Well, we have a system in place that could be adapted and scrap everything else. National Insurance is already used to claim a fixed percentage from both businesses and individuals. Since I consider the health of the nation to be part of the responsibilities of society as a whole I don’t see why it has to be a separate claim on our pockets. The money goes into one big pot and is paid out on a need-to-be-done basis.
We all have individual National Insurance numbers. Use a P (Personal) prefix for an individual and an N (Non-personal) prefix for business, charities etc and X for everything else, eg foreign residents earning money in the UK. Banks and building society interest, stocks and shares sales – all can have tax taken before payout and passed to the government by the bank, building society, stockbroker etc; employment income, including basic salary and bonuses – tax can be taken and submitted to the Government by the employers; house sales – tax on the balance between original purchase price and sale price can be taken and submitted to the government by the solicitors. All accounts and transactions must have allocated ‘N.I.’ numbers and this number must be quoted by the payer to the Government for recording by the Tax Office.
Anyone submitting a tax return simply lists all income for the year and how much tax they’ve paid at source and submits payment for what has not already been paid. The figure already paid is compared to what is recorded under the ‘N.I.’ number and the new payment recorded. There’s no working out what tax band applies, no fiddling to bring the amount down to the lowest possible tax band – one percentage for everyone. Tax inspectors should find their work easier when investigating suspect returns and carrying out random checks.
The more tax is taken ‘at source’ the less chance for individuals to ‘fiddle’. One percentage means sources don’t need to know whether their employees pay a particular rate or are eligible for certain subsidies in order to calculate what they should pay; one percentage fits all, leaves no room for argument or misinterpretation and is easy to change annually when the ‘Budget’ is decided.
What percentage? I’ve no idea; one of those things better minds than mine would need to work out!
Oh, and in case anyone is wondering, no – if you make a loss instead of a profit you don’t get tax handed back. Tough!
I’d like to re-iterate here that income tax should be the only tax. If we need money to keep us going, we all contribute. Keep it separate from anything else so we always know where we stand.
If social engineering is required e.g. a company violates regulations and causes an environmental disaster, the company is prosecuted and not only has to pay to put the problem right but also has to pay a ‘social penalty’. Remedial work and penalties should both be paid from their profits i.e. after they have paid their income tax – which is a separate issue.
Policing and administration of prosecutions should be covered from the ‘N.I.’ pot as this comes under law-enforcement but the social penalty should be paid to a separate fund. That fund to be kept in case any firm does something so awful that it goes out of business without being able to pay for correcting the problem and does not have insurance to cover it.
As another example, if it was decided that a penalty on petrol use was needed as social engineering the money should also go the Penalty Pot. As petrol is so damaging, perhaps the pot could also be used to fund research into alternative fuel sources.
Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts
Sunday, 14 March 2010
Saturday, 13 March 2010
5 Tax changes - an idea?
One fixed percentage of all income seems the fairest. Higher earners may pay more in actual money but are still only being inconvenienced at the same rate as the lower earners, yet are reaping rewards for their work by a better standard of living than others, and inclusion in our society. However, there’s no reason why those at the lower end of the pay scale shouldn’t be inconvenienced to the same extent; they will also be benefiting from society and it gives a feeling of inclusion and shared responsibility, of ‘doing my part’. So it’s fair.
Let’s spell this out. I mean every individual, company, institution, charity etc pays a specified percentage of income from whatever source. No exceptions whatsoever.
What are the benefits of one tax only? ...how long have you got?!
First and foremost is that whole fairness issue. It’s fair, and we know everyone else is in the same boat, so we can see it’s fair. It’s simple…if you earn it, you pay it. If there’s not enough money in the pot, the percentage is adjusted up accordingly, and if - dare I say it? - there’s too much, the percentage can go down! .
No teams of accountants/lawyers/politicians sitting down – and being paid - to work out the pros and cons of increasing/decreasing various sources and the possible side-effects. No complicated Budgets that have to be explained and then complained about/apologised for when they turn out to have an unreasonable burden on a particular section, or sections, of society.
Whole departments in the Tax Office can be dispensed with. There would little need for most of these people to lose their jobs in the short term. They could be re-trained in administrative roles and transferred to immigration. By the time they’ve reduced the lists there should have been enough natural wastage not to cause too many redundancies. In the long run the cost of their salaries and pensions would be vastly reduced and we would lose the cost of the buildings etc, relieving the tax burden on society even further.
