Whose revenue are they wasting?

 

It is time HMRC was made accountable. I wrote to Eric Pickles a while ago suggesting that, as well as caps on bonuses there should be mandatory penalties for not meeting basic job requirements, at least in the public sector. On that basis I suspect that HMRC is not fit for purpose and should be put into liquidation.

In the tax year 2008/2009 I had 18 PAYE Tax Coding Notices covering pension income from three sources. When, along the way, they eventually got it right,butthat did not stop them changing it so it was wrong again. I pay for telephone calls above my standing agreement unless Icall 01, 02 and 03 numbers. So, instead of using an 0845 I found one that avoided that but they objected in spite of the need to speak to them always being them getting it wrong. They eventually paid me £70 in compensation. However, the taxpayers pays for all this. If people are unemployable instead of putting them in public sector jobs and giving them handsome pensions at the tax payers' expense get them sweeping roads, clearing up litter or something else appropriate to their intellect.

Why is this idea important?

 

It is time HMRC was made accountable. I wrote to Eric Pickles a while ago suggesting that, as well as caps on bonuses there should be mandatory penalties for not meeting basic job requirements, at least in the public sector. On that basis I suspect that HMRC is not fit for purpose and should be put into liquidation.

In the tax year 2008/2009 I had 18 PAYE Tax Coding Notices covering pension income from three sources. When, along the way, they eventually got it right,butthat did not stop them changing it so it was wrong again. I pay for telephone calls above my standing agreement unless Icall 01, 02 and 03 numbers. So, instead of using an 0845 I found one that avoided that but they objected in spite of the need to speak to them always being them getting it wrong. They eventually paid me £70 in compensation. However, the taxpayers pays for all this. If people are unemployable instead of putting them in public sector jobs and giving them handsome pensions at the tax payers' expense get them sweeping roads, clearing up litter or something else appropriate to their intellect.

Allow established illegal immigrants a chance to “buy” their citizenship

There are many illegal immigrants who have entered the UK and been living invisibly and working on the black economy because they do not have official documents. I believe there should be an amnesty window, and those who are living underground as it were, could buy their citizenship by paying a very large fine for the illegal entry, which could be spread over some years like the student loan system. As someone with the status of a probationary immigrant, they would be allowed to work legally and contribute to the economy, and also pay a higher tax rate for a while to compensate for the years they could not pay tax, as we have no way of knowing or proving what they earned or how they survived during the time they were invisible.

The probationary citizen period would end when the fine was totally paid off. I would suggest the figure shoudl be around 12-15,000 per person. Once they are working legally, deductions could be made at source at a rate that is deemed managable so they do not suffer hardship, or the fine scheme be too offputting.

Why is this idea important?

There are many illegal immigrants who have entered the UK and been living invisibly and working on the black economy because they do not have official documents. I believe there should be an amnesty window, and those who are living underground as it were, could buy their citizenship by paying a very large fine for the illegal entry, which could be spread over some years like the student loan system. As someone with the status of a probationary immigrant, they would be allowed to work legally and contribute to the economy, and also pay a higher tax rate for a while to compensate for the years they could not pay tax, as we have no way of knowing or proving what they earned or how they survived during the time they were invisible.

The probationary citizen period would end when the fine was totally paid off. I would suggest the figure shoudl be around 12-15,000 per person. Once they are working legally, deductions could be made at source at a rate that is deemed managable so they do not suffer hardship, or the fine scheme be too offputting.

Revert to one PAYE Coding Notice

In prevous years I received one PAYE coding notice even though I was in receipt of more than one small pension. I do not pay tax. This year I received two coding notices as my pensions come from different tax areas, and even though none was due tax was collected from my pensions.After numerous  telephone and six coding notices I am still wating to see if the tax will be refunded or do I start the above again.  

Please bring back  "one PAYE Coding Notice uniting all income under one tax office

Why is this idea important?

In prevous years I received one PAYE coding notice even though I was in receipt of more than one small pension. I do not pay tax. This year I received two coding notices as my pensions come from different tax areas, and even though none was due tax was collected from my pensions.After numerous  telephone and six coding notices I am still wating to see if the tax will be refunded or do I start the above again.  

