Capital Markets Corporate

June 17, 2021

Unshrouding the great tax mystery

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Few people would consider themselves to be genuine tax experts. Removing those who count it as a profession from the equation, for the rest of us it is often too triggering a topic to delve too deeply into, whether that’s because of the perceived injustice, the confusing complexity or – for some – the deathly dullness of it all.

But this apathy towards how the tax system works has created something of a knowledge gap about one of life’s big certainties. It is this financial illiteracy that the Institute for Fiscal Studies is hoping to tackle with the launch of an information resource called TaxLab where users can read simple explainers, have key questions answered and feast on charts and downloadable data to their heart’s content.

Most interestingly, the website contains a tool that allows you to calculate where your household income positions you relative to the rest of the population, something bound to appeal to the nosy neighbour in all of us. As well as educating individuals on all matters relating to tax, one of the other main objectives of the website – jointly funded by the Economic and Social Research Council and the Friends Provident Foundation – is to empower voters.

Held to account

That’s not to say the creation of a simple website will have any sway on what taxes are concocted in the corridors of Westminster, but a better-informed electorate means an increased chance of people understanding what they are voting for and what they want to see from present and future leaders.

Boris Johnson’s infamous Brexit battle bus emblazoned with the NHS monetary pledge ahead of the EU referendum vote proved the effect that hyperbole can have on the masses. The various twists and turns of the pandemic have pushed trust in public figureheads to the limit, so hopefully TaxLab can help give people the facts to counteract unhelpful myths and spin. There is also a lesson here for corporates seeking to build long-term trust and relationships – that simplicity, transparency and accountability need to be front and centre.

Taxing matters

If this hasn’t sufficiently whetted your appetite for finding out more about this necessary evil, then perhaps looking at how UK taxes compare internationally might do the trick (spoiler alert: things could be much worse), how government revenues have changed over time and where government gets its money. There is also further reading on how the pandemic has impacted government spending, what the government spends money on and the case for merging income tax and National Insurance.

TaxLab won’t educate the electorate or reduce the gnashing of teeth around taxes overnight, but it is a positive step for a nation that still has plenty to do when it comes to improving financial literacy. And if it prevents even a handful of individuals from howling at the moon, then it has to be considered a success.

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