Thursday, 22 March 2012

Budget 2012

Budget decisions are moral decisions; the Government’s taxation and spending choices have a big impact on inequality and poverty.

Some principles from my Christian tradition suggest to me that we should have put consideration of the most vulnerable, marginalised and poorest as our priority.  How the rich and powerful, affluent and comfortable care for and show love to a neighbour is probably the hallmark of a society based on a Christian ethos.  Archbishop Desmond Tutu once said “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.” 

Budget decisions are moral decisions too when it comes to the fair sharing of the burden of paying for the Government’s tax and spending decisions.  Those blessed by affluence have a responsibility and a moral obligation to protect and support those who are in need. 

Fundamental to all these considerations has to be the question what is the purpose of economic activity?  A Church of Scotland Commission is soon to publish a new report into just this question which will highlight the need for our economy to reduce inequality, tackle poverty, ensure sustainability (both in terms of the environment but also how individuals and communities are respected in economic life) and in promoting mutuality (that is, increasing the trust and support we can offer to one another, for instance through the growth of credit unions and co-operatives).

So how does today’s budget relate to these principles for economic activity?  I’m afraid I am not in a position to offer an immediate response or a knee-jerk comment; the realm of fiscal planning, monetary policy and growth forecasts are not part of my day-to-day work as a parish minister in Gorbals.  The proof of the pudding, as they say, will be in the eating, and only time will tell if this budget and this Government will succeed in reducing inequality or increasing it, in tackling poverty or not.

 If it is difficult to make definitive statements about the detail of budgetary policy, I think it is possible to make some general points:

Tax avoidance and evasion are, in the words of George Osborne, “morally repugnant”.  I am interested that the Government will now consult on legislating for a General Anti-Avoidance Rule as recommended by the Aaronson Report.  The Church of Scotland has supported Christian Aid’s Trace the Tax campaign and the General Assembly this May will be invited to sign up to Church Action on Poverty’s Close the Gap initiative, both of which target tax dodging by wealthy individuals and institutions.

Tax rates need to be set in a way so the wealthiest, with the broadest shoulders bear the largest burden.  We must recognise that our social security system, which is one of the largest parts of Government expenditure can only be afforded thanks to the contributions in tax of rich wealth-creators.  Tax must be seen as a public good, rather like volunteering or contributing to a charity.  It is through tax that the society we want, with its safety nets and protections, is maintained and enhanced.  We need a culture shift, from complaining about how much tax we have to pay, to thinking about what do we as a society want to create and how will we pay for it, and what is my fair share of a social investment contribution?  An increase in personal tax allowance will benefit lower-paid workers.  A corresponding cut in the top rate of tax will leave many people asking questions about what is really fair.

It is widely understood that the driving principle of the UK Coalition Government is to reduce the size of the deficit so that in five or so years time the size of Britain’s debt will stop increasing.  However it is important that the cuts to spending do not fall heavily on those who are already on the edge of society.  Hearing an announcement of a further £10billion of cuts to the welfare budget by 2015/16, on the top of already deep cuts and the dramatic changes expected from the Welfare Reform Act means that anti-poverty campaigners need to remain determined and committed to service as well as political engagement to try to ensure the best deal for those who need help most.

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