It seems extraordinary that many who use the services provided by central and local governments try to reduce or avoid paying taxes. We all live in society despite what Margaret Thatcher once said about there being no such thing; we all depend on one another for different aspects of life's essential provisions and services like food, clothing, shelter, transport, health care, education, environmental protection for both our native species and us, and much more.

A State's major responsibility is to ensure its citizens have access to these services and to enable a minimum standard of living for its citizens to live purposeful lives, among other things. It does this mainly through raising revenue via taxes. Studies show that economies do better if wealth is spread around. Currently most tax regimes are extremely out of balance and changes are sorely needed.

The whole world, both natural and social, is tightly interconnected and is unravelled to its peril. Because taxes are inclusive, they can be seen as an expression of "love thy neighbour". A fair tax system is non-discriminatory, equitably distributing resources, which meets human rights. Unbridled capitalism, with its emphasis on individuals, wealth acquisition, consumption and materialism, has proven to be destructive of both the planet and society and benefits mainly the wealthy, which is the antithesis of the slightest expression of love. The tax system needs to illustrate to trusts, corporations and the wealthy that they, as part of society also, by enlisting their cooperation could contribute to a more just society, which would bring benefits to them as well.

Not paying tax is effectively theft from the State. Less Government revenue from taxes means less expenditure on essential social and physical requirements, which increases inequality. It enriches the rich while impoverishing the poor. It can also fuel support for the far Right (1), which is dangerously polarising society. If we want a "good society" it is essential that alternative, fairer means of gathering Government revenues must be found.

The New Zealand Situation

From the earliest days of settlement in New Zealand the wealthiest considered that the "others" need to pay taxes while they themselves could enjoy their wealth as they pleased. That attitude has continued in various ways but now has spread to more than the wealthy. It is hypocritical for the wealthy to live in juxtaposition to those living in poverty. The contrast breeds resentment by those without while producing fear in the wealthy who then need to take measures to protect their assets. The ancient wisdom to treat others as we ourselves want to be treated is still as relevant today as when it was first formulated.

Those in the upper echelons of the original colonial authorities who felt that they need not pay taxes eventually realised that the work needed for reasonable living conditions in the developing settlements, even for themselves, required more than what workers could provide through their taxes. Taxes had to be imposed on everyone in order to build the new settlements. A universal tax regime in some form or another has been in place ever since. For a while after the world wars, a progressive tax system enabled New Zealand to develop. New Zealand was considered to be an egalitarian society due to its provision for all of essential services, infrastructure, welfare, and other benefits, which resulted in relative national wellbeing.

Since the "neoliberal turn" New Zealand has been one of the least taxed countries in the world, Government revenue coming mostly from income tax and goods & services tax (GST). NZ's GST is the most punitive in the world, collecting the highest share - 30% - compared to other countries. It is rated as 136th on the fairness of its tax system. The first part of income is not tax free as it is in other countries. There is also no capital gains tax, or any form of wealth tax, like there are in many other countries.

The richest 1% pay about 11% of national income while they own about 20% of national wealth. The less well-off receive barely adequate accommodation supplements that contribute towards private property owners who pay no tax on their assets. Measures to alleviate child poverty have not lived up to expectations, an additional reason being that MMP forces politicians to concentrate on the swinging voters in the middle to remain in power. This is hardly "loving thy neighbour" or caring for the poor.

New Zealand is now more polarised, through reduced tax revenue and the associated austerity measures that shrank many essential services, or eliminated national assets after their being sold off cheaply. Unemployment now "needs" to be unnecessarily high to keep wages low in this competitive society in a workers' race towards the bottom, while the better-endowed aim to race to the top. So now we witness the growth of an impoverished underclass that often feels it must turn to crime to live up to the wealth of the rest, or drugs to numb the discomfort of their impoverishment.

An irony of public sector spending being shrunk while the private sector grows to the size that it is too big to fail (Government must shore them up in times of trouble) is that skills shortages, which theoretically require higher rewards due to their very scarcity, are not rewarded if they apply to public health, education and other Government services. Corporate-size wages do have some effect on top tier managerial salaries though.

