Why Pay Taxes?

My wife and I, through a combination of good luck and good management, have managed to retire in comfortable circumstances. We celebrate our good fortune by making relatively small but regular donations to a range of good causes – to rescue services like the rescue helicopters, St John’s Ambulance and the Coastguard, to organisations dealing with various afflictions like cancer, Alzheimers, heart disease, intellectual handicap and blindness, and to others providing help to the needy, like the Salvation Army, the SCPA and Plunket, and international bodies like Oxfam, Save the Children and Red Cross.

We are under no illusion, however, that our donations are anything other than a drop in the bucket. Private charity, we know, cannot take the place of adequate public funding to support the essential services on which so many depend. Those services require large sums of money and those sums can be obtained only from the public purse.

This is not to overlook, of course, those wealthy philanthropists who donate large sums to particular causes – but even then, welcome as they are, such gifts tend to be one-off windfalls and do not form a reliable basis for future planning and expansion.

The public purse is, in practice, the only basis on which an effective strategy and programme can be built; but it, in turn, needs to be financed from somewhere – and that inevitably means from taxes, taxes levied by a government elected to do precisely that. Accordingly, my wife and I do not begrudge the tax we pay; we are satisfied that our tax payments are applied to worthwhile purposes.

Funding public services is not of course the only purpose of levying taxes. Levying a tax can discourage or regulate particular forms of behaviour which are thought to be socially undesirable or harmful to public health; or a tax can be used as a means of redistributing income or purchasing power, so as to achieve a more effective level of demand in the economy.

And let us not forget that distributive taxation is a response to the fact that our economic system distributes its rewards in a somewhat haphazard and unequal way. But the principal purpose of taxation is to provide the resources needed to sustain essential public services.

We also know what happens, and the price that is paid, if those taxes are not levied and are not then available in sufficient quantity to finance public services. Those services – the hospitals, the schools, the support and social services – become run down and fail to meet their true purpose – and, sooner or later, their deficiencies have to be remedied at considerable expense, with the taxpayers in the end picking up the tab, even a tab they thought they had avoided.

We know, too, that when we are invited to congratulate a government on “running a surplus”, we are really asked to celebrate a government that has spent less on essential services than it should have done and than it has raised from us in taxation.

My wife and I draw comfort from the realisation that there are so many of our fellow citizens who share our willingness (I can’t honestly say our pleasure!) at paying the taxes asked of us. It is heartening that so many of those best able to afford it have indicated that, especially in these extraordinary pandemic times, they are ready to pay a little more for the general good.

One of the satisfactions, surely, of succeeding in life and, as a consequence, having the wherewithal to benefit one’s fellow citizens, is to do so by paying one’s taxes with a good heart.

A civilised society is one that can pull together when needed to meet shared and worthwhile goals – and especially goals that make us all stronger as individuals and allow us to function better as a society. New Zealand is built on such values.

Bryan Gould
16 September 2020