The Budget: What can ‘Dr No’ tell us about the challenges in designing the tax system?

The Chancellor is to present the Johnson Government’s first Budget on Wednesday (11 March). This will set out the Government’s assessment of the economy, its plans for providing public services and for raising taxes to fund those services.

After the 2019 General Election, the Institute for Government argued that the new Government’s majority gave it an opportunity for tax reform that had not been seen for 15 years.

The Institute has written to the Chancellor, alongside the Institute for Fiscal Studies and the Chartered Institute of Taxation, recommending that he take, “a strategic approach to tax policy, setting clear guiding principles and objectives.

But any Chancellor faces challenges in crafting tax changes – not least because they need to encourage people to pay them and ensure they can be collected.

This Insight outlines these challenges using a scene from Bond, a real-life portrait theft and historical approaches to tax reform.

The difficulties of collecting taxes

Let’s first turn to a scene from Dr No.

James Bond, played by Sean Connery, is on Crab Key in the Caribbean, the opulent island hideaway of villain Dr No. He notices, on a small gold easel, a portrait of Goya’s The Duke of Wellington.

In real life, this painting had been stolen from the National Gallery in August 1961 and, at the time of the film’s release, it was still missing.

The scene exposes the variety of ways that individuals can avoid paying their fair share of taxes:

  • legal tax planning (say, deciding to base oneself in a low tax jurisdiction)
  • aggressive tax avoidance (say, choosing to take your income or profits in the form of an undertaxed asset, such as Persian carpets or unrepayable loans)
  • tax evasion (say, concealing your wealth from the tax authorities on your secret island of evil).

‘Fair taxation’ protests and tax reform

In the real-life scandal inspiring the scene on Crab Key, Mr Kempton Bunton, a pensioner living in Newcastle, handed himself in to the authorities in July 1965. He confessed he was behind the theft of the portrait from the National Gallery four years earlier.

In the weeks before his admission of guilt, Mr Bunton had led an anonymous campaign against what he perceived to be an unfair tax. He demanded that a ransom be paid for the return of the painting, to be used to buy television licences for those unable to afford them.

Prior to this, Bunton had refused to pay for his own licence several times on the grounds that the flat fee was a regressive indirect tax – an unfair burden which fell most heavily on those least able to pay it.

Since the theft, there have been many examples where public concerns regarding what is ‘fair’ taxation have led to changes in tax policy.

These have ranged from public riots over the poll tax, to select committee investigations into the scale of multinational corporate tax avoidance in 2012. Protests have also taken place over more benign matters, such as minor changes to the VAT treatment of hot takeaway food in the 2012 Budget – famously christened the ‘Pasty Tax’.

Tax authorities are acutely aware of ‘tax morale’; that is the willingness of taxpayers to voluntarily comply with tax requirements. They are also aware of the risk to morale if some sections of society seemingly find it much easier than others to avoid paying tax.

‘Taxes are for everyone’

Income tax started life when the financial demands of the Napoleonic Wars threatened to bankrupt the British Government.

The Duke of Wellington’s military campaigns were then underwritten by this tax innovation, and since then the growth of the state and the development of the tax system have gone hand in hand. As Paul Johnson, Director of the Institute for Fiscal Studies, has pointed out: four out of every £10 generated in the economy is now collected in tax.

In 1790, Edmund Burke, the influential political theorist, made some prescient observations on the failure of Louis XVI to enact effective tax reform.

In his view the French Government should have taken steps to, “enlarge its collection, to cleanse it of oppression and vexation, and to establish it on the most solid footing.”

Its failure to do so represented the state’s failure and ushered in the French Revolution. Burke argued: “the revenue of the state is the state. In effect, all depends upon it, whether for support or for reformation.”

During the 2019 General Election, Chris Giles, economics editor at the Financial Times made a similar point. He said: “taxes are not for everybody else to contribute. They are for us. They enable government to create a civilised society, and one that protects us when others might do us harm.”

Seen from this perspective, the Chancellor’s challenge in this Budget is to ensure that taxes remain something that all of us pay, so that they remain something we are all willing to pay.  

Further reading:

Spring Budget 2020: Background briefing, House of Commons Library.

Key documents on taxation, House of Commons Library.

Taxation statistics: An overview, House of Commons Library.

The theft of the Duke of Wellington as an example of tax protest is mentioned in John Snape and Dominic de Cogan (eds), Landmark Cases in Revenue Law, 2019; see, “Introduction: On the significance of Revenue cases” pp.4-5.

Revealed: 1961 Goya ‘theft’ from National Gallery was a family affair, Guardian, 30 November 2012.

How Goya’s Duke of Wellington was stolen, Guardian, 5 August 2011.


About the author: Antony Seely is a researcher at the House of Commons Library specialising in taxation.


Photo: Birdcage Walk and HM Treasury by Kiril Strax. Licensed under CC BY 2.0/image cropped.