We are now at the peak of such neglect, with hospitals needing to be urgently rebuilt, teachers wanting a fair deal like the nurses eventually received, infrastructure and roads needing to be completely rebuilt after storms, drinking water being contaminated through broken pipes, or by pollution from nitrates and organisms from dirty industrial-scale farming practices, and a welfare system that must urgently address child poverty.

Neoliberal Policies In Other Countries

This is not only a New Zealand phenomenon; it is visible in the countries where neoliberal policies predominate. Tax avoidance has hardened into a way of life for the very rich to the point where the earnings of the top 0.1% in the USA, for example, have risen 465% since 1979 (2). The USA, which perceives itself to be the world paragon due to its growth in becoming the largest economy with the associated political clout, and having prided itself on the ethos of past presidents (3), though this has now been lost, is experiencing a high rate of civil unrest due to the consequences of extreme wealth brought about by low taxes on high incomes while the middle class has been shrunk and the lower income groups being squeezed even further (4).

It has been shown that such policies reduce American life expectancy through the Republican Party's regressive tax policies (5) and the same can be assumed where similar policies prevail. England, which is currently experiencing multiple sectors striking simultaneously for better deals, is at the end of its toleration of relatively low pay for those providing essential Government services. How this situation rests with those who make the policy doesn't sit easily with the rest. The wealthy have become desensitised towards wage claims by public employees and the plight of the less well-off, witnessed by their objection to wage claims while lobbying for less tax for themselves under the proven false premise that wealth will trickle down.

The philosophy of small Government also proposes that society thrives under intense competition, that individualism is the primary factor that drives economies. But is this really true? The fact that countries and societies are organised in such a way that, like nature, everything is interdependent through very complex networks and that all depend on each other for safety and provision, reveals that to be a lie. After more than 40 years (basically two generations) of highly intertwined global networks and increasingly precarious economic circumstances for many, Governments of the world find themselves being dominated by corporations, blind to the consequences of their practices in their wider social connections.

The wealthy and big businesses who have the means to avoid outright, or be taxed less than wage-earners, have taken wealth for their own enormous salaries and shareholder wealth. They are not team players. Their products have beguiled the world into believing that life would be of less value if they missed out on many "essential" possessions or upgrades as portrayed in appealing advertisements, all the while increasing their business profits.

This has resulted in people becoming selfish, materialistic consumers addicted to superficial values, wanting non-essential symbols of status, and such injustice and inequality that civilisation as we know it is breaking down at a global level. It has also resulted in the destruction of the environment through extracting buried wealth or that growing on land, the latter which, when healthy, provides myriad ecosystem services for our wellbeing, and for free.

Effects Of Neoliberal Policies

Through privatising essential infrastructures and services, which has enabled corporations to grow into very powerful entities, they now dictate to Governments. Through those corporations contributing opaquely, with no accountability, to the political parties that would benefit them the most if elected, they wield enormous power, especially in the USA (6) but also in New Zealand. They are bigger than some other countries' entire economies. Once again, the middle-income wage earners are expected to bear the largest burden of paying for Government services, while big business lobbies for lower taxes. It is immoral and a form of corruption to buy privilege for the few.

Environmental effects are such that that most of us no longer live in a clean environment. This is due to the extraction, mainly by low-taxed, often subsidised, big business, of the Earth's resources that have lain untouched for aeons, and shrinking natural boundaries, for the financial value that they bring to the privileged. It has resulted in the pollution of our healthy planet with the associated increased ill health of humanity.

Zoonotic diseases have been released after the environments that kept them in check had their boundaries breached due to deforestation and other incursions. Scientists warned for decades that this would happen and now some people are puzzled, even outraged, that Government is doing insufficient to help reduce the resultant distress, or that it reduces their "freedom" (of, to, or from what, has never been articulated) while at the same time using resources as if they were infinite. Opinion is now turning to "degrowth", or living within the boundaries of the planet (7) (8).

