They say it’s the most depressing day of the year. Blue Monday. Three weeks into the New Year, most of us have already abandoned our resolutions. The weather is rubbish. And it’s the day the Christmas bills arrive, if you’ve got a plastic habit. It’s also the week before tax bills are due in many EU countries. All in all, it’s miserable.
For many, last Friday’s inauguration of President Trump added to the misery. However, Mr Trump will not be worrying about his tax bill. Here is someone who campaigned on the boast that he had did not pay income tax, despite his huge wealth. In fact, he replied to the challenge by saying “That makes me smart.” The first President not to publish his tax return since Richard Nixon, he gives the distinct impression that only fools pay tax.
If you never use public services – schools, hospitals, social care and so on – that might seem fine. But that’s not the reality for most of us, and these services – not to mention our physical infrastructure rely heavily on public investment. That money comes from taxes. Less tax revenue, less investment. For plutocrats to boast about tax avoidance, is therefore highly corrosive – particularly when they are about to take office.
Equally damaging is the lack of trust in governments to spend our money well. Where people mistrust politicians, they are more reluctant to pay taxes. It is no coincidence that those countries with high levels of transparency, are also those with higher levels of tax and a willingness to pay it.
Ada Colau, Mayor of Barcelona, spoke about the importance of transparent government at the Habitat III event in October last year. Coincidentally, in the event’s host city, interesting work is being undertaken to use digital technology to improve government transparency. The Laboratory of Innovation Quito (LINQ) has been developing digital applications to promote open and transparent government in the city. Citizens need to be confident that their hard earned taxes are being used effectively, and as intended.
Mayor Colau – along with other innovative Mayors including Anne Hidalgo in Paris and Manuela Carmena in Madrid – use recurring language about the importance of taxation to cities. They also underline the need for cities to have increased revenue raising powers (as proposed in the UN’s New Urban Agenda) and the scope to use taxation policy to shape their wider political agenda. Both Madrid and Barcelona are changing tax laws to address the challenge of affordable housing, whilst Paris is using its tax powers to promote its housing and environmental agendas.
Does it make people feel any happier about paying taxes? That leads to a very big existential discussion! However, what we can say here is that if people are confident that their taxes are being used well, then they are less likely to grumble about them. Is it a coincidence that Denmark tops both the tax paying and happiness charts – and that their country also sits high up on any measures of transparency?
So, what do we conclude from this? Without taxes, our public services struggle and our city infrastructure creaks. But citizens need to have faith that their tax revenues are being used for the right things – and are achieving results. Those city politicians are right to argue for more local tax-raising powers, so long as they can offer transparency in their use and reliable data on their impact. Politicians – of whatever level – who argue against taxes are highly corrosive and they only damage the public good. Perhaps its time to reframe an old American rallying call as “No representation without taxation.”
