Tax Justice and the Spirit of the Law

Justin Thacker writes: The spirit of the law matters. It seems obvious to say that but, in doing so, I’m not referring to the third person of the Trinity, I’m referring to the unwritten, uncodified aim or purpose of our legal instruments—especially as they relate to taxation. Of course, both Jesus and Paul recognised the significance of the ‘spirit’ of the law in respect of the Torah. When in the Sermon on the Mount, Jesus repeatedly said ‘You have heard that it was said, but I say unto you…’, he wasn’t replacing one law with another—he was directing us to its aim or purpose. Indeed, in Matthew the relevant section begins with Jesus’ clear affirmation that he had not come “to abolish the law” but to “fulfil” it (Matt 5:17). In setting out then how both anger and adultery are matters of the heart, as much as actions in the flesh, he was pointing out, amongst other things, the intention of the legal code.

As numerous commentators have pointed out when the Torah said “an eye for an eye” it was not a prescriptive command for what must happen, but rather a limit to what can happen – no more than an eye for an eye. In similar vein, Paul also recognises the importance of what we might call ‘the spirit of the law’. In letter after letter he tells us to look not so much at the legal code, but at what its aim or intention was. In places, this was to reveal our sin (Rom 7:7), in others it was to show our need for Christ (Galatians 2—3), and still in other places it was to provide an ethical framework which is fulfilled in love (Gal 5:14). The point, though, is that the law had a purpose which moved beyond its legal codification.

I say all this because in regard to tax justice, and in particular the issue of tax avoidance, there are some Christians who seem to think that the legal code is all that matters. In a debate in the Church Times concerning tax avoidance one correspondent wrote:

The idea of tax legislation’s having a “spirit” is pure fantasy. It is true that those who design legisla­tion have a purpose in doing so.

However, the author then continues:

There is no reason at all why citizens should endorse the purposes of bureaucrats, governments, and legislators in drafting, sponsoring, and passing legislation.

He or she goes on to equate such avoidance with legitimate “tax planning”. So what is tax avoidance and what does it have to do with the spirit of law, and how should we as Christians respond?

There are two concepts that are relevant here. The first is tax evasion—that is, illegal non-payment of taxes that are owed. We could also call that fraud. There is also however tax avoidance. According to both parliament and HMRC, tax avoidance is the intentional thwarting of the spirit or intention of tax legislation. It might not technically be illegal, but as the House of Commons library states:

Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter—but not the spirit—of the law.

Such behaviour should not be confused with tax planning—which is arranging one’s tax affairs in line with the intention of legislation. Examples could include gift aid for charities, ISAs, or pensions. Of course, we might disagree with the legislation that enables ISAs, and there are good reasons for doing so, but we are not engaged in tax avoidance if we participate in them.

The question then is how should Christians think about such behaviour? Is it our role to pay heed to the ‘intention’ of parliament, or should we, as the Church Times correspondent suggests not bother to adhere if parliament can’t manage to codify the law sufficiently?

My view is that we absolutely should adhere to the intent of parliament—and there are at least two reasons for doing so. The first relates to the notorious passage in Romans 13 where Paul tells us to be “subject to the governing authorities” (Rom 13:1). Of course, there are a number of different interpretations of precisely what Paul meant—particularly given the fact that at times the early followers of Jesus seemed not to have been entirely subject (Paul escaped from prison, the early disciples preached Christ despite being commanded not to). Nevertheless, apart from some radical Christian anarchists, the general consensus is that at we should obey the secular law for the most part, if not in its entirety.

There might be exceptions—complying with the Nazis for instance—but seeking a tax advantage for oneself gets nowhere near a legitimate reason for ignoring the secular law. In the same passage, Paul actually turns our attention to the issue of taxation:

This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honour, then honour (Rom 13:6–7).

