Case 6. Payment of Taxes

Caius, a Catholic merchant, is troubled by scruples concerning the obligation of paying taxes. He tells his confessor that he declared to the officials charged with assessing taxes that his annual income amounted to no more than five hundred pounds sterling, although it easily amounts to seven hundred, and that consequently he pays much less than is just. Moreover, he says that he brought a large quantity of cigars from the Continent into England without paying any duty, because, while passing, he secretly placed a gold coin in the hand of the official in charge of the port, who then permitted him to pass with his luggage without difficulty. Hence it is asked:

1. How are direct and indirect taxes distinguished?

2. Does the government have a right to impose taxes?

3. Does the English government impose taxes in such a way that, before their acceptance, it has a strict right to them?

4. What is to be said concerning the case?

1. How does direct differ from indirect taxation?

Direct taxes are levied on the possessors of property, land, income above a fixed sum, and on those who succeed to property on the death of a former owner; and they are payable by them on demand. Indirect taxes are levied on certain commodities such as spirits, beer, tobacco, tea, wine, and form part of the price paid for those commodities by the consumer. At present, in England, the burden of taxation is divided almost equally between direct and indirect taxes.

2. Has the government the right to impose taxes ?

Yes, certainly; a lawful government has the right to levy taxes, for money must be raised to carry on the government of the country, to provide for its defence, to pay for the cost of education, the civil service, and so forth.

3. Does the English Government so impose taxes that before they are paid it has a strict right to them in justice?

The government has a right to impose taxes, but in doing this it must of course follow the dictates of distributive justice, so that no class of persons in the community should be unduly burdened. It has the power of putting an obligation on the consciences of its subjects so that they will be compelled under pain of sin, if the government so intends, to pay the sums imposed by taxation. Subjects may even be obliged in justice to pay the taxes imposed, and thus they may be under the obligation of making restitution, if they have failed in their duty. But although the government has the authority to impose an obligation of this kind, it does not necessarily use all its authority. Other superiors, such as parents, do not always intend to impose a strict moral obligation under pain of sin on those subject to them whenever they signify a wish that they should do something. Neither need the State employ all its authority when it imposes taxes. It may be satisfied with imposing them under the obligation of a penal law, confident of its power to secure payment without regard to the consciences of its subjects. It is at least probable that all English positive laws, including taxation, are of the nature of penal laws.¹

1 Manual of Moral Theology, vol. i, p. 127.

4. The case. Caius, a Catholic merchant, is troubled in conscience because he declared to the income tax officials that his yearly income was £500, whereas it was at least £700, and he only paid income tax on £500. Caius told a lie to the officials, who are empowered by law to put such questions, and therefore have a right to the truth. But it does not follow that he is now bound to make up what he failed to pay on the additional £200, for, as we said above, English law does not give the government a strict right to the money derived from taxation till it is paid in. Nor can we say that if this view be accepted, Caius will escape part of the obligations which he owes to his country. For Caius necessarily pays what others of his position and style of living pay in the shape of indirect taxes, as well as income tax on the best part of his income, so that it can not be said that he does not pay for the benefits he derives from the institutions of his country. His action is not to be praised or imitated, but when we are asked whether he is bound to make restitution for the past, we must answer “No.”

By generously tipping the custom-house officer at the port Caius brought from the continent a large quantity of cigars without paying duty for them. The custom-house officer sinned by taking the bribe and not doing his duty as he was bound to do by an express or at least tacit contract entered into when he accepted his office. Caius induced him to commit this sin, and therefore sinned himself by co-operating with the sin of another. Still, inasmuch as the money levied in taxes does not belong in justice to the government before it is paid in, neither Caius nor the custom-house official is bound to make restitution to the government for what it would have obtained if the officer had done his duty.