Please bring back  "one PAYE Coding Notice uniting all income under one tax office

Abolish Income Tax (and make Payroll costs non-deductable for Corporation Tax)

This idea starts from the premise that the proper purpose of tax is to raise revenues.  (I will return to other purposes at the end.)  On this basis, Income Tax should be abolished as it fails to raise revenue; is expensive to collect and administer; and is an obstacle to enterprise.

A consideration of a number of categories of employee will demonstrate how Income Tax fails to raise revenues:

  • Individuals employed in the Public Sector (close to half our economy): gross salaries are paid from tax receipts, and a portion then taken back immediately from the recipients.  Income tax collected from these individuals is merely a recycling of funds; payment on a net basis would eliminate complexity and administration with no loss to the exchequer.
     
  • Individuals employed by large, profitable private sector firms: across a workforce of varying earnings, gross PAYE revenues amount to approx. 20% of payroll.  Payroll expenses are a deductable expense of business, with larger companies deducting at 30% (set to reduce).  The employer is given more relief than the tax taken from the employee.  By switching to net pay, abolishing income tax and making payroll no longer a deductable expense, administrative costs and complexity would be reduced, and the total revenue to the exchequer would increase.
     
  • Individuals employed by small firms: in a company paying the smaller companies rate, the tax relief to the employer is approximately equal to the tax raised from employees.  These companies are, however, particularly impacted by administrative burdens, so would benefit greatly from abolition of Income Tax.
     
  • Individuals employed by failing firms: in a loss-making firm, without sufficient profits against which to deduct payroll costs, there is a net gain to the exchequer.  A change to net pay and zero income tax might provide considerable assistance to such firms' survival, however, by reducing their cash outgoings.  This could help many firms to survive, with overall benefits to the economy and consequently total tax take.

Abolishing Income Tax entirely would increase total tax take from larger firms; save administration costs in both public and private sector enterprises; and allow deep cuts at HMRC.  Additionally, by simplifying casual working, it would increase workforce participation.

Certain conditions would need to be met for such a policy to be workable, including:

  • A national 'Tax Free Day' would need to be announced, from which date employers would have a right to re-set employees' salaries to a net basis, and after which payroll expenses would cease to be deductable.
     
  • Appropriate treatment and adjustment of pensions in payment would be required, together with accruing right expressed on a salary-related basis.
     
  • The self employed would need to be required to convert to a simple corporate form, and become taxed under the same code as smaller companies.
     
  • Suitable transitional arrangements would need to be determined to compensate for impacts to the timing and stability of tax receipts (PAYE offers the benefit to the exchequer of being collected at a consistent rate, and hard to manipulate; which can not be said of Corporation Tax currently.)

(Note: applying a similar logic, one would also create a process whereby smaller companies (charged tax on profits at 20%) that only supply other businesses (claiming relief at 20% – 30%) could opt to supply services on a non-taxable (for supplier) and non-deductable (for customer) basis, saving both administrative costs, and increasing total tax take again.)

In closing, it is appropriate to mention the other current role of the tax system – to support social engineering goals of redistribution through 'progressive' tax rates.  I make no comment about the merits or otherwise of a redistributive policy, but would argue that given our system of personal taxation fails to raise revenues that are not recycled in public sector employment or exceeded by Corporation Tax reliefs on the same payrolls in the private sector, it is a hugely wasteful and destructive way to pursue those goals.  Other tax mechanisms – such as differential bands of VAT (the Marketing community can tell us which categories of product are consumed by different wealth strata), could achieve similar or greater redistribution at much lower cost.

Why is this idea important?

This idea starts from the premise that the proper purpose of tax is to raise revenues.  (I will return to other purposes at the end.)  On this basis, Income Tax should be abolished as it fails to raise revenue; is expensive to collect and administer; and is an obstacle to enterprise.

A consideration of a number of categories of employee will demonstrate how Income Tax fails to raise revenues:

  • Individuals employed in the Public Sector (close to half our economy): gross salaries are paid from tax receipts, and a portion then taken back immediately from the recipients.  Income tax collected from these individuals is merely a recycling of funds; payment on a net basis would eliminate complexity and administration with no loss to the exchequer.
     
