Is tax fair?

When I was at primary school I recall clearly one teacher. He had a catchphrase. A pupil would run up to him with a grievance and invariably end up saying, "Sir, it is not fair." Those around knew the answer coming, mouthing the words in time with the teacher.   His words predictable and solidly spoken - in a deep voice he would say, "Life is not fair."  To small children it never seemed a satisfactory answer - we expected fair.  As adults we appreciate the irregularities in life and its imperfections. Is life always fair? Certainly not.

The recent ethical and moral debate on the UK tax system is a fascinating one. There has been an explosion of interest in tax avoidance. There certainly does appear to be an expectation that the tax system should be fair.  Especially as emotions tend to run high in times of economic hardship and when personal finances tighten.

Does a fair UK tax system exist?  Our ancestors certainly never managed one.  Is the current UK tax system fair for everyone? Absolutely not.  Is there an expectation that it should be? Perhaps.

Let us think what it would take to produce a fair tax system.  Taking the definition of the word “fair” it would require a tax system that:

 “Treats people equally without favouritism or discrimination.”

Do you think that is possible?  Of course not!  Fair is an opinion, it is subjective and your opinion may be completely different to mine.  As an individual you probably pay higher rates of income tax than a small company pays for corporation tax – quite possibly nearly double. Does that seem fair to you? Perhaps it does, perhaps it doesn’t – your view of fair on an issue may be different to mine.

More accurately as Peter in his post noted:

“There’s nothing “fair” about tax.  It’s whatever each government wants it to be.  A revenue-collecting device.”

So when you listen and read the stories on tax avoidance first keep in mind that the UK tax system will never be fair.  The real question is not is tax fair – it isn’t for everyone – but how can our UK tax system be changed?  So ask yourself what would you do?