Is tax really a “necessary evil” that we all have to deal with?
Fr. Dennis Yu’s Render to Caesar? The Morality of Taxation gives a different look at taxation using a moral lens taking into account few contemporary issues as shared by Dr. Jess Estanislao in its preface, “common good” as the justification for taxation and for tax reform, the principle of “equity” in distributing the burden of taxation; and the increasing inequality of income and wealth, which led to the economic and social exclusion of an increasing number of people at the bottom of the pyramid; and the insistence on legal justice as the basis for the citizen’s obligation to pay taxes.
I had the chance to read Fr. Yu’s book during the Holy Week. I gained a lot of insights in reading and putting in perspective the morality of taxation. It may really be a “necessary evil” after all.
But taxation is not simply giving money to the government. It implies a myriad of things: Common good and solidarity; to pay taxes out of the spirit of solidarity, working toward the common good.
For Catholic taxpayers, this book will make you think twice before you evade or avoid taxes. “As encouraged by the Church Fathers, a good Catholic is a good citizen. One cannot “render to God” what is God’s without rendering to “Caesar what is Caesar’s”.
It presented several moral principles which I consider essential in a progressive and effective taxation in any country in the world. First, common good: The common good is the “sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily.” It is the only justification for tax imposition.
Second, solidarity: “To live the virtue of solidarity, the Catholic must bear in mind that he is contributing directly to the common good by paying the right taxes.”
Third, equity: “Above everything, equity in the distribution of taxes (tax burden) and benefits. Ability to pay is the principal criterion in determining a person’s share in the tax burden.”
Lastly, exclusion: “Catholic social teaching does not require absolute equality in the distribution of income and wealth. However, if inequality leads to exclusion then it becomes immoral.
Pope Francis explained the evil of inequality in the sense of exclusion.
“Today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality … masses of people find themselves excluded and marginalized: Without work, without possibilities, without any means of escape.”
The Morality of Taxation as discussed in the book of Fr. Dennis Yu is more than just a theological discourse although it very much resonates Luke 12:48 ” … much will be required of the person entrusted with much, and still more will be demanded of the person entrusted with more.”
Violation of just tax laws is a sin and requires “adequate reparation” to the common good.
The points and insights I have shared in this article are very much relevant in our quest to push for a simpler, fairer and more efficient tax system. Whether the rich will agree or not, they have to pay more taxes.
And that is the rationale behind removing excessive VAT exemptions and imposing higher excise tax on automobiles. Exemption from VAT doesn’t protect the poor, it only leads to large leakages benefiting a few as explained by the Department of Finance.
Lowering personal income tax is both urgent and necessary. It is an injustice on the part of the government to rely on the fixed income earners who are mostly earning a little more than minimum wage but are paying the same tax rate as the big corporations and less than its rich business owners.
To make it worse, most senior executives enjoy a tax shield—a tax saving scheme extended as a benefit to corporate executives, which is in the borderline of tax avoidance and evasion (for not declaring their actual income or benefits received from the company), while ordinary employees receive their relatively low salary, net of withholding taxes.
In the end if we want a genuine tax reform, we should be ready to sacrifice our old ways and practices of avoiding taxes at the expense of the common good, and render to Caesar what is Caesar’s.
This article was originally published on The Philippine Daily Inquirer.