Businesses wouldn’t have to employ large numbers of people to interpret and implement the Tax Laws. The self-employed wouldn’t have to pay Accountants to work out their tax liability. The employed wouldn’t feel frustrated at having to pay full whack for e.g. a wardrobe, that a self-employed person can get tax relief on by asking the sales-assistant to describe it as a ‘cabinet’ on the invoice! Everyone would spend less energy looking for ways to reduce how much tax they pay and spend more time and money investing in their business and resources.
As businesses invest and grow, they will expand and employ more people, who can afford to buy whatever society produces and the country prospers. Likewise, new businesses can concentrate on getting off the ground instead of paperwork.
The ordinary Joe-on-the-Street has tax deducted from his wages by his employer before he even gets the money in his hand. He then has to live on what’s left, providing food, shelter, heating, caring for dependents etc. Companies and the self-employed can deduct their raw materials (food), premises (shelter), heating, paying employees (dependents) from their income before they are taxed! Why can’t Joe pay for his living expenses before he has to start paying tax? No…it still leaves the whole question of what is a valid tax deduction and what isn’t. Surely it’s better for companies and the self-employed and the employed to pay their taxes based on their income?
It also seems to me that the simpler a system is the harder it must be to find loopholes or ‘work’ (‘fiddle’?) the system.
Why should any one section of society be exempt from paying tax? For example, charities and religious bodies can be tax free. What a can of worms! Firstly there’s the question of what is a ‘valid’ charity or religion? I’m sure there are lots of different views on this! Then there’s the question of who’s going to make up the shortfall? If a charity invests money in a savings account, that money is effectively taken out of the economy for taxation purposes. Those who don’t agree that a particular cause is worthy, end up having to contribute by default because more tax has to be paid by everyone else to make up for that cause’s tax-relief benefits.
Society’s infrastructure has to be paid for regardless of who pays. If one section doesn’t pay then everyone else has to make up the shortfall. How is that fair?
Taxes are to cover transport, communication, education, defence and so on. Whether we are old, or young, married or single, a private individual or a business, charity or church, we all benefit from these things and no one person or organisation should be exempt.
Is one tax for all Impossible? Is it Impractical? Maybe! But let’s explore it as a starting point and build up a workable solution.
Let’s spell this out. I mean every individual, company, institution, charity etc pays a specified percentage of income from whatever source. No exceptions whatsoever.
What are the benefits of one tax only? ...how long have you got?!
First and foremost is that whole fairness issue. It’s fair, and we know everyone else is in the same boat, so we can see it’s fair. It’s simple…if you earn it, you pay it. If there’s not enough money in the pot, the percentage is adjusted up accordingly, and if - dare I say it? - there’s too much, the percentage can go down! .
No teams of accountants/lawyers/politicians sitting down – and being paid - to work out the pros and cons of increasing/decreasing various sources and the possible side-effects. No complicated Budgets that have to be explained and then complained about/apologised for when they turn out to have an unreasonable burden on a particular section, or sections, of society.
Whole departments in the Tax Office can be dispensed with. There would little need for most of these people to lose their jobs in the short term. They could be re-trained in administrative roles and transferred to immigration. By the time they’ve reduced the lists there should have been enough natural wastage not to cause too many redundancies. In the long run the cost of their salaries and pensions would be vastly reduced and we would lose the cost of the buildings etc, relieving the tax burden on society even further.
Businesses wouldn’t have to employ large numbers of people to interpret and implement the Tax Laws. The self-employed wouldn’t have to pay Accountants to work out their tax liability. The employed wouldn’t feel frustrated at having to pay full whack for e.g. a wardrobe, that a self-employed person can get tax relief on by asking the sales-assistant to describe it as a ‘cabinet’ on the invoice! Everyone would spend less energy looking for ways to reduce how much tax they pay and spend more time and money investing in their business and resources.
As businesses invest and grow, they will expand and employ more people, who can afford to buy whatever society produces and the country prospers. Likewise, new businesses can concentrate on getting off the ground instead of paperwork.
The ordinary Joe-on-the-Street has tax deducted from his wages by his employer before he even gets the money in his hand. He then has to live on what’s left, providing food, shelter, heating, caring for dependents etc. Companies and the self-employed can deduct their raw materials (food), premises (shelter), heating, paying employees (dependents) from their income before they are taxed! Why can’t Joe pay for his living expenses before he has to start paying tax? No…it still leaves the whole question of what is a valid tax deduction and what isn’t. Surely it’s better for companies and the self-employed and the employed to pay their taxes based on their income?
It also seems to me that the simpler a system is the harder it must be to find loopholes or ‘work’ (‘fiddle’?) the system.
