Tax has a bad name. A 'taxing' exam will be a hard one that is likely to cause a lot of stress. If you 'tax someone's patience', you are being pretty annoying. And whenever the amount of tax people pay is discussed in the news, it is invariably referred to as 'the tax burden', suggesting something heavy that slows us down. But tax is inescapable, and necessary.

Tax is at the heart of many debates; so it should be. It makes a difference to what sort of country we live in, and what sort of country we want to live in. We need to understand what tax is, what it is for and how it works, before we can decide how much we should be made to pay.

Tax is at the same time incredibly complex and very simple. The 'tax code', which lays down the government rules on tax, runs to hundreds of pages. Accountants up and down the country are paid large sums of money to make sense of the rules for their clients, all the way from doing the books for a neighbourhood cafe up to protecting the wealth of billionaires in private jets. There are many different ways of collecting tax, and many debates to be had about the pros and cons of these different kinds of tax. We will go into these in more detail in later articles. For now, let's keep it simple, and get our heads around the principles of taxation, which are in fact very simple.

What is tax?

Tax is the state's income, the money it needs to function.

Why does the state need an income?

Everyone needs an income to pay for their needs, from basics like food, heating, shelter and clothing, up to things it's possible (but not very nice) to live without, like going out and holidays. The state - in our case the UK - is no different. Except that rather than spending money on itself, the state spends its money on us, because the state exists for the benefit of its citizens - us.

What does the state spend its money on?

Protecting us: the armed forces to protect us against invasion, the fire brigade to rescue us and our property from fire, the police to protect us against crime, the prison service to keep criminals locked up.

Looking after us: state schools to educate our children, the NHS to treat us when we're sick, welfare benefits to keep us going when we can't work.

Making things work: building and maintaining roads and bridges so we can get around, collecting rubbish, looking after public spaces like parks and playgrounds.

Who pays the state its income?

We do. Sometimes as individuals, handing over part of our personal income, sometimes as businesses, handing over part of our profits.

Who decides how much the state gets paid?

The government. In a democracy, the government is chosen by the people.

So when we pay tax, we are effectively paying a fee for a service, or rather lots of services. We give money to the state to do things for us we couldn't do for ourselves, such as build roads, run schools and arrest criminals.

The services the state provides are not quite the same as services you might buy for yourself, though. To take one example: education. You can choose whether or not to have a child. If you have a child, you can choose whether or not to pay for private education for your child. But you can't choose whether or not to pay the tax which funds state schools (failing to pay tax owed is a criminal offence for which you can be sent to prison). So you could end up paying for something you don't use, either because you have no children, or because you educate your child or children privately. On the other hand, if you unexpectedly fall pregnant, or can't afford the school fees any more, you know the state schools will be there for you (and your child). Having the state provide for us means sacrificing freedom for security.

You can think of the relationship between citizens and the state, as expressed through tax, as being on a kind of sliding scale. At one end, you have the most extreme form of communism, where the state owns and provides absolutely everything, and nobody has any possessions; in effect, taxation is at 100%. You have total security (as long as the state can provide what you need) but no freedom. At the other end, you have the most extreme version of libertarianism, where everyone has to provide for themselves, not only paying for their own education and healthcare, but also having to pay for private armies to protect them. The state takes nothing from you - taxation is at 0%. You have absolute freedom, but no security. Most countries fall somewhere between these two extremes, moving back and forth on the scale as governments change their policies. Where we should be on the scale is a matter of constant debate.

How much tax should we pay?

This is, as they say, the million dollar question (or rather the £788.8 billion question, this being the amount of tax collected in the UK in 2022-23).

For higher taxes

Higher taxes are fairer, because they ensure those who are more fortunate support those who are less fortunate. They make society more equal and therefore more cohesive. They enable the state to look after people who can't look after themselves, and this is the mark of a civilised society.

Higher taxes are more effective, because they enable higher public spending, which makes everything work better. Better state schools mean a better educated workforce; a better funded NHS means a healthier workforce; a better supported police force means less crime; better maintained roads and public transport mean everyone can get around more easily. All these factors help the economy to grow, making everyone more prosperous.

For lower taxes

Lower taxes are fairer because they mean people can keep more of the money they have earned through their own efforts. They mean that people are rewarded for hard work and talent. They give people more freedom to decide how to spend their own money.

Lower taxes are more effective because they incentivise people to work hard, and to invest in and start businesses. If people can keep more of their money, they will have more to spend; if businesses can keep more of their profits, they will have more to invest. This will mean that the economy will be more dynamic and will grow faster, ensuring greater prosperity for everyone.

One important fact about tax to end with. You can't have something for nothing. You can't budget for a BMX and expect to drive a BMW. If you want public services to be better - if you want schools without leaking roofs, shorter waiting lists in the NHS and more police on the street - you need to pay more tax. If you want to pay less tax, you need to accept that there will be less to spend on public services, and they will not be as good.

How we strike the balance between public and private, between the individual and the community, is, like so many things, a matter for debate.

Motions that go with this topic

1. This house would cut income tax.
2. This house would abolish inheritance tax.
3. This house would increase inheritance tax to 100% above a threshold of £1 million.
4. This house would introduce a wealth tax.
5. This house would introduce a land tax.
6. This house would increase income tax to fund the NHS