“Taxation is key to the character & functioning of the state, the economy & society as a whole.”
– Solomon Picciotto
Before facilitating any session to do with tax, it is important to ensure a common understanding of ‘tax’. Taxes have been described as the price paid for having a government, paid by anyone who benefits from the existence of the state & the public services it provides. The formal definition of a tax is “a compulsory contribution levied upon persons, natural or corporate, made to the public authorities in order to generate revenue to help defray the expense incurred in conferring common benefits upon the residents of the state”. In more simple terms, a tax is compulsory, increases government revenue/income, is placed upon those incorporated which means both people & corporations, & is used for the purposes of offsetting some of the costs that are incurred by governments in the process of providing public services to their population. Tax is a core element of what is known as fiscal policy, or government policy concerning in particular public revenues & taxation.
Even though it is a payment from one party to another, tax differs from a regular transaction as it is not paid with the expectation that a specific output is given on payment, in the way that we may exchange money for food or clothing. In other words, there is no quid pro quo (direct return) in the case of a tax. Instead, taxes are paid to the authorities & it is they, along with councils etc. (depending on the decision-making structure of the country’s public institutions) who ultimately decide (with more or less input from & responsiveness to the population) what tax revenue should be used for & how it should be apportioned between services.
In contrast however, some argue that tax is a way for governments to deprive citizens of their hard-earned money. The Neoclassical school would be of this approach, arguing that low tax rates allow the private sector to flourish. This analysis of tax ignores the reasoning behind tax systems, namely that their existence supports the fulfilment of economic, social & human rights. The human rights legal framework states that the minimum requirements needed to fulfil economic & social rights include providing sufficient foodstuffs, essential primary healthcare, basic shelter & housing, & the most basic forms of education. Tax is crucial for ensuring that these rights are fulfilled.
