Saturday , April 1 2023

Talking Tax

Summary:
Blog Talking Tax Paul Hebden digs into where our attitudes towards taxes come from. He finds its roots in the runup to the 2008 financial crisis. By Paul Hebden 28 February 2023 This is an article from the fifth issue of the New Economics Zine. You can read the full issue here.In the wake of the 2008 financial crash, an economic crisis incubated and caused by a reckless and out of control banking system transformed into a drive for full-blown public austerity. And we continue to witness the consequences of it today. But Brits didn’t suddenly

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Blog

Talking Tax

Paul Hebden digs into where our attitudes towards taxes come from. He finds its roots in the runup to the 2008 financial crisis.


This is an article from the fifth issue of the New Economics Zine. You can read the full issue here.

In the wake of the 2008 financial crash, an economic crisis incubated and caused by a reckless and out of control banking system transformed into a drive for full-blown public austerity. And we continue to witness the consequences of it today.

But Brits didn’t suddenly wake up one day and decide we needed an austerity drive to cut public spending. So where did the idea come from? Academic Mike Berry studied how the media responded to the 2008 financial crisis, and found that a narrative about public sector waste’ had been building for years, and reached a crescendo in 2009.

Berry’s research found a 600% rise in mostly negative media stories between 2000 and 2009 that was crucial to what he calls the socialisation of support for austerity”. He notes how words and phrases like inefficiency”, waste”, non-jobs”, bloated”, gold-plated pensions”, benefit cheat”, skiver” and scrounger” became ever more prominent in news stories in the years preceding the financial crash.

So by the time tax revenues collapsed in 2009/​10 and the deficit’ between the amount the government got in tax and the amount it spent loomed into view, the public was already primed to accept cuts as the solution. Years of public sector waste were held up as part of the reason the economy was in a mess, despite the crisis itself having its roots in the failures of the global financial system.

The media didn’t decide to write stories about waste purely of their own volition however. The narrative was partly fed by campaigners. It’s no coincidence that the Taxpayers Alliance was set up in 2002 with a remit to deliver a steady stream of research’ stories about waste in the public sector. Part of the reason the Taxpayers Alliance has been so effective is that they barely talk about tax at all. Instead they promote a kind of meta-narrative about waste. The theory of change seems to be that, by undermining public confidence in the ability of collective institutions to properly spend taxpayers’ money’, they can head off support for higher taxes, particularly on corporations or the wealthy.

This has created dividing lines in the public’s mind, between taxpayers’ who contribute to the public pot, and others (bureaucrats, politicians, the unemployed and migrants) who take away from it.

In late 2019, Tax Justice UK set off on a journey to understand what people in the UK think about tax. The result was our report, How to talk about tax. What we found during the course of 11 focus groups and two opinion polls was that people don’t spend much of their time thinking about tax and the economy. Tax is complicated, and when we asked them to think about it they reached for familiar cultural understandings and metaphors to explain what it meant to them. Chief among these was the idea that the economy is like a container, that taxpayers’ pay tax into, and others’ take away from. But tax was also seen as something that bonds people together and can help pay for good things — the NHS being the most obvious example.

For those of us who believe that our taxes are a vital way of reducing inequality and funding our public services, the research uncovered some big wins. It found widespread public support for taxes on wealth, disgust and anger at tax avoidance, and an understanding that tax can and does help create great public services. There was also evidence that this waste’ narrative had cut through (it’s worth noting that it’s also a core part of the current Labour Party pitch on the economy). However, despite the cynical moves of some campaign groups, Brits do see themselves as part of something bigger and understand tax can be part of it.

If you want to communicate a more progressive story on tax, you have to give people hope that the system can change. People are often cynical and fatalistic about the tax system, especially when it comes to the behaviour of big companies, the wealthy and politicians. It is important that we give hope that things can change, and be loud about the times that we made change happen. But this should be tempered with realism: people understand that tax is largely a force for good but they will never love paying tax.

People see that public services have been hollowed out and they do want more investment. The public do support tax increases so we should call for them, particularly on wealth, and link these proposals to supporting public services. But it’s important to do this while being mindful that not all public services are paid for by tax. The government has a large degree of control over the economy and politicians have many tools for supporting public investment beyond tax, including borrowing and quantitative easing.

The public hate tax avoidance. If you are angry about it, they will support you. But always try to point to ways in which politicians can fix the system. When talking about wealth, it’s important to be specific. Don’t talk as if it’s inherently bad. For people who are struggling to afford life’s essentials, the idea of wealth is not an inherently bad thing. People quite admire the wealthy and often find generic rich-bashing’ divisive. Focus on how the tax system can support collective security so that no one needs to worry about building big individual safety nets.

Make sure you explain everything in straightforward, everyday language. People’s knowledge of the tax system is limited. It’s better you risk looking a bit patronising than saying things nobody understands. Use common metaphors to help people understand difficult concepts, or ideas that are usually only discussed in numerical terms – like how much money actually constitutes being rich. If you’re talking about fairness, make sure you explain exactly what you mean, as different people have very different ideas of what fair’ looks like.

When talking about the economy, it’s more effective to use metaphors that emphasise how the economy is humanmade — and that it can be changed to build a better world. Be very wary of talking about the economy as a big pot where money is either contributed or drained (this is sometimes called the container model’). Stress that tax and public spending play crucial roles in building things that we collectively need.

We are living through a cost of living crisis and political decisions about tax are a central part of it. So much so that the current moment sometimes feels more like a scandal than a crisis. The decision to increase national insurance this year and not capital gains (a tax whose lower rates overwhelmingly benefit the already wealthy) feels scandalous. The ability of companies to profit off the back of rising energy prices is obviously scandalous. With our current government committing to tax cuts which will cut the money available for public services, and mainly benefit the wealthy, the arguments on tax are still not yet won. 

Arguments on tax are still not yet won. However, we have also seen some wins, partly informed by the fact that the public are behind us. The most obvious recent example is the windfall tax on energy companies, a move that challenges the decades old political-economic dogma that the state has no role to play in protecting families from inflation. We won a windfall tax and with the cost of living crisis showing no signs of abating the moment feels ripe to push for further wins. With the right story, why not a wealth tax next?

Paul Hebden is head of communications at Tax Justice UK.

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