Parliament to allow individuals who identify as conscientious objectors to redirect the military portion of their taxes (already calculated by HMRC) towards non-violent means of maintaining our national security such as development, diplomacy and nation-building.
Liberal Democrats have embraced hypothecated taxes in the past – a penny for education being one of the party’s most well remembered policies.
Is it time we looked at pledged taxes to protect the rights of conscientious objectors?
In the words of Ruth Cadbury:
If we can hypothecate for women’s sanitary products – why can’t we hypothecate for peace?
* Shaughan Dolan is Campaigns and Communications Officer for Conscience: Taxes for Peace not War
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18 Comments
Repeat after me: All Money is Fungible.
It doesn’t *matter* if specific money is given “for a specific purpose” if there is more money available that can be shifted around to cover elsewhere.
Pledged taxes are an illusory way of making it seem like you are having an effect, while actually doing no such thing. If you want to stop the government funding a particular palicy, go out and campaign to change the policy. A tickbox that says “don’t spend my taxes on X” will achieve precisely nothing.
Only on religious grounds. We can’t allow people to opt out of defence spending due to moral grounds because then it makes taxes optional and there’s a whole load of other spending people could reject to paying, and I would be one of them.
People’s responsibility to defend innocents and the society that they benefit from is just as important as people’s opposition to the military.
So in summary: only for religious grounds, otherwise it’s making taxes optional and people would feel free to start rejecting to other taxation expenditure, either the amount or what it is being spent on.
Regards
hypothecation and ‘pledged taxes’ are not the same.
Hypothecation assumes that all taxation raised by a particular method is automatically spent on a particular item of expenditure (although, as Alistair raises, fungibility means this in itself is not as simple as it seems).
What this campaign proposes is that there should be an ability for individuals to choose to prevent taxation raised by any means, from being used for a particular item of expenditure.
This is not the same thing and the article, persuasive as it is and attractive as the concept may be in principle, is based on a false premise.
So you hypothecate money for one use and that immediately releases the money that would have been spent on that service to be spent elsewhere. That’s the short sharp answer to this nonsense.
Of course I don’t want my money spent on nuclear bombs. What I and others have to do is to persuade the government of the day to change its policy. We do this by campaigning for parliamentary candidates who oppose nuclear bombs and seeking to persuade those of a different view to change their minds. It’s called politics.
Should Catholics be able to hypothecate abortion and family planning funding? Republicans the civil list money?
The problem is, if you say you don’t want your tax spent on something someone else will, in effect, be paying a higher percentage towards what you dislike. The government will spend on what it likes as long as it does not cost votes in marginal seats.
Whilst we want fresh radical ideas to take us forward, this sort of proposal is a total non starter, for reasons stated above
“Ruth Cadbury MP…. will be tabling a bill in Parliament to allow individuals who identify as conscientious objectors to redirect the military portion of their taxes”
Sure, as long as you will permit me to redirect a greater proportion of my tax contribution back into Defence spending, in support of an activist Foreign Policy.
Would that be okay?
After all, it only seems fair that I be given an equal chance to signal my moral priorities, just as you might yours.
We operate a representative democracy because we entrust others to look at the governance of Great Britain in the round. This rather precludes a single-issue focus to governance.
Nick I’m not sure the abortion example is particularly relevant – whether a zygote is actually a human life, is after all, very debatable.
For the other comments – religion is just one aspect of this – and conscientious objection shouldn’t be just viewed solely as a religious concern. Many people reading this would probably claim CO status if there were a draft tomorrow!
Conscientious objector status is a very unique, but well recognised human right. The slippery slope argument being deployed here just doesn’t add up.
Everyone in the UK already has the right to become a conscientious objector – this did not lead to everyone claiming CO status from everything from schooling to the NHS.
You cannot claim CO status for any government service you don’t like – it is specifically reserved for military service, recognising that deliberate killing is different from other forms of government spending.
If I may point out the Liberal Democrats have had a policy of hypothecated tax previously:
“We will increase investment in education by GBP 2 billion, funding this by an increase of 1p on income tax.”