Why should any one section of society be exempt from paying tax? For example, charities and religious bodies can be tax free. What a can of worms! Firstly there’s the question of what is a ‘valid’ charity or religion? I’m sure there are lots of different views on this! Then there’s the question of who’s going to make up the shortfall? If a charity invests money in a savings account, that money is effectively taken out of the economy for taxation purposes. Those who don’t agree that a particular cause is worthy, end up having to contribute by default because more tax has to be paid by everyone else to make up for that cause’s tax-relief benefits.
Society’s infrastructure has to be paid for regardless of who pays. If one section doesn’t pay then everyone else has to make up the shortfall. How is that fair?
Taxes are to cover transport, communication, education, defence and so on. Whether we are old, or young, married or single, a private individual or a business, charity or church, we all benefit from these things and no one person or organisation should be exempt.
Is one tax for all Impossible? Is it Impractical? Maybe! But let’s explore it as a starting point and build up a workable solution.
4 Taxation - do we need it and is it currently fair?
Money governs every aspect of society; taxation is the tool we use to raise money. Do we have to have taxation? Yes, of course we do. There are certain areas of our society that we have responsibility for as a group if we want to survive; transport, communication, education, defence and so on. Our way of getting these things done is by payment. Everyone pays something towards the pot to keep our infrastructure in place - taxation.
Understanding that we have to have taxes, now we have to work out a fair system of collection. I think our system has become complicated over time as society has evolved. There are numerous taxes, direct, indirect and hidden, and it seems to me that whatever way you look at it, some unfortunate section of society ends up paying more than the rest. If it’s not fair it will generate ill-feeling, resentment and eventually, social disorder.
My thought is that it’s only fair if it’s seen to be fair and it can only be seen to be fair if it’s simple.
• Is it currently fair? Not to my mind. Is it fair that someone living in one part of the country should receive benefits that someone elsewhere in the country isn’t, when they are paying taxes for the same services? Of course not!
• Can it currently be seen to be fair? Again, not to my mind. Some people are eligible for tax relief, others aren’t. Can we see who these people are, why they are eligible for relief and be sure we’re not paying more than our share? No!
• Is it simple? Guess what – not to my mind!
So, what do I think would be fair? Well, put at its very basic, purely from a fairness point of view and accepting that nothing in this life is completely fair for everyone I would say…
…we should pay on the basis that we are all inconvenienced to the same degree.
Paying a set amount is clearly not fair. £10 a week, for example, out of the pocket of a pensioner could be life threatening if it meant they couldn’t eat or keep warm. £10 a week out of the pocket of a millionaire simply wouldn’t be noticed.
But is paying according to a scale – a higher percentage the more you earn, or paying nothing if you’re earning at the bottom of the pay-scale - any fairer? High earners lose 40% of their income. Not as life threatening as £10 for the pensioner but what incentive is there to stay in the UK and keep contributing? What incentive to work harder if the more you earn the higher the rate of tax? On the other hand, what incentive to work at all if someone else will pay for you?
Understanding that we have to have taxes, now we have to work out a fair system of collection. I think our system has become complicated over time as society has evolved. There are numerous taxes, direct, indirect and hidden, and it seems to me that whatever way you look at it, some unfortunate section of society ends up paying more than the rest. If it’s not fair it will generate ill-feeling, resentment and eventually, social disorder.
My thought is that it’s only fair if it’s seen to be fair and it can only be seen to be fair if it’s simple.
• Is it currently fair? Not to my mind. Is it fair that someone living in one part of the country should receive benefits that someone elsewhere in the country isn’t, when they are paying taxes for the same services? Of course not!
• Can it currently be seen to be fair? Again, not to my mind. Some people are eligible for tax relief, others aren’t. Can we see who these people are, why they are eligible for relief and be sure we’re not paying more than our share? No!
• Is it simple? Guess what – not to my mind!
So, what do I think would be fair? Well, put at its very basic, purely from a fairness point of view and accepting that nothing in this life is completely fair for everyone I would say…
…we should pay on the basis that we are all inconvenienced to the same degree.
Paying a set amount is clearly not fair. £10 a week, for example, out of the pocket of a pensioner could be life threatening if it meant they couldn’t eat or keep warm. £10 a week out of the pocket of a millionaire simply wouldn’t be noticed.
But is paying according to a scale – a higher percentage the more you earn, or paying nothing if you’re earning at the bottom of the pay-scale - any fairer? High earners lose 40% of their income. Not as life threatening as £10 for the pensioner but what incentive is there to stay in the UK and keep contributing? What incentive to work harder if the more you earn the higher the rate of tax? On the other hand, what incentive to work at all if someone else will pay for you?
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