A Catholic understanding of taxation requires a Catholic understanding of the role of the state.
Ruth Kelly
Member, Vatican Council for the economy.
The purpose of this contribution is not to develop this from first principles but to help us understand how we should see the current development of politics, bearing in mind the lessons of the Covid-19 pandemic. This then has implications for some aspects of how we should see the tax system developing. Following the pandemic, many people are looking to government to protect them ever more strongly in an increasingly uncertain world. Indeed, events such as the invasion of Ukraine and its consequential impact on the cost of living have reinforced this view. At the same time, many, if not most, people understand that central government cannot – and should not – control economic and social life in such a way that it becomes the default solution to all economic and social ills. Do we, as Catholics, have better answers? And, if so, what are the implications for taxation and for fiscal policy more generally?
During the Covid crisis, governments around the world, of left, right and centre, intervened in ways that would have been unthinkable before the crisis. The then Chancellor of the Exchequer, Rishi Sunak, was praised for his swift intervention at the start of the crisis, paying wages for furloughed workers and keeping businesses afloat through grants and loans. The free market in rental property was put on hold, with landlords prevented from evicting tenants who failed to pay their rent. Universal credit was raised. In general, financial caution was thrown to the wind. The result of those interventions, while they may have been sorely needed in human terms, was that deficits and debt soared. Only after major wars has government debt as a share of national income been so high.
Perhaps not surprisingly, many are using the crisis to call for a much larger role for the state, arguing that people need greater shielding from the ups and downs of life, both financially and in terms of stronger and more resilient public services. For example, the economics editor of The Guardian, Larry Elliott, has argued that:55
“The world has been fighting a war against Covid, and in wartime the power of the state always increases… Failings of the old model were exposed in the run-up to the crisis, while the benefits of a more hands-on approach have been demonstrated during the pandemic response. Unsurprisingly, there is appetite for a different way of running the economy. The reason a new variant has emerged is simple: there is a need for something stronger and more resilient than the old model.”
Conservative politician William Hague has written in The Times that government intervention was needed to deal with inequality and a range of other problems.56 Indeed, the then Johnson government had an emphasis on ‘levelling up’ with large-scale plans for infrastructure, social care and education catch-up.
Of course, we do want all citizens to have access to basic goods and services, including decent healthcare and education. And government – including central government – has a role to play in ensuring that this happens. As Gaudium et Spes (1965), one of the documents of the Second Vatican Council, puts it:
“Therefore, there must be made available to all men everything necessary for leading a life truly human, such as food, clothing, and shelter; the right to choose a state of life freely and to found a family, the right to education…” (Gaudium et Spes 26)
A right to healthcare is mentioned elsewhere in Catholic social teaching and so this can be added to the list. But the fact that government does not provide food, clothing and shelter directly should immediately raise the question of what the role of government in the economy and society should be. Although the government has a role in ensuring that all have the basics for a dignified life, the big questions that face us in public policy debates relate to the nature of that role. If we conclude that the government’s role should be less than it has been hitherto in certain areas of economic and social life, this, in turn, leads to the question of how functions currently carried out by government should be carried out and how they should be funded. This has implications for the shape and size of the tax burden.
An analysis of Covid, and later crises, reveals a certain fragility of our family lives, our communities, our local societies, our Church and other faith organisations. In short, the crisis exposed a weakened and vulnerable civil society, though it also revealed an ability to respond to need.
As we shut our doors on the world during the pandemic, the Office for National Statistics (ONS) found a substantial increase in loneliness. Within a year of the pandemic taking hold, about 3.7 million adults reported that they felt lonely “always” or “often”.57 This feeling of isolation and loneliness was not just a result of lock-down, however. It was the result of an ongoing and deeper malaise in society which was exacerbated by the pandemic and by the measures taken.
In his final book, the late Chief Rabbi Jonathan Sacks documented the rise in people living alone in an era he describes as that of “the solitary self”, without the traditional sources of support in place. In the US, for example, he noted:
There are also fewer opportunities for people to embrace the “other” through broad and diverse networks. Perhaps the best-known of the social scientists describing the fracturing of institutions that have traditionally brought people together across generations, communities and classes is the American social scientist, Robert Putnam. In his book Bowling Alone,59 he charts the decline in membership of sports teams, local charities, religious congregations, etc. This seemingly small phenomenon symbolises a significant social change which, he argues, has wreaked havoc on our physical and civic health.
