protestors with banner saying tax avoidance = £25billion, welfare cuts = £4.5 billion

Principled Tax Rebellion and how it is compatible with Tax Justice

protestors with banner saying tax avoidance = £25billion, welfare cuts = £4.5 billion

The current system (based on neo-liberal capitalism) is unjust, it is:

  • Dangerously unstable and associated with a growth in corruption and debt
  • Creating gross inequality, leading to many social problems
  • Downgrading public services, like the NHS and welfare system
  • Threatening life on earth through climate change and environmental degradation
  • Bringing us into a state of almost constant war

This article is for the growing body of people who want change to come.
Rebellion (civil disobedience) has a strong role to play in securing social change.

Why rebellion?

Hannah Arendt, the political theorist was clear in her seminal work “on Violence” that power lies in the collective. Change requires a body of citizens to rise up. Significant change rarely comes down to one or two powerful individuals, although good leadership  can be invaluable. Only 1-3% of a population need rise up to enable change however, which is only about 2 million people in the UK.

Successful social movements have generally followed a 4 stage path of:

  1. Consciousness – the stage of realising there is a problem and creating conditions for change, raising awareness of the issue.
  2. Coordination – networks and organisations working together and developing joint plans.
  3. Confrontation – a direct challenge to the power of the dominant system, often through some form of civil disobedience.
  4. Consolidation – ensuring that real-life change occurs and is lasting.

Many current movements appear to be good at stage 1. especially using social media. We are OK at stage 2., though inevitably organisations jostle for position. Stage 4. is about having a clear idea of the change that is needed and mechanisms for embedding change. For some movements, the calls for change have been specified technically at great length.

We appear to have an issue with 3. Confrontation, despite history showing us time and again that this is necessary. Confrontation, civil disobedience, rebellion these are less apparent aspects of life in Britain today.Why is that?

  • Firstly, protest is under reported, because billionaires who control the media have a vested interest in the status quo and the BBC has a right wing bias. If you don’t talk about protest movements, they are less likely to grow and be successful. In reality there are ongoing acts of civil disobedience happening across the UK. Though many fail to reach critical mass, there are local successes.
  • Secondly, movements that confront the status quo are actively suppressed. Specific laws were passed to prevent Suffragettes from gathering in parliament square and similar laws were brought in to suppress Occupy. Confrontation needs strong organisations who are able to organise and mobilise tens of thousands of people. The Trade Union Bill and the “Gagging Law” are more recent attempts to suppress strong organisations, a process that has been ongoing for sometime.
  • Finally “NGO-isation” is an issue. This is where NGO’s (non-governmental organisations) can become part of the very problem they are supposed to be solving. NGOs can remove the “teeth” from bodies of justifiably angry people. From their “ivory towers” some have appealed for “reasonableness”, co-opting grass roots movements, diminishing demands and settling for small acts of reform.

It doesn’t matter how clever your arguments are or how many facebook “likes”  you have or how many organisations are in your alliance or how elegant your solutions are; significant and lasting change is unlikely to come without an uprising of collective energy; without a rebellion. (Of course all the other stuff are important conditions to nurture a rebellion in the first place- please keep doing them!).

And why a tax rebellion?

Civil disobedience can take many forms. By its nature it involves breaking the law as an act of defiance. Tax rebellion can be a legitimate form of civil disobedience and it has formed part of many successful struggles in the past, for example:

The value of tax rebellion is that it can act as a form of defiance that people can participate in across a country- they don’t all have to meet up at the same time and place and do a  blockade for example, which the State is well set-up to deal with. Tax rebellion can act as a direct criticism of a democracy when it is in crisis, because tax is a symbol of the social contract between State and citizen.

Defining tax rebellion

In this blog I prefer to use the term “tax rebellion” to capture the spirit of a defiant act, for people who also believe in the social value of taxation. Tax resistance is another term that is used, but it can also refer to those who are opposed to tax as a concept in itself and has particularly hard right connotations in the USA.

Tax rebellion is done on principle, as a complaint against a Government that is badly off track, with full disclosure to authorities. Those participating are willing to take personal risks to make their point known. Tax dodging is about skirting around the law or the spirit of the law, for personal gain, hoping to not get caught. Tax dodging is about ignoring the moral responsibility to contribute tax as a “membership fee” of society, leaving others having to make greater investments. Whilst they both involve the non-payment of tax, tax rebellion and tax dodging couldn’t otherwise, be more different.