In saying all this, Paul’s point is not that we legalistically follow the letter of the Roman or Pharisaical law, but be ‘subject’ in a much more general sense. This idea is similarly reflected in his instruction to slaves when he tells them to…

obey your earthly masters with respect and fear, and with sincerity of heart, just as you would obey Christ. Obey them not only to win their favor when their eye is on you, but as slaves of Christ, doing the will of God from your heart. Serve wholeheartedly, as if you were serving the Lord, not people” (Eph 6:6–7).

The whole sense is obedience to the spirit, not just the letter, of the law.

But the second reason why as Christians we must eschew all forms of tax avoidance is much more significant. It is simply this: tax avoidance hurts the poor. It is currently estimated that at least $8trn is sitting in tax havens—that is more than twice the amount needed to pay for the global costs of coronavirus. More importantly, let us not forget that the virus disproportionately hurts the poor. Those who are poorer tend to have more severe disease and higher death rates, those who are poorer can absorb the economic shocks of unemployment less well, those who are poorer often live in over-crowded housing with less access to green spaces. It’s relatively OK sitting in the garden of your three-bed semi, but if you’re in a tower block with a 2ft by 6ft balcony, social isolation takes on a whole new meaning. And this does not even account for the devastation that is predicted to affect the global south when the virus hits the urban slums or refugee camps.

It is also estimated that up to $400bn per year is lost to poorer countries through tax dodging by large multinational firms. By way of comparison, the total GDP of Sierra Leone per year is around $4bn. That figure of $400bn is about three times the amount that is given in aid to the global south each year, so for ever $1 we give in aid, approximately $3 leaves the global south through tax dodging, and currently now sits in those tax havens we have mentioned. No wonder that numerous aid agencies and tax justice campaigners have argued that the best way to put an end to global poverty is simply to, in the words of one African campaign, stop the bleeding, that is end the tax dodging and illicit financial flows that ravage that continent.

Here in the UK, the situation is not very much better. Official government statistics reveal that at least £35bn that should be paid in tax each year is not paid. That represents about a third of the total costs of the NHS. Some commentators suggest the tax gap is as much as £90bn per year which, if collected and spent on the NHS, would effectively double its size.

Perhaps more significantly, the currently UK tax system is fundamentally unfair. This is not the result of any single political party but has taken place piecemeal over the years as the wealthy in particular have been much better at lobbying all parties for tax concessions for themselves that leave the poorest picking up the tab. One of the problems we have is that far too often we only think of tax in terms of the headline rates of income tax which are indeed progressive (the wealthiest pay a higher rate than the poorest) but we ignore all the other taxes that affect us (national insurance, VAT, council). These disproportionately affect  the poor with the poorest households for instance paying 9% of their income in council tax while the richest pay just 1%. This means that when all taxes are taken into account, and when you allow for the growth in wealth of the richest households, the poorest pay an effective tax rate that is over 40% of their income, while the richest pay just 18%.

This is fundamentally wrong. It’s just not fair.

All of that raises the thorny question of equality, and whether or not complete economic equality should be our aim as Christians. We obviously live in an extremely unequal society. It is true that over the last ten years or so, income inequality has been relatively static but it is has been static at a very high level as, during the 80s, there was huge growth in income inequality across the UK. Wealth inequality on the other hand has simply continued its inexorable rise since the 50s, going up year on year on year. But does this matter? After all, one of our favourite hymns – All Things Bright and Beautiful– appears to even sanction some form of God-ordained inequality. The third stanza reads as follows:

The rich man in his castle,
The poor man at his gate,
God made them, high and lowly,
And ordered their estate.

Now to be fair to Cecil Alexander, who authored the hymn, it is important to spot the comma in the third line which suggests that the point is not that we are created rich and poor, but that all of us are created whether rich or poor. However, it is less obvious how we can explain the fourth line and certainly the hymn has been understood as justifying some form of God-given inequality. But is that right? Does God ordain inequality?

Of course, the resounding answer to this must be ‘no’. In the pages of Genesis we are told that the image of God is conferred on everyone. In the ancient near east, only the supreme ruler bore the image of the god(s), but not in Genesis where everyone male or female is created with the imago dei. Long before equality became the rallying cry of some, it was embedded in our anthropology in Genesis. We are all of equal worth and dignity before God. In light of this, how should we react to the inequality around us? After all, didn’t Jesus say the poor will always be with us?