  • Individuals employed by large, profitable private sector firms: across a workforce of varying earnings, gross PAYE revenues amount to approx. 20% of payroll.  Payroll expenses are a deductable expense of business, with larger companies deducting at 30% (set to reduce).  The employer is given more relief than the tax taken from the employee.  By switching to net pay, abolishing income tax and making payroll no longer a deductable expense, administrative costs and complexity would be reduced, and the total revenue to the exchequer would increase.
     
  • Individuals employed by small firms: in a company paying the smaller companies rate, the tax relief to the employer is approximately equal to the tax raised from employees.  These companies are, however, particularly impacted by administrative burdens, so would benefit greatly from abolition of Income Tax.
     
  • Individuals employed by failing firms: in a loss-making firm, without sufficient profits against which to deduct payroll costs, there is a net gain to the exchequer.  A change to net pay and zero income tax might provide considerable assistance to such firms' survival, however, by reducing their cash outgoings.  This could help many firms to survive, with overall benefits to the economy and consequently total tax take.

Abolishing Income Tax entirely would increase total tax take from larger firms; save administration costs in both public and private sector enterprises; and allow deep cuts at HMRC.  Additionally, by simplifying casual working, it would increase workforce participation.

Certain conditions would need to be met for such a policy to be workable, including:

  • A national 'Tax Free Day' would need to be announced, from which date employers would have a right to re-set employees' salaries to a net basis, and after which payroll expenses would cease to be deductable.
     
  • Appropriate treatment and adjustment of pensions in payment would be required, together with accruing right expressed on a salary-related basis.
     
  • The self employed would need to be required to convert to a simple corporate form, and become taxed under the same code as smaller companies.
     
  • Suitable transitional arrangements would need to be determined to compensate for impacts to the timing and stability of tax receipts (PAYE offers the benefit to the exchequer of being collected at a consistent rate, and hard to manipulate; which can not be said of Corporation Tax currently.)

(Note: applying a similar logic, one would also create a process whereby smaller companies (charged tax on profits at 20%) that only supply other businesses (claiming relief at 20% – 30%) could opt to supply services on a non-taxable (for supplier) and non-deductable (for customer) basis, saving both administrative costs, and increasing total tax take again.)

In closing, it is appropriate to mention the other current role of the tax system – to support social engineering goals of redistribution through 'progressive' tax rates.  I make no comment about the merits or otherwise of a redistributive policy, but would argue that given our system of personal taxation fails to raise revenues that are not recycled in public sector employment or exceeded by Corporation Tax reliefs on the same payrolls in the private sector, it is a hugely wasteful and destructive way to pursue those goals.  Other tax mechanisms – such as differential bands of VAT (the Marketing community can tell us which categories of product are consumed by different wealth strata), could achieve similar or greater redistribution at much lower cost.

Largest Personal Tax Code in the developed world…….

We used to have a vaguely sensible tax code, now its the most convoluted, longest, impenetrable load of mumbo jumbo ever seen. It was possible to do your own tax return – not now. It's just a job scheme for tax accountants.

Corporation tax has been made clearer – why can't we do the same with personal tax.

Lets start again. Get rid of National Insurance. Get back to just PAYE, Capital gains and inheritance tax. All the silly little rules that make it like a "game" and not real life. Remove all the allowances, just strip it right back and make it understandable, if your average person can't understand the tax code then its not a fair system.

Get rid of the TV licence – whats the point? Its impossible to enforce and with people watching TV on the internet increasingly irrelevant. And no-one believes that the licence money was ring fenced in the first place.

Why is this idea important?

We used to have a vaguely sensible tax code, now its the most convoluted, longest, impenetrable load of mumbo jumbo ever seen. It was possible to do your own tax return – not now. It's just a job scheme for tax accountants.

Corporation tax has been made clearer – why can't we do the same with personal tax.

Lets start again. Get rid of National Insurance. Get back to just PAYE, Capital gains and inheritance tax. All the silly little rules that make it like a "game" and not real life. Remove all the allowances, just strip it right back and make it understandable, if your average person can't understand the tax code then its not a fair system.

Get rid of the TV licence – whats the point? Its impossible to enforce and with people watching TV on the internet increasingly irrelevant. And no-one believes that the licence money was ring fenced in the first place.