An act of conscience or a tactical act of collective defiance?

War tax resistance by peace tax protesters is the refusal to pay some or all taxes that contribute towards war. Often Quakers, people who have undertaken this act have done so at great personal cost. Whilst information is shared on why and how to undertake such a protest, there isn’t a movement as such, to encourage a mass mobilisation of peace tax protesters. This is very much an act of individual conscience.

Some Suffragettes unilaterally decided that they wouldn’t pay tax: “no taxation without representation”, whilst others vowed to do it if others joined them.

Pledging to withhold tax if others join you (thus you don’t start until the numbers grow), enables a movement to mobilise and creates some element of safety in numbers. It also has the potential for drawing publicity, where other forms of protest get ignored. The Salt tax marches and poll tax rebellion were successful because of the large numbers that participated. They shine a strong light on illegitimate government and unjust policy making.

Tax rebellion and tax justice

People need to pay tax, tax is a good thing! Tax dodging by rich people and multinationals makes people rightly angry, especially as they see cuts to public services justified on the basis of a “lack of money”. As a tax justice campaigner (I support Tax Justice UK and Tax Justice Network) I’m clear on the socially vital role tax plays:

1. Raising revenue – to pay for the NHS, education, social security and so forth

2. Repricing goods and services – considered to be incorrectly priced by the market such as tobacco, alcohol, carbon emissions, etc.

3. Redistributing income and wealth – because huge income inequalities contribute to and are correlated with many social problems

4. Reorganisation of the economy through fiscal policy – so Governments can spend money into an economy to help prevent recession

5. Raise representation within the democratic process –  it has been found that only when an electorate and a government are bound by the common interest of tax does democratic accountability really work.

That last point is an important one. It speaks of the social contract– the bond between the government and people, based on legitimacy. Whilst you may not be happy with the result of an election, if you accept democracy, you are bound by the social contract to observe the laws and policies emerging from the democracy under which you live.

But what if you feel your democracy is deeply deeply flawed? Closer to a plutocracy or corporatocracy? Captured by powerful financial interests? There are times when the principled non-payment of tax is justified.

Tax rebellion is, in principle, perfectly compatible with calls for tax justice, indeed a tax rebellion could be part of a call for tax justice. This is analogous to strike actions. People can love their jobs and believe deeply in the social value of their work, and nevertheless be prepared to strike for reasons of justice and fairness.

Whether a tax rebellion has the cause of tax justice or not, it is helpful to bear in mind specific aspects of tax justice:

  • Progressive” taxation is especially beneficial – where those with more wealth pay a higher percentage of tax. However, taxation in the UK is currently “regressive”.
  • Poor people pay a greater percentage of their income in tax than the rich. Prof. Prem Sikka shows that households in the bottom 20% of income bracket pay 35.5% of their gross income in direct and indirect taxes, compared to 33.7% for the top 20% of households.
  • Tax rules are skewed to serve the rich – Value Added Tax (VAT) which hits women and the poor hardest has been increased, taxes on the rich and corporations have been lowered. The standard rate of VAT was 15% in December 2008 and is now 20%. Corporation tax has been lowered from 28% to 20% and a 10% rate is offered through “patent box”. Those earning over £150,000 saw the top rate of tax fall from 50% to 45% in 2013. In 2015 inheritance tax rules were changed, providing huge savings for those with expensive properties.
  • There has been no serious attempt to tackle tax dodging and tax havens, half of which are UK crown dependencies or overseas territories, which puts increased pressure on the ordinary tax-payer and spreads corruption

 Any tax rebellion should celebrate tax as being socially useful and should also complain about the injustices in the current tax system.

What issues should someone planning a tax rebellion bear in mind?