I think there is a useful parallel with sin here. We all recognise that sin is inevitable, but that does not mean that it is God’s intention. A misunderstanding of this simple truth is why we so often misappropriate Jesus statement that the poor will be with us (Mark 14:7; Matt 26:11; John 12:8). In saying this, Jesus was quoting Deuteronomy 15:11 “There will always be be poor people in the land.” But what we miss is what the Deuteronomic passage goes on to say “Therefore I command you to be open-handed towards your fellow Israelites who are poor and needy in your land.” What we have here then is a both an empirical statement—‘There will always be poor people’—and an ethical imperative—‘Therefore I command you to be generous’. The inevitably of inequality is no more a prescription for passive acceptance than it is in respect of sin. None of us say, ‘sin is inevitable, so why bother doing anything about it’. Yet, for some reason that can be our attitude to inequality—one of the fruits of sin. For as numerous passages indicate our responsibility is to be open-handed, to tackle poverty or as Paul signals to us in respect of the poor in Jerusalem “the goal is equality” (2 Cor 8:14).

This Sunday (14thJune) is Tax Justice Sunday. It’s a time in the annual calendar when we can perhaps step back and consider the way in which our individual and corporate behaviour contributes or not to the common good. On our website at Church Action for Tax Justice we’ve produced a wide range of resources to help you think through these issues both biblically and practically. We have a series of studies for small groups as well as an online church service and sermon you could use this Sunday (or indeed any Sunday), or there is our two minute video which summarises why Christians should be concerned about tax justice. Whether you use these resources or not, can I encourage you to remember Paul’s words in Galatians when in considering the relevance of the law he reminded his readers of this “They only asked us to remember the poor” (Gal 2:10) for in the end that is what tax justice is all about.

Dr Justin Thacker is the national coordinator of Church Action for Tax Justice. He was formerly the academic dean and lecturer in public theology at Cliff College and continues to lecture on a freelance part-time basis at a number of theological colleges. His most recent book is Global Poverty: A Theological Guide (SCM Press)

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24 thoughts on “Tax Justice and the Spirit of the Law”

  1. It is interesting to ask believers who sometimes have strong views on this—and usually only ever pay direct tax under PAYE—if at the end of the tax year they offer to send more to the government. “So you only ever pay the minimum possible then?” The answer is always either a puzzled, or a sheepish yes.

  2. Colin, I don’t see the relevance of your comment. If you see an item on sale for less than it is clearly worth, do you always offer to pay more than the sale price? That’s also not relevant to this piece, but we can all come up with silly examples to detract from challenging words.
    Not paying extra tax at the end of the year is not a matter of tax evasion or avoidance so don’t let’s dilute this highly relevant argument about the impact of tax issues on the poorest.

    • Hi Chris,
      I am sorry you did not see the relevance of my comment. All my staff work from home (even before Covid-19) and it is possible under HMRC rules to reclaim a range of allowances, and also permits the staff member to charge the company rent thus allowing the company to pay less through PAYE—and thus less tax is paid by all. Should we do this? It is legal.

      But is it in the ‘spirit’ of the law. How do I judge that? Why did HMRC include this if they did not want people to do it? We started doing it, but I eventually stopped and thus we all paid more tax than the minimum.

      But is it right for me to choose to channel more money to the State—and away from the families of my staff? People on the receiving end of PAYE generally do no have to make these decisions. They simply pay what HMRC calculate which is fixed by legislation and de facto the minmum amount.


      • Hi colin. I think the issue of when its ok to reduce your tax bill or not simply relates to whether it was the intention of the relevant policy / legislation. If in doubt, just check with HMRC, but in my experience the relevant policy guides are clear enough.

      • Is it not rather the appropriate, correct amount based on the relevant legislation rather than the ‘minimum’?

