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zero tax rate for public sector

Comment 7th July 2010

The salary of those in the public sector is paid for by tax revenue but is then in turn taxed at the standard tax rate – this results in a double handling of the money – in some cases up to 30% of an employees wages are returned simply to pay the wages of another public sector worker –this does not fit with any of the main principals of LEAN handling of cash revenue – at each stage there are inefficiencies

 

I propose reducing the tax rate in the public sector to 0% over a numbe rof years – achieved by a combination of gross pay freeze compensated by tax  rate reduction in order to provide a net income increase year on year

 

This would then provide saving due to reduced double handling  and allow a reduced inland revenue department to save costs through reduced work load and the need to handle issue e.g sending out coding notices etc to those no longer taxable

 

In addition it would provide an incentive to work in public sector while not increasing overall costs

Why does this matter?

This scheme would provide significant saving and shift focus from the notional gross pay – which reflect neither take home or cost to employers (due to NI etc ) – to the actual net pay of employee


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