Any response to the pandemic must surely involve the reinvigoration of the bonds of family, kinship and community ties; and it must recognise the role of churches and faith groups in helping people support one another during the crisis. The policy choices necessary to bring about this change of trend, including those in the area of taxation, may well be difficult.
There are some obvious reasons why this fragility has happened. We are facing an era – which started in the 1960s – in which individual desires are increasingly trumping the collective need for order, self-restraint and the common good. We are increasingly living in a world of subjectivity and value-free social mores, with an emphasis on individual autonomy. It is not unusual to hear the refrain from members of ‘Generation Z’ that he or she is ‘living their best life’. This search for self-realisation has seemingly come at the expense of a rich account of human flourishing and human fulfilment.
There is likely to be both cause and effect here, and this creates a dilemma when it comes to solutions. The breakdown of civil society and family ties increases the fiscal costs of dealing with social problems. This exacerbates the tendency for centralised solutions, financed by central government taxation, rather than local solutions being sought. It also increases the demands on public services as well as their cost. At the same time, the centralisation of government and the resultant tax burden on families ‘crowds out’ civil society and local solutions to the problems we face. The Catholic Church certainly supports a very strong role for family, civil society and lower levels of government in solving social problems and this is clear in her social encyclicals. To get to that position from where we are is, however, a huge challenge.
Catholic social teaching is clear that individuals are fundamentally social beings. Anthony Costello, an eminent doctor and anthropologist, examines the evolution of humanity from pre-social hunter gatherers to the present day. He argues that, rather than being obsessed with finding big, complicated, technological solutions to modern ills, the solutions lie not in techno-fixes but in harnessing the power of one of the oldest and simplest human units – the sympathy group.
In The Social Edge, Costello writes:
“Living in groups is our human condition. We were born to share and struggle, to care for others, be sensitive to their feelings, divvy up food, and work together on tasks. A balance between the individual and the group drove our evolution as the most successful species on earth. Survival of the fittest individual, and sibling rivalry, drives human success in many ways. But other traits determine success within and between groups: the size and cohesion of the group, the division of labour within it, the ability to communicate and to read the intention of others. Group diversity and our willingness to sacrifice personal for collective benefit create trust… Our five or so close family members also usually provide nurture, love and unconditional care. But much of our happiness and skills come from sympathy groups, gatherings of perhaps three times that number in social meetings – through the workplace, religion, farms, gardens, hunting, clans, books, sport, choirs, politics, loans, dance, games, nature, conservation, investment, hobbies, theatre and voluntary action.”60
Catholic social teaching demands the rebuilding of community and civil society. The market and the state should not be the only two institutions promoting prosperity and human flourishing. This point has been echoed by the former Chief Rabbi, Jonathan Sacks:
“The state cannot provide strong families or supportive communities. It cannot provide children with stable and responsible parents. It cannot generate the work ethic, self-control and resilience that are vital if individuals are to escape the vicious circle of poverty and unemployment and lead lives of happiness and hope. It is… not surprising, that those who are suffering from this lack of resilience are increasingly discontented with those who govern them, asking from politics and politicians a satisfaction which they could never hope to provide.”61
This dissatisfaction is mirrored in the statistics shown in the Edelman Trust Barometer. In 2020, fewer than one in five people in 28 countries agreed that ‘the system’ was working for them; half said that it was failing. This was a figure that improved slightly in the first few months of the pandemic as government seemed that it was grasping the agenda, before falling again as the pandemic wore on.62
This Catholic social teaching perspective does not deny the proper role of the market or the state. However, the signs of the times indicate that we need to rebuild society from the bottom up rather than from the top down. This has important implications both for how we conduct our politics and for policy related to taxation and government spending.