        In the particular example you give, I do find it rather odd that someone working from home, as I am at the moment, can charge their employer ‘rent’ presumably for working in their own home instead of office space. Given that they are living there anyway regardless of work, I would have thought other costs such as additional heating and electricity would be more legitimate (though then how one would work out ‘additional’ may be complicated). Currently as a public servant working at home I cannot claim any additional incurred costs as so far the argument has been that we’re saving on commuting costs, so tough.


        • Hi Peter,

          The tax amount is the minimum and the maximum. The law does not allow the HMRC to extract more than the minimum you must pay or the maximum they are allowed to take. You see my point I hope?

          And the HMRC guidance – which you (or me) might think “odd” – is the guidance. Those involved in the complex world of self-assessment tax have to make a judgement on these things which is now seemingly being counter-judged by the Inland Revenue – and others. Thus Christians with muddled thinking often consider any attempt by somebody looking to minimise their tax under that regime – even though they employ the same principles as those on PAYE – as ‘immoral.’

          It is interesting that so many of my Christian friends want tax increasing – I assume they have a moral integrity and do not mean just for everybody else. In effect, they want more of their hard earned money transferred to the secular State for the them to spend as they choose on their secular agenda. There are literally hundreds of charities spending each pound for the poor and needy to great effect in our country. I have been closely involved with one. Why not send their proposed extra taxation direct to this third sector?

  3. Well I never, Tax Justice Sunday!
    This is no longer a question of local (national) proportions, but of a global, and multi- national, corporate, dimension and of investments and ethics.
    How far does mammon posses us?
    Notwithstanding the emphasis in the article of, spirit, purpose, I’m unsure if I’ve missed any setting out of the purposes of any taxation at all? Is it only or primarily for relief of poverty?
    What were the purposes of Temple taxes of tithes and offerings, of St Paul’s exortations for collections?
    How far does mammon, materialism posses us?

    • Thanks for the comment Geoff. I think taxation has a number of purposes including reducing inequality (ie. redistrbuting wealth from richest to poorest), supporting public service provision and fostering democracy (tax payers are more likely to vote). The purpose of the temple tax and roman taxes were arguably exploitative, and so if Paul indicates they should have been paid how much more should we pay our own today

    • Hi Geoff,

      Indeed. The Guardian reports that “the top 1% of all adults accounted for well over a third of income tax and the people who pay no income tax has risen from 24% of the total in 2007-08 to 30% currently.” This, in the main, has been under Conservative governments. And this does not account for the fact that higher earners also pay much more in indirect tax. I am not suggesting this is wrong. But does high tax equal “Justice.” How much more “Justice” do we want?

      • Is the consideration the absolute amount of tax paid, or the fraction of the income paid in tax? I have read that actually ordinary people pay a higher proportion of their income in all taxes than the wealthy. Even if you consider earned income, remember that National Insurance means that the marginal rate for those in the low to middle income range is 32%, but employee NI itself falls to 2% above the upper threshold.

        A separate question relates to the justice and morality of a society where the level of income for a small proportion is so high that they are paying such a large proportion of the tax. That difference cannot in any realistic way reflect the contribution of the those individuals to the common good.

        • Hi David,

          Yes that is a good point. But the blog I think is about people minimising the tax they pay by using to the full HMRC allowances that some might think are not in the ‘spirit’ of the regulations. I think it is a slippery slope to suggest the law says one thing but might have another meaning lying beneath (or indeed above!) that.

      • Hi colin,
        Higher earners only pay more if you look at the absolute amount of tax paid. As I point out in the article, as a proportion of income they pay much lower rates than the poorest. It is true that the top 1% pay 28% of all income tax, but that is surely a cause for embarassment as it reveals how staggeringly high their salaries are. As a proportion of their income they pay less than the poorest.

        • Hi Justin,

          As the Guardian points out the lowest 30% of earners do not pay direct taxation at all. To get to your calculation you include indirect taxation (you mention Council tax). Lower earners also pay a higher proportion of their income on food clothes and heating.

