Reforming UK Tax System
Discussion
98elise said:
Child thing is always a red herring. All things being equal everyone will
1. Draw from the state as a child
2. Give to the State as a working adult
3. Draw from the state as a pensioner.
Its a zero sum game. You will contribute and take for one person your whole life, it doesn't matter how many kids someone else has, as those kids will take and contribute by the same amount as you.
Unfortunately, we have a whole swathe of the population that have '2) Draw from the state as an adult' as a lifestyle choice.1. Draw from the state as a child
2. Give to the State as a working adult
3. Draw from the state as a pensioner.
Its a zero sum game. You will contribute and take for one person your whole life, it doesn't matter how many kids someone else has, as those kids will take and contribute by the same amount as you.
cymtriks said:
How about:
One personal allowance for income tax
One rate of income tax above that
One fixed amount universal benefit from age 18 to the day you die
Make the tax allowance transferable between husband and wife
That's it. Nothing else. No "allowances" or extra bits, that is it.
So:
Work always pays. There is no means testing so going to work, for however many hours a week you want to, will always pay.
If you work the universal benefit is effectively a tax refund.
If you are out of work you don't need to jump through hoops to get help, the universal benefit is always the universal benefit.
No more 80 page forms for senile women to get a bit of cash and a home help for 15mins a week (yes, I helped fill them all in!)
No more complex forms for anything else, if you exist you are in the four point system
No more poverty trap built in to the benefits system, you always get the universal benefit whatever you do
No more employers administering the benefits system by doing the governments job, maternity pay and state pension are the single benefit
No more playing the system to get more benefits, the single rate is the single rate.
No more Stamp duty, VAT, IHT, or NI or any other form of tax, you just pay income tax and there is just one percentage after just one personal allowance
This man speaks sense. Simplification of the tax process would reduce the collection costs dramatically, simplification of the benefits process would lower the administration costs dramatically, two big birds, one simple stone. One personal allowance for income tax
One rate of income tax above that
One fixed amount universal benefit from age 18 to the day you die
Make the tax allowance transferable between husband and wife
That's it. Nothing else. No "allowances" or extra bits, that is it.
So:
Work always pays. There is no means testing so going to work, for however many hours a week you want to, will always pay.
If you work the universal benefit is effectively a tax refund.
If you are out of work you don't need to jump through hoops to get help, the universal benefit is always the universal benefit.
No more 80 page forms for senile women to get a bit of cash and a home help for 15mins a week (yes, I helped fill them all in!)
No more complex forms for anything else, if you exist you are in the four point system
No more poverty trap built in to the benefits system, you always get the universal benefit whatever you do
No more employers administering the benefits system by doing the governments job, maternity pay and state pension are the single benefit
No more playing the system to get more benefits, the single rate is the single rate.
No more Stamp duty, VAT, IHT, or NI or any other form of tax, you just pay income tax and there is just one percentage after just one personal allowance
Lower costs would mean that less tax would need to be collected, hence the base rate could theoretically be low. However, since the 'rich' would not get hammered and the Government would need to lay off loads of civil servants it could never happen. Nice to dream though.
Personally, I'd look to simplify everything even further and only have three taxes.
1. VAT.
No tax on income at all, no stamp duty, no inheritance tax, no CGT, nothing. Instead, put it all on expenditure, and have an essentials VAT level and a luxuries VAT level.
In addition to being far cheaper to administer, you also don't have to worry about how someone generates their income, as you're taxing their expenditure, not their income.
Lower paid people - who presumably already spend more of their income on essentials - will still have a lower tax burden.
A small percentage of the cost of currently administering the massively complex tax system goes into clamping down on people avoiding VAT on imports.
2. Corporation Tax.
I'd set this at a very attractive rate, but figure out a way to ensure that taxes are applied to profits generated in this country without allowing for the current weaseling out through internal transfers to tax havens and the like. If you want to do business here, we'll make it attractive, but you still have to pay your taxes in exactly the same way as a domestic SME to ensure everyone gets a fair shot at success.
3. Future Investment Fund.
We have a rapidly ageing population, coupled with political moves to dramatically curtail immigration. This suggests that we're going to become ever more desperate to increase the birth rate at a time where it's not getting any cheaper to raise kids.
You can't force people to have kids if they don't want to, but at the same time, it seems unfair to just be able to opt out of contributing to the workforce we're going to need in the future, so I'd add a couple of extra percent onto the VAT rate, but allow people who choose to raise children (whether their own or adopted/fostered) a 2% VAT discount per child up to a maximum of 5% to recognise that they're already contributing more to the future of the country.
1. VAT.
No tax on income at all, no stamp duty, no inheritance tax, no CGT, nothing. Instead, put it all on expenditure, and have an essentials VAT level and a luxuries VAT level.
In addition to being far cheaper to administer, you also don't have to worry about how someone generates their income, as you're taxing their expenditure, not their income.
Lower paid people - who presumably already spend more of their income on essentials - will still have a lower tax burden.
A small percentage of the cost of currently administering the massively complex tax system goes into clamping down on people avoiding VAT on imports.
2. Corporation Tax.
I'd set this at a very attractive rate, but figure out a way to ensure that taxes are applied to profits generated in this country without allowing for the current weaseling out through internal transfers to tax havens and the like. If you want to do business here, we'll make it attractive, but you still have to pay your taxes in exactly the same way as a domestic SME to ensure everyone gets a fair shot at success.
