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The Relationship Between Tax and War

 5 min read / 

“If a thousand men were not to pay their tax-bills this year that would not be a violent and bloody measure, as it would be to pay them, and enable the State to commit violence and shed innocent blood”

For centuries, wars and battles have dominated the activities of governments across the globe. An efficient and effective tax system has played a pivotal role in funding armies, weaponry and other resources during times of war. The relationship between income tax and war is a positive one, and it has been for many hundreds of years. Throughout history and still to this present day, tax revenue is used to fund wars across the world. We, the taxpayers, are funding the governments with the financial resources necessary to carry out acts of violence.

The Birth of War Tax Resistance

War tax resistance was born in the 13th century. John, The King of England in 1202, had an empire stretching from Ireland to the French-Spanish border. John needed money to build an army and therefore levied feudal dues far beyond what Englanders were used to. In 1214, King John invaded Europe, but his defeat sparked a civil war in England between the barons and the King. The barons were tired of paying taxes to fuel the wars of King Johns, leading to the introduction of the Magna Carta. The Magna Carta was supposed to be a peace treaty between the king and the barons, in order to control the kings’ revenue collections.

Relationship between Income Tax and Wars – Fiscal Extraction

In ‘Economics of Taxation’, the author highlights the importance of taxation and its relevance to wars. King John’s need for money from taxation resulted in the recall of Parliament and was a factor leading to the Civil War and the execution of Charles I. The author goes on to stress its significance concerning the French and American Revolution. Taxation is a very powerful tool for governments and the ‘higher power’ to use in order to gain wealth and control.

The American Revolution: 1775 – 1783, also known as the U.S War of Independence, is an example of where the tax system was used aggressively to fund war. Tensions arose between residents of Great Britain’s 13 North American colonies and the colonial government, which represented the British crown. Tension had been building between colonists for more than a decade before the break-out of the war, where the British government raised revenue by taxing colonies. Three main methods of taxation were used, notably, the Stamp Act of 1765 and Townshend Tariffs of 1767 and the Tea Act of 1773.

The French revolution: 1789 – Late 1790’s. Initially, the income tax, introduced by William Pitt the Younger in 1798, was temporary, requiring renewal each year and was primarily used to cover the cost of the Napoleonic wars. It continued right up to the Battle of Waterloo in 1815. The income tax was repealed, however only temporarily, as Sir Robert Peel re-introduced the income tax in the 1842 Budget Speech, remaining ever since.

World War 1: 1914 – 1918. The burden of tax was still ‘unfair’ and disproportionate to your income. During the war, Parliament was able to authorise tax to support exceptional levels of wartime expenditure. The tax rate increased from 6% in 1914 to 30% in 1918, revealing the impact of war on income taxes and illustrating the true costs incurred during war times. By 1920, approximately 60% of tax revenue was in the form of direct taxation. Parliament recognised the importance of income tax and took steps to introduce income tax legislation into a single Act of Parliament.

World War 2: 1939 – 1945. Similarly, the income tax rate was displaced from 25.2% in 1939 to 44.7% in 1944, again, demonstrating fiscal extraction by the government at times of war and unsettlement.

Korean War: 1950 – 1953. The Korean War cost the US approximately $30bn ($341bn in constant 2011) this was equivalent to 14.1% of GDP in the last year of the war.

Iraq War: 2003 – 2011. The war in Iraq has cost the UK and US taxpayer’s eye-watering amounts of money. Interventions in Iraq and Afghanistan has cost the UK £30bn, which is approximately £1,000 for every taxpayer in the country.

The War Tax Resistors

Numerous organisations have been set up to resist against paying taxes towards war. In March 2003, an organisation called Peace Tax Seven obtained nineteen M.P’s signatures on an Early Day Motion. In 2000, the Humans Right Act was introduced into Britain, incorporating the European Convention of Human Rights into British law, which led to debates to whether an individual can opt out of contributing to the military and war under Article 9 – Freedom of thought, conscience and religion.

Conclusion

The relationship between income tax and war is indisputable if we are to look back through time and history. The income tax was originally imposed as a temporary measure, expiring each year on 5th April. Parliament reapplies the tax each year with the Finance Act. After the first and second world wars, income tax had been embedded into the economic system and was soon forgotten due to war turmoil. The temporary measure of income tax had vanished in people’s minds and thus was implemented in the fabric of working life as a norm. The Pay As You Earn (PAYE) system was implemented in 1944, just before the Second World War had ended.

