This blog has often commented on the unlikely ways in which tax intrudes itself into the conversation. Several years ago, we asked who actually pays VAT and more recently we wondered why tax was being imposed in a way that appeared to go against the government’s most basic principles.
Now, another unlikely scenario leads us to ask whether tax is taken too much for granted.
For years, the taxpaying public has been encouraged to think (not entirely misleadingly) that tax is a good thing, because it pays for schools and hospitals. It is therefore somewhat concerning that increasingly, people are complaining that tax is used to pay a burgeoning welfare bill. Both things are true, of course, neither exclusively so. One of the reasons why hypothecated taxes are discouraged by experienced thinkers is that they distract attention from the simple truth that taxes pay for a myriad of things and none of us can choose what we are prepared to stump up for (or, more pertinently, none of us should be encouraged to think that we can choose what we are not prepared to pay towards).
For many years, until March 2026, there was a scheme under which VAT refunds could be obtained for repairs to listed places of worship. Such refunds are now not universally available and fundraisers are having to face up to higher targets than before. This has had a disastrous effect on such fundraising efforts, far beyond the apparent need to raise an additional 20%. Why? Because donors are being asked to contribute towards a VAT bill, which has no benefit for the cause (building repair) and is just a significant sum of money going directly to the government.
One can imagine the conversation:
“Please give us £20,000 to top up our appeal fund.”
“I’d love to. What is it going to be spent on?”
“Paying VAT to the government.”
“Hmmm.”
People generally accept that most things they buy in the shops or online have an amount of VAT included in the price but then they want to buy those things and can conveniently forget that they are being taxed. “Please give us some money, out of the goodness of your heart, so we can pay some tax” is a harder message to ignore, especially in a climate where the use by the government of tax revenue is coming under increasingly critical scrutiny.
