Tax Policy, Financial Literacy and Education

Comment regarding the guiding principle of ‘simplicity’ on page 20, Tax Consultation Paper 114

It is important to clearly describe the difference between:
‘simplicity for the benefits administrators’ (i.e. implementability) and
‘simplicity for tax payers’ (i.e. transparency).

Implementability must  be considered as a limiting factor.  However transparency is a complex and very important principle for many reasons.  It is not about the numbers being simple.  It is about individuals properly understanding the numbers.  The numbers can actually be quite complicated if they make sense graphically.

An individual wants to know three things about their own income:
1. How much tax will I pay if I earn/receive different amounts of money?
(This can be shown with a graph.  There should also be a graph for the amount of money which they will get for different income levels given effects of national insurance and benefits.  There also needs to be a clear logical statement which would allow people to reconstruct the graph if they didn’t have it)
2. What is the %tax I pay as I earn different amounts of money?
(I.e. if my income goes up by £2k a year what proportion of that will I see?)
3. What are the implications of proposed tax changes for my income?

Here are two examples of graph 2 – overlaid to compare policy:

Here is an example of graph 3:

Health warning.  I am not confident these graphs are correct even though I have a degree in maths and management and have tried hard to research this topic.  Hence the need for this policy focus!

(Sincere apologies to readers for the current malfunctioning of the graphs. Please don't hesitate to contact me if you'd like the originals through a different route.  I'll try to fix this problem when I get time.).

Beyond understanding their own income people want to know how their graphs differ from other people and why those differences exist.  It should be possible to rapidly overlay the graphs of people in different 

circumstances and to clearly see and comment on the different.  At present it isn’t. 

When tax is considered in this way things like earnings from investments, income from inheritance tax and so on are considered as part of the income of the individual receiving them.  It may be that only a proportion or an amount after a threshold of these should be considered.  If so this should be openly and transparently discussed.

This policy principle should be clearly linked to the introduction of the teaching of financial literacy into schools.

One of the drawbacks of the £10k threshold is that it means that many young people will not pay tax and will therefore not learn to cope confidently with the tax system.  One thing we could do to address this would be to say that from the ages of 16-25 you pay 10% tax on your income if you are still living at home (expense on education could be deductable?).  The purpose of this would be to actively link the teaching of financial literacy training all our young people to engage with the tax system and their state.  If they engage actively at this age they will not forget that experience.

We should not forget the Jimmy Carr case.  Lots of honest tax-payers pointed the finger.  We pay our fair share and so should you.  Most people want to be honest tax-payers who pay their fair share.   The kind of thinking I’m describing would make it very clear to all what everyone’s fair share was and therefore it would be blindingly obvious to the individuals concerned and those scrutinising them whether they were tax avoiding or not.  There will always be some people who seek to tax avoid at all costs but they are actually few and far between.  There are a heck of a lot of people who will tax avoid if they think it’s the done thing and are unaware of what they should be doing.  We should not neglect to capitalise on the things which peer pressure can achieve that complex legislation never has.

About the contributor:

Rebecca Hanson is a lecturer in mathematics education.  She became a mathematics teacher not because she loves maths but because she loves people and is inspired by the positive changes in them when they become confident mathematicians.  She is on the committee of the LDEA and will be standing for election to Cumbria County Council in May.

She became involved in this consultation by taking part in the session run by Lisa Smart at NW conference and then in the session run by Jeremy Hargreaves in Brighton.

Letter to Graham Stuart MP 12 March 2013

The Rt. Hon. Graham Stuart MP
Chair of the Education Select Committee

                                                                            12^th March 2013

Dear Graham,

As you prepare for your discussions with Michael Gove tomorrow you might find the insights contained in this letter useful.  I’m a specialist in online discussion forums (I run workshops and give advice on how to make them work well and I’m an FRSA researching and writing on mass online discussion and 21^st century enlightenment). I’m also a lecturer in education and have particular expertise in education discussion forums.

You may remember that I first contacted you in the early days of this government during the Ofsted enquiry because I had been trying to explore positive ways forward for Ofsted on the TES discussion forum.  I had been very shocked to find that when I did this I was immediately subjected to severe cyberbullying, the systematic deletion of my posts, other inappropriate moderator intervention and substantial personal attacks which went beyond that forum and were clearly designed to discredit me so to a level where my opinion would be meaningless.  I was concerned that your enquiry would struggle to reach the quality of conclusion it should have attained as constructive debate appeared to be being actively prevented.  My MP, Tony Cunningham, persuaded you to view some of the issues on the forum with him.  TES rejected my offers to help them improve their discussion forums and have instead chosen to threaten me with legal action and ban me from their sites.

You may also remember that I raised specific concerns about Ofsted at the Westminster Education Forum you spoke at after that review.  You advised me to speak to the Ofsted directorate about these issues.  Richard Brooks (the director present) readily accepted this request in  public, however his attitude was completely different when I followed this up.  I found that there was no place where I could have intelligent discussion about the future of Ofsted.  

In response to this I started to work hard on developing small education discussion forums which were run by individuals for the purpose of free speech.  The first major progress was made on linkedin.com where there are many such forums and there is no anonymity.  It was, for example, possible to systematically explore the intellectual foundations and the practical rationale for Michael Gove’s reforms and to discover that they were not robust.  Eventually it became possible to transfer this quality of discussion onto a forum where anonymity was allowed.  That forum was the ‘Local Schools Network’ which is lightly and impartially moderated by four labour campaigners. 

It was interesting to see key characters around Gove participating in this forum.  They simply couldn’t cope with the quality of discussion and found their ignorance exposed by the high quality participants and impartial moderation.   

During Easter Recess last year a new character suddenly appeared on the Local Schools Network forum under the pseudonym of ‘Ricky Tarr’.  Ricky Tarr could access any information on education at lightning speed.  He always knew Michael Gove’s views precisely and thought them entirely rational.  He never had to qualify his descriptions of them with caveats such as ‘I think’ he means.  This was a very different behaviour pattern to all other posters.  Despite careful observation I never found any reason to suspect that this was anyone other than Michael Gove.  We chatted at length for many months before he posted that he somebody called ‘Rick’ from the DFE and disappeared.  His posts were at first abusive and derogatory but they rapidly improved because on a properly moderated forum such behaviour only discredits the poster.  Here is a link to just one of the many conversations I and others had with ‘Ricky Tarr’ on the Local Schools Network. 

I was eventually able to properly explore the issues associated with Ofsted in the properly moderated forums and, together with expert regulators from outside education and the Liberal Democrats, have been able to develop the policy insights I’d been unable to attain while conversation was prevented.  

It became much more difficult to ‘manage’ cyberspace during 2011, the year of the Arab Spring.  This happened because ordinary people became hyperconnected and were able to converse in real time through multiple devices.  They also became empowered with platforms which enabled them to set up and moderate their own discussions. 

The world is changing very rapidly.  At present I can’t see it changing in favour of those who wish to control the thoughts and views of others.  We seem, thankfully, to be moving rapidly in the other direction.  We need to prepare to positively manage the consequences of this.  In state education there is further to move than in many areas of society.

I hope this letter is of some use to you and you committee.  Please don’t hesitate to contact me if you have any further questions or if I can help you in any other way.

Yours sincerely,

Rebecca Hanson  MA(cantab.), MEd, FRSA