John Fisher

Whose money is it anyway?

The existential thrill of paying tax (Pixabay)

Having finally crawled to the end of the latest one-thousand-page, gory instalment of JK Rowling’s adult crime series over the weekend, I decided it was time for some light reading. Fortuitously, yesterday saw the publication of the Israel Tax Authority’s outrageously entitled ‘Know Your Rights 2022’.  Completely free of charge, this annual list of filing obligations ensures that, when the hangman asks if you have any last words before he lets slip the trapdoor, you can’t scream, ‘I was ignorant of the law’. It’s all there in black and white.

But, spare a thought for the Income Tax Commissioner whose impossible job it is to write an introduction selling you the glories of the working of his department. And it doesn’t stop there. His thoughts are regularly reported in the financial press, articles often accompanied by headshots. The only comparison that comes to mind is ‘Mad’ Frankie Fraser, principal hitman of the notorious 1960s Richardson Gang, who, after half a lifetime of terrorizing London (the other half was, blessedly, spent behind bars), was feted as a celebrity by the press, being allowed to explain to an unconvinced public his justification for his actions.

A tax authority is the government of the day’s hitman or, more precisely in English slang, gopher. It does the government’s bidding, the government takes the credit for what the money is spent on, and – as is very clear from the latest introduction to ‘Know Your Rights’ – all the tax authority is left with is the hangman’s pride of claiming the rope was precisely the right length to dispatch the condemned man efficiently.

This dichotomy of roles between government and tax authority is not a good state of affairs. While deep down we the people all know that paying taxes is a good and honourable thing, in our daily lives – watching the money disappear out of our bank accounts – we find it difficult to see it as anything more than a smash and grab.

There must be a better way, and there is. Salvation may be from the unlikely quarters of the Church of England.

During the financial crisis of 2008, the then Archbishop of Canterbury wrote a brilliant newspaper article linking the crisis to the fact that credit had lost the personal relationship between lender and borrower. Someone borrows from a bank somebody else’s money that even the bank, having entered into a series of complex derivative transactions against its loan book, cannot identify. As a result, the borrower feels little guilt towards the lender for defaulting and the lender feels no compassion for the borrower’s plight.

Taxation has the same problem. Individual taxpayers see no connection between the taxes they are, begrudgingly, required to pay and the good those taxes do. This is partly because they often do no good at all, and partly because governments insist, for reasons best known to themselves, on behaving as if they rule the country. If the government – through its bureaucratic agency, the tax authority – was required to present each individual taxpayer with an annual pie-chart of where their tax went (a simple tiny percentage, based on amount paid, of their share of the national pie) there would be one of two consequences: either a cohesive effect on society with a greater chance that taxpayers would willingly accept the consequences; or an outcry over the waste. In the latter case, the electorate would be expected to influence the government as only the electorate at the polls know how to do.

And then, the Income Tax Commissioner’s introduction to ‘Know Your Rights 2023’ might not be so utterly cringeworthy.

About the Author
Born and educated in the UK, the author is a Chartered Accountant and Israeli Certified Public Accountant who has been based in Israel for the past 35 years. He retired a few years ago as an international tax partner at one of the Big 4 accounting firms, and now runs a boutique tax practice.
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