Not only is this vision of reinvigorated families and communities consonant with Catholic social teaching, it also, I would argue, resonates with the British intellectual tradition, stemming right back to the age of the Enlightenment. Indeed, Pope Benedict XVI, when Cardinal Ratzinger, made a distinction between the intellectual tendencies in the British and French Enlightenments, as have others. The British Enlightenment stands in stark contrast to the individualism and rationalism of the French Enlightenment which, in its political manifestations, led both to the raising of the rights of the individual and of the authority of the centralised state.
The late American intellectual historian Gertrude Himmelfarb argued that, in Britain, secular and religious institutions, civil society and the state, public relief and private charity complemented and co-operated with each other.63 This can be compared with the period following the French revolution when church and charity schools were abolished. Paradoxically, it was a Protestant country that developed a politics that resonated with key themes of Catholic social teaching.
It is this complementarity of state and civil society that we are at risk of losing if it is not clearly championed. A social reform agenda which reflects the richness of Catholic social teaching would incorporate family, faith and charitable groups.
This may be possible following Covid. Alongside the increase in loneliness, in anxiety and in depression – particularly among the young – during Covid, we also saw some positive and unexpected results. Fay Alberti at the University of York has argued that we might even be seeing a grassroots redefinition of what “community” means in the 21st century:
“In the UK, neighbours are looking out for vulnerable people and volunteering to offer support. University students and services are donating food and equipment to local hospitals, while urban and city dwellers alike stand outside their homes to clap every Thursday for hospital workers. Londoners are walking the dogs of people they have never met. These forms of community action are self-organised and dependent on the same social media networks that have previously been condemned as antithetical to real relationships. And they seem to be spreading, virus-like, between cities and countries.”64
The specific principle of Catholic social teaching that is often proposed when we use phrases such as ‘building from the bottom up’ is that of subsidiarity. This demands that action in the political and social spheres is taken at the lowest level possible. Central government should not usurp the role of local government; and government should not do what civil society institutions and families can do. However, that principle also indicates the nature of intervention by governments. The principle of subsidiarity demands that the government helps other institutions in society rather than takes over their role. Such help can be through finance, co-operation or simply providing a fiscal, legal and regulatory framework that enables all institutions in society to thrive.
The other principles of Catholic social teaching support the idea of ‘building from the bottom up’ too, including the principle of solidarity. As Pope John Paul II wrote in 1987:
“[S]olidarity… is not a feeling of vague compassion or shallow distress at the misfortunes of so many people, both near and far. On the contrary, it is a firm and persevering determination to commit oneself to the common good; that is to say to the good of all and of each individual, because we are all really responsible for all.” (Sollicitudo Rei Socialis 38)
This requires that we develop relational bonds within communities to support spiritual, emotional and material needs. Doing so promotes both human dignity and the common good. It is for these reasons, amongst others, that Catholic social teaching has always demanded that the state should allow – or support – the development and flourishing of a wide range of types of school, including Catholic schools. This applies to other institutions too. In what is generally regarded as the first social encyclical (Rerum Novarum, 1891), Pope Leo XIII welcomed the development of charities, societies of mutual aid, benevolent associations and employers’ and workers’
associations that would provide for the welfare of those in need.65 This has been echoed through the ages in almost every other social encyclical.
Building from the bottom up does not mean ignoring the importance of political structures. Civil society and political institutions need each other. As Pope Francis wrote in his encyclical letter Fratelli Tutti (2020):
“Every commitment inspired by the Church’s social doctrine is ‘derived from charity, which according to the teaching of Jesus is the synthesis of the entire Law (cf. Mt 22:36-40)’. This means acknowledging that ‘love, overflowing with small gestures of mutual care, is also civic and political, and it makes itself felt in every action that seeks to build a better world’. For this reason, charity finds expression not only in close and intimate relationships but also in ‘macro-relationships: social, economic and political’.” (Fratelli Tutti 181)
So, what are the lessons for practical politics – and especially for tax and fiscal policy?
This innate sense of empathy and common instinct to help each other, unleashed at times of crisis, contains lessons for politics and politicians.