  1. Whatever the focus of the rebellion is, it should also, at least tangentially, celebrate tax as a socially useful construct and highlight current tax injustices.
  2. The rebellion should be clear if this is an act of individual conscience or an act seeking strength in numbers. If the latter, it may be wise to build numbers before beginning, by using a pledge hosting system such as Compassionate Revolution.
  3. A tax rebellion should link logically to the cause being protested, so that the tax withheld affects the authority that the protest has a complaint with. For example if there is an issue with a local authority, then withholding council tax can make sense. The fabulous Rev. Paul Nicholson has successfully taken this action in recent years, to point out injustices in Harringey Councils’ approach to council tax arrears. If the issue is with national Government then the tax withheld should be a tax that national government collects.
  4. Where possible (and often it isn’t) enable the tax rebellion to be inclusive so that anyone can join, because everyone pays tax. Tax rebellion is “easier” if you do tax returns. For those on PAYE it is not possible to ask your employer for tax to be unpaid. Everyone pays VAT and yet it is difficult not to pay. If you withheld the VAT on a utility bill you would affect both the Government and the company (which could be a good tactic depending on the protest, for example a protest against water privatisation or hikes in charges). In reality you would just be paying less of your bill overall  (including the VAT). One way to not pay VAT is to ask for a takeaway in a cafe or restaurant when you actually intend to eat in. This could be tried without the cafe’s consent, to save implicating in them in the action.
  5. Collective power (Counterpower) comes in three main forms – sharing powerful ideas, economic power (such as boycotts) and physical power (such as blockades). Tax rebellion can be an “idea power” more than an “economic power”. In other words the rebellion may not be intended to damage the public purse (which could lose allies). Its purpose may be to spread particular ideas and to show that defiance is possible. In this way boycotts are usually much more successful in damaging a companies reputation than hitting its bottom line. A tax rebellion can damage the reputation of a countries democracy by highlighting its flaws!
  6. Tax rebellions need to be heard about to be effective. Can you involve famous people or get a good story going? What is unique that will lead to publicity? People of public standing, such as religious leaders, can add moral weight to the calls for justice.
  7. Money withheld should either be kept to one side for later payment, when demands are met or given to a related cause, such as to pay for investigative journalism, whistle-blower support or grass roots campaigns.
  8. Decide upon an approximate amount of  money you would like to see withheld and calculate how this compares to public spending. For example if 5000 people join a tax rebellion withholding an average of £50 each, the total is a quarter of a million pounds. UK Government spends about £500billion annually  and a 6 hour bombing mission to Syria costs over half a million pounds. Some may argue a tax rebellion damages the public purse, but the reality is that fiscal policy is not strongly linked to tax collected. Tax justice shows us that there are other opportunities being missed to collect tax (£120bn in the UK annually!). When a Government wants to find money for something it can and does (like war) and the amounts in a rebellion can be pretty small.
    Another useful comparison is that annual subsidies per person for air travel are around £400-800pp depending on oil price, so people may want to withhold this amount in solidarity with the Heathrow 13 likely to face 3 months in Jail.
  9. Give clear instructions and legal information for participants. Ensure participants understand that legal information is not the same as legal advice and that outcomes cannot be predicted. The risks should be made clear.
  10. Share information about other tax rebellions so that we can reclaim our collective memory of acts of dissent and disobedience, so that we can remember we have power as a collective and that the things we enjoy today were made possible by people being willing to break the law.

A current tax rebellion of sorts (no tax is currently being withheld) is the Crickhowell offshore stunt, where small businesses are attempting to set up a tax dodging scheme akin to those used by multinationals. The idea is to shame HMRC into creating a level playing field and other businesses are being encourage to join the group. The Fair Tax Town brand has been created as a result (a good companion for the Fair Tax Mark for individual companies). The scheme has been widely covered already and is especially clever in that it is not asking participants to take a legal risk.

Will the group be large enough to really take on HMRC, pursuing their tax haven-using mechanism through the courts as multinationals are able to? If the scheme fails, what next for the movement? Will they be willing to fully rebel and withhold tax in protest at unfair rules? And is there an inherent risk here? Neo-liberals are not fond of corporation tax at all. To ask for a level playing field could include asking for no corporation tax for anyone. Yet corporation tax tends to hit wealthy people who are shareholders- it is a very useful tax for society and needs to be defended. A scrapping of corporation tax would very likely lead to an increase in VAT which is a regressive tax. Hopefully those organising the Crickhowell offshore stunt will be mulling these points over as they plan their tactics going forwards.

protestors with banner saying tax avoidance = £25billion, welfare cuts = £4.5 billion
UKUncut protest

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