          You say such disparity is “fundamentally wrong.” It is a view that is possible to take from scripture (I do not) but have we a mandate to advocate that position for the multi-cultural secular state? Surely it is a Marxist/Communist ideology that has produced poverty in any state where it has been practised – and was quickly abandoned by the early pilgrim fathers in the USA.

          Those that advocated voting for the British Labour Party in the last election certainly seemed to want a Marxist government but fortunately – to my mind – they were decisively rejected.

          • Thanks Colin. Our choice is not between marxism or the status quo. Our choice is between the status quo and a better, more effective, fairer tax regime. If you want a concrete example, look at the Nordic countries which collect more tax on a more equal basis but can hardly be considered marxist. As a result they have much more income and wealth equality than ourselves. And if we say marxism caused poverty – which it did – then so does hyper capitalism. The US has the most neoliberal economy and some of the worst death, poverty and education statistics of industrialised countries. Poverty is rife there. It is just hidden by per capita gdp because at the other end of the spectrum is has extraordinary wealth. A country with a single individual earning 99% of the income could have a good per capita gdp, but have 99% of its population in absolute poverty.

  4. Respectfully, this article seems to be more a study in cultural Marxism than in the Scripture. There is nothing “just” about tax. If God wanted us to have taxes, He would have put them in the Garden of Eden, or in heaven itself. His perfect and just world does not have taxes – it is only because of the sinfulness of man that we extort, steal, and covet what our neighbours have. This article describes the results of taxes without exploring the unjust nature of taxation itself. All the things that taxes pay for can be paid for voluntarily, without government getting in the way. (One could argue that taxes don’t help the poor – it just keeps them in cycles of dependence and poverty). The Ten Commandments are clear that we shouldn’t steal and shouldn’t covet. The nature of those commandments is that our possessions will be unequal – so inequality of resource is biblical. Of course, we as Christians should pay our taxes and submit to the government. But we shouldn’t promote paying taxes or ever seek their increase. To avoid unnecessary tax is to have more resources to promote the kingdom of God. Jesus said we can only serve one master. We must choose to promote the Kingdom of God rather than the kingdoms of this world.

    • Whenever anyone uses the phrase ‘cultural marxism’ my alarm bells ring. It has been called, not unfairly I think, a uniting theory for rightwingers who love to play the victim.

    • ” If God wanted us to have taxes, He would have put them in the Garden of Eden.”

      I don’t follow this…. I’m surrounded (and was kept alive) by things not found in Eden. Presumably (and, really, no offence meant) Do you wear clothes?

  5. Have I missed something: when did Paul escape from prison? Or was that when he was let down from the wall when hearing of the threat to kill him?

    And a tax hurrah (I like to find an excuse for this) to Blackwells Bookshop in Oxford who will send your books post free in the UK, in good time and, of course, pay their tax dues unlike a certain international company run by the wealthiest man in the world.

    • Finding ways to avoid doing business with *that company* does seem like a practical way we might respond to this call for justice? Ironically, the link to Justin’s book in his bio above takes you straight to the Amazon website, though its available at a similar cost from SCM. I wonder if Ian’s considered what he links to across the site?

  6. I do hope you don’t mind…. I’ve shared it on Facebook… I thought it was an excellent article. my father was an accountant and reading the first part of your article made me think of all the work he’d do leading up to April 6… a form of legal fiddling….. a most excellent article… when my husband and we’re first converted we stated to tithe, we were self employed and he offered to do our books for free, once he saw that we tithed he gave us an enormous row, waste of money etc……. (yet by a “strange coincidence” our work almost doubled!!) he couldn’t see that!! we took the books away and paid for an accountant ho minded his own business!!!! . So much of small dealings are done “cash in hand” that of course never ever goes through the books. A friend of ours needed major structural work on her house she got in estimates, one was a good couple of £100 cheaper, she asked my husband what she sHould do…he told her…what do You think the Lord would have you do? She went for the proper invoiced one…. even though it cost quite a bit more…. she had a good job and eventually sold at a good price… the Lord will always honour!


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