Politicians need to rediscover the importance of family, of faith and of ‘place’ in politics. We all need to realise that change comes from the ground up and not the top down. This is not just a call for devolution, as is so often the case in politics, to the four nations of the UK, to Mayors and cities or to local authorities. Nor does it mean calling for a ‘small state’ which withdraws from delivering the services so many rely on. It is a call for a much deeper form of devolution. It means testing every single policy to see whether it supports and nourishes families, charities, faith groups and local communities, allowing them to take the active role that we have seen during the pandemic for which they have the capacity, or whether it undermines families, charities, faith groups and local communities.
As a politician myself, I tried to champion the kind of reforms that would promote parent-led and faith schools; that would tackle the discrimination against low-paid couples by the Working Families Tax Credit (as it was called then); and that would make communities viable for extended families. I must admit that the gains, if any, were modest. Our experience with coronavirus has changed what is possible. I believe that dealing with the problems arising from the cost-of-living crisis will also change what is necessary. Covid provided the potential for more connectedness and more community. The challenge now is for that renaissance to be sustained: by politics, by church communities and by ourselves.
This analysis is firmly grounded in the principles of Catholic social thought and teaching. The state has particular functions in promoting the common good of society. However, it must do so in such a way that the bonds of solidarity and social justice that arise within other institutions in society, including within and between families, are strengthened and not weakened.
When it comes to government spending, and hence taxation, this might mean that the state does less, spends less and taxes less, though this is by no means certain given the demographic and other challenges we face. If the effect of allowing civil society and families greater space to flourish were reduced demand for government services and welfare, there may be second-round effects too. However, the main conclusion relates not to the size of the state but to how it acts. In particular, the following are important:
In areas such as education and health, government should promote pluralism of provision and fund alternative providers in the same way that government funds its own direct provision. Government should also ensure that it does not use its role as a funder as a pretext to interfere unduly with the charism of such alternative institutions.
The above steps may seem quite tentative. However, there is a dilemma that faces governments that wish to move in the direction proposed here. It might be the case that civil society does not rise to the challenge until there are gaps in provision. At the same time, in any transition, there will be pressure to ensure we do not leave those in need without the basic services they need to thrive.
In that context, the benefits of the proper application of the principle of subsidiarity would be significant. Services currently provided by central government could be provided at a lower cost and with greater engagement with those benefiting from the services. There is likely to be more innovation and less of a ‘one-size-fits-all’ approach. Perhaps more importantly for the community at large, however, would be the renewal of a civil society and extended family culture, which will give rise to better social relationships and a happier, healthier community that flourishes more effectively on a range of different levels.
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55. L. Elliot, ‘During the pandemic, a new variant of capitalism has emerged’, The Guardian (30/7/2021).
56. William Hague, ‘The real danger is insurgency on the right’, The Times (19/7/2021).
57. Office for National Statistics, Mapping loneliness during the coronavirus pandemic (7/4/2021) accessed 29/8/2023).
58. J. Sacks, Morality: Restoring the Common Good in Divided Times (2020) p. 30.
59. R. D. Putnam, Bowling Alone: The Collapse and Revival of American Community (2014).
60. A. Costello, The Social Edge: The Power of Sympathy Groups for our Health, Wealth and Sustainable Future (2018) p. 14.
61. J. Sacks, Morality: Restoring the Common Good in Divided Times (2020) p. 126.
62. Edelman, Edelman Trust Barometer Global Report 2020, p. 12.
63. G. Himmelfarb, ‘Two Enlightenments: A Contrast in Social Ethics’, Proceedings of the British Academy, 117 (2001) pp. 297–324.
64. F. B. Alberti, ‘Coronavirus is revitalising the concept of community for the 21st century’, The Conversation (29/4/2020).
65. Pope Leo XII, Rerum Novarum (1891) 48-59.
The framing question for this reflection is whether addressing the national debt from the response to Covid-19 will require cutbacks in expenditure or increased taxation or both
The Church, from her origins, was a movement of the poor and the powerless. The fact that her founder, Jesus Christ, was born in poor circumstances necessarily made concern for the poor one of its founding commitments.
As with many other questions in Catholic social thought and teaching, a logical starting point is the work of St Thomas Aquinas.
