Taxation: Functions and principles Introduction: Why tax? Tax – a dirty word, a drag on all of us, a raid on private funds – or a legitimate aspect of modern, democratic life? While paying it in our own case is never enjoyable, tax is an essential medium through which our governments meet and serve the needs of the people. Accountability for public money and maximisation of tax revenues form the foundation for the capacity of states to deliver on domestic expectations and international obligations. As such, taxation is a fundamental aspect of the relationship between the citizen and the state. The citizen pays tax to the treasury on the understanding that the government of the day will use the money for considered spending in the name and for the benefit of the nation and its people. Few authorities can lower tax rates to (near) zero, for all governments have spending obligations to meet. Schools, hostels, roads, street list, sewage works, clean water supplies, rubbish collection, armed forces and infrastructural costs all need to be funded. There is a broad acceptance of this principle across most states, though whether high or low tax is desirable is a lively matter of debate and political judgement. This piece does not enter that debate but instead sketches the need for any taxation system to be transparent – so as to build popular legitimacy and to maximise collection against tax requirements – both to build national self-reliance and to deliver rights obligations. Tax and transparency Tax and spend is what governments do. It is not all that they do but is a key, core element. The premise is that governments can and must do good, that taxation enables the government to be active, to undertake initiatives for the benefit of their country and to support those in need. It is also essential if people are to realise their human rights. Public support for the tax and spend powers of their governments must in part be built on the ever increasing need for transparency in public life and in government. The increase in freedom of information mechanisms across jurisdictions and their regular use suggests that there is public hunger to know what is done in their name. And concerns about actual or perceived corruption, fear of politicians lining their own pockets through the public purse, can be allayed if real transparency can be assured. Each state must find ways of sharing information about the amount and uses of tax with the tax payer – perhaps publishing information in the press, discussion on the television or radio making copies of annual budgets available in civic offices. But often, public accounts information is not accessible or the most fascinating to the general public. And conventional paper-based forms may not be the most inviting ways to open up to public scrutiny. In many Commonwealth countries, the internet and web based information reaches an increasingly wide audience, is easily accessible and could be further exploited in the service of transparency. One such example that might spark interest and adaptation is an initiative called Where Does My Money Go? It is a fair question that can be asked by any taxpayer with an accessible and visually interesting answer offered on the website. This UK project offers a breakdown of where public spending goes and was established to ‘promote transparency and citizen engagement through the analysis and visualisation of information about UK public spending’. At the very first glance, the viewer can see the overall spending allocations. The project uses headings that are easy to comprehend – health, helping others, running the country (see Figure 1). It is of course part of the modern journey to remove from the domain of specialists, the chance to know what is being done with the contribution each person makes to the state. By clicking on a specific button in the graphic, the reader can get more information about that area of spending. So, for example, clicking on the environment button will get you the graphic in Figure 2; clicking on the running government circle allows the viewer to see how much of the tax revenue in the UK goes on aid (see Figure 3). The pursuit of transparency in matters of taxation may lead to some critical questions, but politicians and government officials will surely be up to the task of explaining and defending their choices. Democracy and public confidence will be strengthened by such engagements and suspicions about corruption can be dispelled. Commonwealth Governance Handbook 2013/14 71 Purna Sen
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