They foster an imagined community of ‘taxpayers’ and subvert the collective identity that should underpin tax
From late November onwards, the British weekday breakfast ritual faces yet another distraction. People up and down the country will get to enjoy their cornflakes alongside the arrival of a letter from Her Majesty’s Revenue and Customs. Rather than demanding more money or offering a rebate, this will offer just data: official tables and figures of where and what, exactly, their tax contributions are being spent on by the government. From November onwards, everyone who pays personal income tax will now receive one of these annual tax summaries, courtesy of the Treasury.
George Osborne has called the tax summaries ‘a revolution in transparency’ that ‘will show hardworking taxpayers have to pay for what government spends’. The examples provided by the Treasury on Flickr show a simple table and pie chart, including categories of welfare, health, and education at the big end of town. The small categories represented include the environment, overseas aid, and – what else – the UK contribution to the EU budget. The key question being asked by many is: are these annual tax summaries really about transparency, or are they instead inherently political?
Increased transparency should be celebrated, in principle. Yet this assumes that the figures and statistics on the tax summaries are a fair representation of taxing and spending. There is good reason to think they are not. Richard Murphy has made the very persuasive case that the tax summaries are an inherently political device that function to reinforce existing popular sentiment in favour of a lower tax burden. The summaries, for instance, make no mention of implicit tax subsidies. According to Murphy’s alternative calculations, these should account for a fairly significant 4.21% chunk.
Even worse is the way in which welfare is calculated. On the example summaries provided by the Treasury, ‘welfare’ is the highest expense and represents what looks like around 25% of an individual taxpayer’s contribution. Failing to split up the welfare category is cynical, and clearly plays to popular misconceptions. The welfare category, for one, includes public sector pension payments, which, as the IFS points out, is not really welfare at all.
This will also flare existing tensions. For instance, a TUC/YouGov poll found that people believe that 41% of the entire welfare budget goes on benefits to unemployed people. Yet, as Murphy’s recalculations demonstrate, unemployment benefits represent a relatively small proportion of government spending – around 0.67% overall. By further chopping up and refining the welfare category, we can see that allowances and relief account for around 13% and specific non-employment benefits 15%. These more nuanced figures would impact upon how the tax burden is evaluated. But instead the Treasury has plumped for the more general category.
While these miscalculations and dubious categories should be criticised, we should also question why an annual tax summary has become politically desirable and the effects it may have. For one, it is near enough impossible to truly appreciate what ‘taxpayers’ money’ buys us in regard to a hypothetical statement. After all, what constitutes ‘welfare’ officially is very different from the popular image. In-work tax credits and child benefit make up a substantial amount of the welfare bill. It is estimated that around 1 million families receive child benefits, some earning over £50,000 per year.
This focus on highly visible and contentious examples of government expenditure means ignoring the equally important but taken-for-granted state responsibilities that are less amenable to rational calculation. It has recently been argued, for instance, that it is the wealthiest people who get the best value for money from the property rights sanctioned and secured by the state. After all, the wealthiest have the most to lose. This sort of ‘value’ cannot be represented in these summaries.
But the single biggest problem with the annual tax summaries is how they are fostering an imagined community of ‘taxpayers’. The term the taxpayer is ‘playing an increasing role in British public debate, often introduced, seemingly, as an apparently neutral synonym for “the public” whilst really being no such thing’.
But who are the ‘taxpayers’? Or who is an ‘average taxpayer’? One answer is that the concept expresses a very rough and approximate group identity shared by those who have a sense that they are making a net contribution to the public purse. The key word in that sentence is ‘sense’. There is no way of knowing in any way even close to a ballpark figure whether, say, a median-income household is a fiscal net contributor, or not. Instead, it is just a ‘sense’, based largely on popular wisdom, everyday experience and media representations of public spending. The collective identity of the taxpayer thus encourages an individualist attitude towards paying tax.
Yet the idea of tax is – or at least should be – collective: one cannot really define what each of us gets as an individual, since it is what is provided to society as a whole that is truly at stake. At some point the argument became very individualised, with this collective sense diminished. The tax summaries clearly reinforce this.
The tax summaries also reinforce a vague sense that it is only through personal income tax that one makes a contribution to the funding of the state. Therefore all money spent by the state is ‘our’ money, with ‘taxpayers’ positioned as ultimately accountable for deciding on what is essentially fair or not. Again, this just is not the case. For example, people also pay VAT and all sorts of other duties. Corporations and other bodies also contribute.
Yet this sense of ‘taxpayers’ money’ continues unabated, with annual tax summaries highlighting and then hammering home this sort of imagined us vs. them divide – between those who ‘pay’ and those who ‘take’. The broad and cynical categorisation of welfare on the summaries speaks to these concerns in a way that has a clear political function. This is the problem with annual tax summaries.