3. Future Investment Fund.
We have a rapidly ageing population, coupled with political moves to dramatically curtail immigration. This suggests that we're going to become ever more desperate to increase the birth rate at a time where it's not getting any cheaper to raise kids.
You can't force people to have kids if they don't want to, but at the same time, it seems unfair to just be able to opt out of contributing to the workforce we're going to need in the future, so I'd add a couple of extra percent onto the VAT rate, but allow people who choose to raise children (whether their own or adopted/fostered) a 2% VAT discount per child up to a maximum of 5% to recognise that they're already contributing more to the future of the country.
Kermit power said:
3. Future Investment Fund.
Ignoring the ludicrously impractical way you imagine this being paid for (everyone paying different VAT rates), what makes you think government can achieve investment returns higher than their borrowing costs, or even make a profit at all? And if they can't shouldn't the money go to paying down debt rather than some fanciful investment fund?fblm said:
Kermit power said:
1. VAT.
VAT raises about 100bn, so there's roughly 500bn of value added to tax.If VAT is to replace all taxes except CT (40bn) then you need to raise 600bn.
So even assuming the level of retail sales remains the same (?!) you need VAT at roughly 120%
Quite apart from the fact that you should get significant savings from only administering one tax rather than dozens, just how much more accountable do you think we'd force the government to become if they couldn't hide just how much the bend us over and rape us for across all those different taxes and duties?
Just take a look at what you're paying over the course of the year. Add in income tax, NI, VAT, fuel & alcohol duty, CGT, inheritance tax, community charge (is it still called that?), car tax, insurance tax, airport tax, benefits in kind and on and on and on... The only reason you think 120% on VAT is odd is because you've not added up just how much you're already paying at the moment!
fblm said:
Kermit power said:
3. Future Investment Fund.
Ignoring the ludicrously impractical way you imagine this being paid for (everyone paying different VAT rates), what makes you think government can achieve investment returns higher than their borrowing costs, or even make a profit at all? And if they can't shouldn't the money go to paying down debt rather than some fanciful investment fund?The point I was trying to make is that when will always need more children being born, and at the rate the population is currently ageing, that's going to become more and more acute until the Baby Boomer bubble dies off, so why is it fair that only the parents of those children should bear the cost of raising them until such time as they're able to contribute to society?
If you choose not to have children yourself, that's fair enough, but somebody needs to be having them, or we're all going to be completely f
ked when we're too old to keep the country running ourselves. Would you really fancy an Octagenerian with arthritis and a bit of dementia carrying out your heart bypass because there's nobody younger qualified to do it? Obviously those who choose not to have kids aren't going to be popping round to the houses of those who do to stock their cupboards with food and clothing, so why not have a system whereby they contribute a bit more fairly through taxation?OK, it might not be the easiest system to manage right now whilst some people still use cash, but how long until that dies out and everything's on cards? At that point, it becomes pretty simple to manage.
Having said that, thinking about it a bit more, maybe it would be easier to just have a 75% inheritance tax with no tax free allowance for people who die childless?
fblm said:
Kermit power said:
Well of course you'd have that sort of VAT rate. That's precisely the point!
Oh ok. Might be considered a little bit regressive. Works for me though. I'm in! 
Moonhawk said:
Fastchas said:
I would scrap Council Tax and introduce some kind of...I don't know, lets call it a 'Community Charge' where everyone pays the same for the councils services of Fire Service, local police, social care, libraries etc.
Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
Yep same here.Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
We probably pay the most council tax on our lane - despite using the least amount of services and only having comparable incomes to our neighbours.
Most of our neighbours also have kids - some grown up and earning, but still living at home.
But because our property has a higher theoretical and unrealised value - we have to pay more?
I'd love to see a 'community charge' introduced.
There's a lot more to it than bin collections.
oyster said:
Moonhawk said:
Fastchas said:
I would scrap Council Tax and introduce some kind of...I don't know, lets call it a 'Community Charge' where everyone pays the same for the councils services of Fire Service, local police, social care, libraries etc.
Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
Yep same here.Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
We probably pay the most council tax on our lane - despite using the least amount of services and only having comparable incomes to our neighbours.
Most of our neighbours also have kids - some grown up and earning, but still living at home.
But because our property has a higher theoretical and unrealised value - we have to pay more?
I'd love to see a 'community charge' introduced.
There's a lot more to it than bin collections.
We are all eligible to use the services - again, why does the value of your house determine what you pay for services you may or may not use?
oyster said:
How on earth can you know you are using less services than your neighbours?
You're right - I can't know absolutely - but it's likely given there are 2-3 adults plus a couple of kids living in some of these properties - whereas there are two adults living in ours.The point is however - the level of council tax you pay is not related to your use of council services. We aren't paying more because we use more of the services on offer, or that we have a higher income and thus are more able to afford it. We are paying more simply because our house is deemed to have a higher notional value - that IMO is wrong.
A community charge or even a local income tax would be a much fairer way of funding council services.
Moonhawk said:
A community charge or even a local income tax would be a much fairer way of funding council services.
How can it possibly be fair? The well off couple in the nice house are not forced to pay more than the council house dwelling scum bags with hoards of kids that run riot, causing mayhem that requires constant Police attention, Social Workers, special schooling etc etc etc. Hmm, how is that "fair"?Just look at the stink that was kicked up by the few that suddenly realised that they may actually have to contribute something the last time this was tried.
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