Climate extremes, which have also been predicted for the last 40 years at least, are now wreaking havoc. The world is experiencing floods, droughts, storms, heat waves, cold waves in the USA, polar ice melting from on top and underneath, sea levels rising, oceans acidifying and biodiversity being lost due to the capitalist model that grabs anything from the commons that can be used for private profit and which reduces tax for those rich who can afford the equipment to extract it while often receiving subsidies for doing so. Others receive no such privilege.

Industrial pollution has degraded the land, sea, fresh water and air due to businesses neglecting to pay the costs of cleaning up after the processes that despoiled them, while restoration and reparation is left to Governments whose revenue comes from taxes, to pay to fix the negative external costs. If applied to anyone else, the political Right shrieks "communism", when Government money is used to help others.

They deceptively conflate communism with social democracy. The tax structures in countries that make the rich richer while the less well-off become poorer, and where the wealthiest are drunk from their own excesses while the poorest are blamed for their own circumstances, is surely insensitive, uncivilised and a massive indictment for the injustices that have arisen from such policies. It must stop if the injustices so generated are not to completely destroy most people and assets, including those of the wealthiest.

Something must be done to halt and reverse this situation. After the covid shutdowns with the associated supply chain disruptions, and the Russian invasion of Ukraine, many large companies are making record profits, yet they still pay relatively little tax. Now the costs of rectifying the effects of massive natural and man-made disasters must be found - from taxes. Calls are being made, from the United Nations (9) to grass roots activist groups everywhere, for the wealthy to contribute their fair share of taxes to the world.

Taking a purely financial, single bottom-line approach disregards externalities. Thinking in terms of single-focus financial "efficiency" means external costs, or externalities, are not included in product prices. This is the least efficient way when viewed though wider lenses. All effects need to be accounted for holistically. If carbon was taxed at a fair rate at source, there could be no market manipulation around its cost, and the costs of rectifying environmental destruction, e.g., land loss due to deforestation for industrial farming resulting in the loss of millions of cubic metres of soil annually, or the loss of soil microorganisms due to immoderate application of costly artificial fertilisers, might be included in price structures. People may live more simply due to the higher costs of the products, but be healthier in the long run and would waste less.

Possible Solutions

Global standards are needed. An international tax system would impede criminals moving trillions of dollars offshore, thwart corporate tax cheats, and more. Transparent international tax cooperation would result. If corporations belonged to more people through staff being included in ownership schemes, the profits would be spread more equitably and the employees would more likely work willingly for the enterprise. Child abuse would be reduced too over the long term (10) after parents were less financially stressed. This would consequently reduce medical and justice costs. Viewed from this perspective, genuine democracy, happier and more egalitarian and sustainable societies seem genuinely desirable.

Taxing the very rich is needed. Taxing profiteers is also a means of fighting inflation , (11) (12). Globally the top 1% took in $US26 trillion of the $US42 trillion in new wealth created since 2020, nearly twice as much as the share of the bottom 99%. This has even prompted millionaires at Davos to urge higher taxes on the ultra-wealthy (13).

Billionaire wealth accounts for about 13.9% of global gross domestic product (GDP), yet they comprise only about 0.1% of the population. Energy and pharmaceutical companies' profits spiked after the invasion of Ukraine and covid. Transnational information technology (IT) companies enable tax avoidance. This is inflationary. Economies will not crash if inflation comes under control through taxing large enterprises at a higher rate because it is the large enterprises that are driving up the prices in the first place.

Excess profits tax is being proposed and would protect against profiteering. It is used in Norway and was successfully used after World War 2 to rebuild nations. Oxfam has proposed keeping the super-rich from being super by taxing the wealthiest 0.1% at a rate of 75%. It views this as "conscription of wealth" (14), since lives are conscripted for war from which the wealthy profit. In the USA lawmakers want to introduce wealth taxes, e.g., estate tax above $US5m (15).

