There has recently been a bit of a brew-ha-ha
surrounding the HMRC proposal
that they should have the right to directly take money from the accounts of
taxpayers who are in debt. Some people are outraged by the proposal but I would
cautiously accept it and I thought I would outline why.
In my forthcoming book I set out some principles of taxation
and it is useful to consider the proposal in light of these. The principles
that are immediately relevant are that the tax system should be just and that
it should not interfere with people in making their plans. I would argue that
the first principle mentioned tells in favour of the proposal and that the concerns
raised under the second principle do not render the proposal impermissible.
A just tax system will be one in which the right people contribute
the right amount of tax. People who consistently fail to pay their debts to the
tax authority clearly undermine this. Furthermore, by failing to pay they
increase the costs of tax administration and thereby reduce the net contribution
they make below that which they could reasonably be expected to make. Making
the tax system more effective by reducing costs and increasing revenues is a
good thing all round and if the proposal can achieve this then there are good
reasons to allow HMRC to take money from the accounts of non-payers.
The other principle that I mentioned is that the tax system
should not interfere with people’s plans. It could be that if the tax authority
takes money from someone’s account then this will render them unable to do
something they were planning to do with the money. However, I do not find this
argument compelling as an example of breaking the second principle. If people
are given plenty of warning that they will have the money taken, perhaps with
attempts at contact made through several forms of media, then there is no
problem here. People should not be making plans with money that is not theirs
and if people have a tax debt then the money is not theirs. In an ideal world the
correct tax would be withheld at source but where this doesn’t happen the
person who has the tax money does not have any prior right to this money.
A further related point is that people should not be making plans
with money that isn’t theirs, and so the proposal would not violate the non-interference
principle. This may lead some to suggest that my defence of the proposal also
implies that all debtors should have the right to take money from people’s
accounts. This would clearly be untenable and so how can the seemingly similar
proposal be acceptable? Courts should have the right to seize assets from
financial institutions where this has gone through the correct procedure, and
HMRC can undertake these proceedings.
Why should HMRC be able to do what other debtors cannot? One
reason is the one set out above; people have duties to contribute their tax
revenues to society and these are a stronger claim than other debts that people
have entered into as part of a contract. But these other debts are based on
contracts that people have entered into freely, albeit ones that should be
enforced by the state if one of the parties fails in duties they have adopted
through the contract. The requirement to pay tax is not of this nature however—tax
is not an agreement entered into between two parties but a moral requirement
for people to pay their due to the rest of society. Everyone is required to pay
no matter whether they would like to or not and so it is not like society has
made the mistake of making a contract with someone of poor character.
There are of course reasonable worries about proposals such
as this, and sensible rules
must be applied to ensure that mischief is kept to a minimum. However,
there is no good reason to assume that the proposed HMRC powers are morally
impermissible.