Lib Dem manifesto 1992 General Election
If I recall correctly it was well received and most importantly the electorate could remember it as a Lib Dem policy. It was a way of clearly differentiating the Lib Dems from other parties.
Hypothecation was not ground breaking then or now.
Shaughan, you keep calling defence “killing”, what about the defending part? If ISIS tried to take our oil and natural resources then came marching onto Westminster should we just let them in and exit the buildings? Run to the top of Scotland then dive into the sea to our deaths?
Or just let them rule us and take away all our rights? It’s not a reasonable proposal so that’s why most here have disagreed with this idea that we should be able to opt out of military spending just because we feel like it.
I take conscientious objection rights seriously, but they need to be for a specific conflict, not just total and non-religious.
Regards
The Professor – but this proposal is not hypothecation as is being falsely claimed. It goes beyond hypothecation, because it differentiates between individuals, rather than by the particular taxation method.
Under a hypothecated tax, individuals have no say in where their tax goes unless:
a) they refuse to pay the tax
b) if it is a purchase tax (as with the tampons) they do not buy the product that is taxed
c) they deliberately rearrange their purchases or accounting so that they do not meet the criteria for the tax (this does not necessarily mean fraud, but could).
Under this proposal, people would ‘opt-in’ to a new form of variable (and therefore potentially imperfect and partial) hypothecation if they met a particular set of criteria (ie their moral views enabled them to be registered as a conscientious objector.
Zebras are not horses, although they look alike.
This proposal is just not the same as a ‘penny on income tax for education’. It is simply cunning rhetoric to argue that it is.
Shaun – ‘CO status … is specifically reserved for military service’
Yes.
So what you are arguing for is a negotiation of the terms of that concept and status to include taxation as well as service.
So the arguments others are raising do need to be considered, tiresome as you may find them, because you are returning to the drawing board, and not arguing as you seem to presume you are, from that which is established and self-evident.
Sorry, renegotiation.
Also, CO status only applies where there is conscription, surely?
The Professor
That’s not hypothecation. That’s an acknowledgement that the proposed increase in expenditure would require an equal increase in taxation to keep the books balanced.
@Alisdair McGregor
A hypothecated tax (or ear marking of tax) is the dedication of the revenue from a specific tax for a particular expenditure purpose.
It is the linking between the two that makes the 1% increase in Income Tax to be spent on education a hypothecated tax.
In the same way that the 2015 budget had an increase in Insurance Premium Tax from 6% to 9.5% with the resultant additional revenue to be spent on flood defences.
Note only the increase is hypothecated i.e. the 3.5%
The arguments used by pacifists to seek exemption from taxes used for war could be used by racists seeking exemption from any expenditure that helped minority groups or refugees. I might seek exemption from any of my taxes used to prop up nuclear power or Trident, only to find my neighbour was seeking exemption from taxes used to support environmental protection.
If we hypothecate, I can see that this makes paying some taxes more palatable, but what’s left is the expenditure that is necessary – or needed to be fair – but doesn’t turn people on; and that will come under great pressure. In the charitable sector this leads to charities for cuddly, lovable things sometimes getting more than they can use while support for drug-users rebuilding their lives may be underfunded.
There are two fundamental points about parliamentary democracy that are relevant: (1), that we make some collective decisions as a community, not always as separate human units in the marketplace; and (2), that while we want to free people to make their own decisions as much as possible, the social contract at the root of government depends on recognising that there will be matters where representatives will be able to go into the issues more deeply: the make their judgment based on the broad direction hopefully set by the electorate, and if they get it wrong, the electorate can turf them out.
Practically, though, if say 10% of taxpayers are allowed to not pay a proportion of tax that goes to military spending, either the money stays in their pockets – in which case I can see this argument getting very popular and taxes for the rest of us rising to cope with the gap – or their taxes are diverted to other government activity, in which case all government does is calculate on the basis of last year how many pounds will be lost to the military budget, and compensate from other budgets. Good John Smith’s taxes go to support education and welfare benefits and roadbuilding, but not armed forces. A bit of Bad Jane Jones’ tax that would have gone to education or benefits goes instead to buy arms and pay soldiers.