Around the World in 80 ideas

Around the World in 80 Ideas

ECONOMIC POLICY
58: Combine and cut
The role of taxpayers' associations

The problem: making the case for tax cuts

Many countries have tax rates so high that they discourage work and stagnate the economy. But how to put pressure on politicians to cut it?

The idea: get citizens together

Form a taxpayer association to show people the size of the burden they face and gain support for tax cuts.

Examples:

World Taxpayers Associations, based in Stockholm in Sweden, is a coalition of all the world's taxpayer associations - and there are many of them. Founded in 1988 to provide support and exchange information between taxpayer activists throughout the world, its 39 member (and 8 associate) organizations can be found in six continents and dozens of countries, including many in the former Soviet bloc.

Describing itself as 'a united front for lower taxes, less waste, accountable government and taxpayers rights the world over', it spreads its message at annual conferences in countries as diverse as Tanzania and Russia, Hungary and Canada, Estonia and America. It keeps up-to-date information on tax rates on income, capital, wealth, services and commodities throughout the world, and produces short briefing papers on tax reduction policies.

A sister organization, Taxpayers Associations of Europe, was established in 1969 to bring together the specifically European associations.

The taxpayers' movement grew out of the desire of ordinary citizens to protect themselves from the increasing tax demands of their governments. It works in many different ways to campaign for a society with lower taxes and more individual freedom, which it believes will stimulate economic growth and cut public-sector waste (it is right: see the chapter Soak the Rich: Cut Taxes!).

Some of these taxpayer associations throughout the world are small campaigning bodies, but others have grown into large advocacy organizations and businesses in their own right. A number employ legal counsel and have telephone hotlines so that members can get help and advice on their own tax affairs - and to many people, especially those in countries with very complicated tax systems, this is seen as a major benefit of membership. The taxpayers' association (Veronmaksajat) in Finland, for example, employs fifteen tax lawyers to help its 185,000 members - more than 3.5% of the country's population, which makes it one of the biggest citizen organizations in Finland. In addition to regular magazines and books it sends out fax and e-mail bulletins on important tax issues as they arise.

The association in Finland was founded in 1947, but others go back even further. Its equivalent in Sweden dates from 1921. Its 170,000 members make it too one of the largest public groupings in Scandinavia, and its 23 staff similarly provide tax advice to members. Australia boasts the even older is Taxpayers Australia, with 10,000 members, which was originally founded in 1919 by business leaders who wanted to see an end to the new income tax that had been created in 1915 (still some work to do there, then).

Some taxpayer associations get involved in the political process, publishing information about how various members of national or local government assemblies have voted on tax-and-spend issues, and urging the public to back them or sack them in the polls. The Oregon group, Oregon Taxpayers United even claims to have defeated state spending plans by forcing so many tax-and-spend proposals onto the general election ballot that voters have been overwhelmed and simply turned them all down. At the federal level, the National Taxpayers Union claims to have helped defeat 90% of the 50 major tax increases that have appeared on state ballots over the last five years.

Conclusion: still campaigning

The world's taxpayers association represent millions of members in dozens of countries across the world. Their campaigning pressure has been an important factor for the drive to lower taxes and balance public budgets, which is now accepted much more widely across the globe. As tax systems become ever more complex, their membership grows yet further, and it is clear that these associations, representing the views not of the super-rich but of ordinary concerned citizens, are an effective way of influencing the public debate.

For more information:

The World Taxpayers Associations web site is at www.worldtaxpayers.org. The European body is at www.taxpayers-europe.com.
The National Taxpayers' Union and NTU Foundation site www.ntu.org, or for Canada www.taxpayer.com and for Australia www.taxpayer.com.au. Oregon Taxpayers United are at www.out.org.
The Tax Freedom Day website at www.taxfreedomday.co.uk.
On the economic benefits of lower tax rates, see Howell, David, et al (1988) A Healthy Economy: Adam Smith Institute (London) www.adamsmith.org. and Neil, Andrew, et al (1986) It Pays to Cut Taxes: Adam Smith Institute (London) www.adamsmith.org.