What might happen if New Zealand brought in more tax revenue more equitably? The Tax Coalition is calling for a wealth tax, while another group, EcuAction, is calling to entirely replace GST with a transactions tax, a capital gains tax and a wealth tax, which would more than compensate Government for the GST revenue foregone. The rich would pay a little more than they do currently from their purchases of goods and services. It would provide for better paid employees in the health, education, justice, conservation and other public sectors.

NZ Could Be A Beacon To Others

EcuAction's proposal of a financial transactions tax of 1% on every transaction across the board, a real capital gains tax and some form of wealth tax above about $NZ4 million sits uncomfortably with those who remind us that the wealthy at least pay some tax through their purchases. However, the middle- and low-income earners pay proportionally a lot more of their income in taxes, which hurts them. It has also been claimed that a financial transactions tax would prompt the wealthy to move their financial dealings offshore, but many transactions simply cannot be transacted elsewhere.

Sceptics may disagree with this opinion but other countries have lower GST, do have capital gains and wealth taxes and it works for them. It is also important to note that those with more equal societies are relatively more peaceful than unequal societies. The research has been done. New Zealand could have a rearranged tax system that would be fair for all, the very wealthy would pay a bit more than they do in GST, those on lower incomes would have more with which to buy essentials, would be less resentful, and overall wellbeing would increase.

Even if no Government was brave enough to radically flip the tax system in one move, gradually reducing GST while increasing corporate and other taxes would enable the Government to spend more on infrastructure, have well-resourced public services, provide for guaranteed minimum incomes appropriate for the sizes of families, a restored natural environment, improved education and training, health and other Government services, unpaid work would be valued and social needs would be met. These measures would fulfil basic human rights requirements, the conditions set out in the Build Back Better report and the Sustainable Development Goals outlined by the United Nations. It would increase social cohesion!

New Zealand could become a country where people of goodwill enjoyed peace once again, but if the lower income brackets remain poor there will be no goodwill, therefore no peace. It is like faith without good works that prove faith - we know the dynamics, so we need to address the causes of our ills. If New Zealand had a more equitable distribution of the nation's wealth, we could all thrive and New Zealand could be a beacon to others.

Endnotes

1. Todesco F, "How Economic Hardship Fuels Support For The Far Right".
2. Johnson, J, 21/12/22. "Fuelling Inequality, Earnings Of Top 0.1% In US Have Soared By 465% Since 1979: Analysis".
3. "Taxes are what we pay for civilised society" - Roosevelt. Jefferson sought legal ways to prevent the perpetuation of great fortunes, fearing the rise of American-style feudalism.
4. Stancil, K, 10/2/23. "Over 30 Million In US Face 'Hunger Cliff' As Food Benefit Cuts Loom".
5. Stancil, K, 26/10/22 "Republican Policies Are Killing Americans: Study"
6. Moon, D and Eskamani A, 12/12/22. "In 2023, It's Time To End Corporate Tax Giveaways". s
7. Knight, C, 16/1/23, "Why Combatting Climate Change Means Embracing Degrowth".
8. Knight, C, 14/2/23, "A Pathway Out Of Environmental Collapse".
9. Woodman, W, 18/10/22, "Global Tax Proposal Gains Grounds At UN As OECD Plan Falters".
10. Georgia Institute of Technology, 17 /2/23, "Study Links Child Tax Credit Payments To Reduced Child Abuse, Neglect".
11. Neeley, B, 23/10/22, "To Fight Inflation, Tax The Rich And Corporate Profiteers".
12. Sepulveda, M, 9/12/22, "Taxing Super-Profits To Beat Inflation, Defend Rights".
13. Johnson, J, 18/1/23, "200+ Millionaires To World Leaders At Davos: 'Tax The Ultra-Rich And Do It Now'".
14. Pizzigati, S, 16/1/23, "Oxfam Wants To More Than Double The Tax Rate On Our Richest".
15. Johnson, J, 19/1/23, "Because Congress 'Won't Act', Lawmakers In Seven States Team Up To Introduce Wealth Tax Bills".