This was a very convenient time to implement such a system, as now, members of society would find it harder to protest against the income tax, due to it being deducted at source. It is clear, that governments through time and history have used the tax system in order to profit and increase their power. To conclude, in my opinion, if taxpayers could follow their money through the economic system, observing its use to fund unethical activities, tax avoidance would unexpectedly become a very ethical practice.

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Companies

Financing for Green Sustainable Development

 3 min read / 

Green Sustainable Development

Green sustainable development has been on multiple discussions channels. Talks, seminars, workshops, you name it. However, financing it has not been thoroughly discussed. How do we finance sustainable green development? Is it profitable for companies who do so? Is the rate of return high enough to cover the cost of investing in green technologies?

No doubt, green sustainable technology is an expensive technology with no clear ROI. Venturing into green technologies may be a blind-man guided only by a voice in his head. Yes, green sustainable technology yields a significant Marginal Social Benefit (MSB). But often, MSB is non-quantifiable.

Leading this social-technology movement, Jeffrey Sachs, with the support of foundations such as the Jeffrey Cheah Institute, established the Sustainable Development Goals (SDG) centre in the backdrop of academics – Sunway University.

The aim is to directly address the issues for SDGs and to ensure the goal set in the Paris Climate Agreement is able to be achieved successfully.

Now, as mentioned, private firms are both afraid and pessimistic about green sustainable development. Many do not see the outcome of this initiative and are not concerned about the environment. The technology is costly, and some firms are even struggling to break-even at their current costs. Lack of momentum from firms involved in similar industries and lack of financial support has made venturing into green technology unattractive.

On 14th of January 2018, pioneers and advocates from across the globe were invited to join a workshop at Sunway University. The idea was to bring together a group of academics, from the Asian Development Bank Institute to representatives from New Zealand and Austria, to discuss how to finance green sustainable developments. It attracted a number of firms involved or who wanted to be involved in this movement.

Financing models such as the SIB model and the Yozma model were introduced by Dr Hee Jin Noh. Papers on the theoretical relationships between a firm, a bank, and households were presented by Dr Maria Teresa Punzi. And the outcome of these series of workshops will be a book, which aims to provide a better insight and guideline for green financing, written by Dr Hee.

Also presented was a case study, comparing different countries. Associate Professor Ivan Diaz-Rainey had made comparisons on some successful countries, looking at European countries versus New Zealand and Australia. In the case study, countries were compared, and recommendations were made on how to make green financing successful. Though the definition and KPIs of a successful green development country are still vague, countries from Europe are exemplary on the ‘theory to practice’ phase.

While there is a significant increase in awareness and wanting to be involved by private firms, it needs to be supported by the government more. Regulators need to provide sufficient information to assist private firms venturing into green technology or green development. A healthy government support will increase the chance of a firm venturing into green development being successful. And these are the baby steps needed in order for transformation at city-scale or nationwide-scale.

Keep reading |  3 min read

Global Affairs

Smart Cities Take Off

Smart cities

Big tech deals took off in 2017 as big tech firms strived to make smart cities a reality. 

Editor’s Remarks: In 2017, 35 agreements were reached between various cities around the world and big tech companies – a huge increase from the eight that were agreed in 2016. Alphabet has launched a project to develop a miniature smart city in 12 acres of land it purchased in Toronto. Meanwhile, Alibaba is leveraging digital infrastructure in Macau, where its smart transport systems will hopefully improve efficiency for the municipal government. Saudi Arabia has also announced a plan to build a new city, to be named NEOM, which will rely fully on renewable energy as well as self-driving vehicles and drones.

Read more on Big Tech:

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Europe

Bayeux Tapestry on Loan

Bayeux Tapestry UK

Emmanuel Macron has offered to loan the famous tapestry to the UK in an effort to improve relations.

Editor’s Remarks: The offer is expected to be announced this Thursday, when Macron will meet UK officials at the Anglo-French summit at Sandhurst. The Bayeux Tapestry was commission by William the Conquerer’s brother to celebrate his 1066 conquest of England and depicts the Norman king defeating the Anglo-Saxon ruler King Harold. Although it was made in England, the piece – which measures about 35 square metres – has remained in France for the past 940 years. At the upcoming summit, Macron is also expected to petition the UK to join his combined European military initiative – a move many expect Britain’s new defence secretary Gavin Williamson to push back on.

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