In Episode 5 of this ‘Good with Money’ season, Simon and Bex discuss what our attitude towards taxes should be.
Some key points of interest covered in this episode include the following:
- Simon introduces the topic of taxes by quoting from the UK Parliament’s introduction to taxes on its website. [01:44] He then makes mention of Tax Freedom Day to illustrate the extent, variety and significance of our tax system. [03:36]
- When it comes to our attitude towards taxes, Simon and Bex note the importance of recognising how much we as individuals, and also society as a whole, benefit from the UK’s taxation arrangements. [05:04]
- For its part, the Government has made a priority of explaining how taxes are used, with HMRC publishing detailed information about the expenditure that has been made possible through taxation. [06:55]
- Simon suggests that the ‘right’ amount of tax to pay should be based on honest and accurate personal financial information, combined with any valid reductions that can be applied for specific, recognised purposes. [08:24]
- To illustrate the challenge that the Government faces in trying to make the tax system efficient and effective, Simon talks about the Laffer Curve, explaining that it shows how individuals and businesses alter their behaviour in response to changing tax rates. [09:49]
- References to tax in the Bible include the following: Jesus saying that we should give to Caesar what is Caesar’s and give to God what is God’s (Matthew 22.15-22); Jesus providing a coin from a fish to pay the temple tax (Matthew 17.24-27); and Paul saying that it is right to pay taxes (Romans 13.6-7). [12:20]
- Simon explains the difference between tax evasion and tax avoidance: the former means that the right amount of tax is not being paid, which is illegal; the latter is sanctioned, and indeed promoted, by the Government in order to prompt people to participate in specific schemes (eg investing in their pensions) that - over the long term - will produce better outcomes for the government, for society and for the individual. [17:59]
- Simon suggests that our default position should be to obey the law by paying the taxes that we owe. If we are unhappy about the amount of tax that we can pay, we can look into allowable, practical ways of improving our individual circumstances, and we can also engage with the politics of the situation by lobbying for change. [20:18]
- In Simon’s concluding remarks, he encourages us to be deliberate, thoughtful and prayerful in this area while also seeking practical advice, as appropriate. [21:59]
- Next week’s episode will explore the very important topic of ‘Debt’. [23:37]
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