UK Taxes

[Xenophon PCDGS]

Good point. I mean, there's so many things the Government could do... For example, a concerned Government might

• Prevent shops from keeping cigarettes in plain sight
  

I've often wondered why the British Government hasn't done any of those things. I guess you're right and it's because of the tax income from cigarettes...

I will choose this particular point stated and say this is already the case.

 

[Bletchleyite]

They're all already the case - he was being sarcastic

 

[northwichcat]

It's been suggested for decades. But governments of various stripes have resisted.

There's a bit of a psychological thing, 20% tax +12% NI okay, 32% 'new' income tax looks scary. (Remember all the fuss with the 10% income tax when that was withdrawn).

Some income is currently NI-exempt (e.g. Pensions, savings) but gets income tax on it, do you retain the lower level or just charge the full rate?

Then you have to unpick the various bits of welfare that are tied into NI contributions.

Unfortunately it's a lot more complicated than just adding NI to Income Tax.

When the 10p tax rate went a lot of people were worse off until they later changed the personal allowance and back dated the change. It was incompetence by Labour that they made a change which left lower earners worse off so the Conservatives made sure there was a big fuss.

 

[Bletchleyite]

When the 10p tax rate went a lot of people were worse off until they later changed the personal allowance and back dated the change. It was incompetence by Labour that they made a change which left lower earners worse off so the Conservatives made sure there was a big fuss.

And that is because the electorate are fickle, childish and unthinking, by and large.

What we need in politics is honesty, but the electorate also needs to grow up and accept honesty.

 

[Butts]

And that is because the electorate are fickle, childish and unthinking, by and large.

What we need in politics is honesty, but the electorate also needs to grow up and accept honesty.

The problem is everyone seems to want a more progressive system as long as they do not have to pay for it.

People vote in respect of their wallets not supposed empathy with poorer members of society.

Forget the poor and the rich - "malcolm in the middle" is where the real source of revenue is to be found.

 

[Bevan Price]

I would agree that the UK tax system is over complicated, and often unfair. Council tax, in particular, in that the nominal value of a house bears no relationship to current income and ability to pay. Now retired, I probably get about one third of what I would receive if I was still working - but my council tax bill is unchanged (i.e. a much higher percentage of my income). Yes - i know that "THEY" claim that property-based taxes are relatively easy to enforce - but that benefits the system, not the individual.

The VAT scheme involves much administrative work, with payments & refunds if, for example, you buy materials, process them, and sell finished items to someone else.

Now I know this will never happen, e.g. the likes of Daily Wail, Torygraph & Scum would try to convince people that it was "unpopular / unworkable, etc."

1. I would replace VAT by individual rates of sales tax for each class of items, the tax level being related to the effects on health and the environment. So, for example, tobacco, alcohol, sugary foods would have the highest sales tax rates - as would anything that created vast piles of waste that went to landfill, or was expensive to recycle.

2. I would abolish council tax.

3. Assuming that the government could ever make computer systems work.... - I would make income tax the main method of revenue collection, but with individual tax adjustments for everybody, wiith tax reductions for those doing socially beneficial jobs.

Income tax would include a local contribution to where you lived, and your tax band rate might be reduced, for example, by up to 10% if you were a nurse, doctor, waste disposal operative, etc., but not reduced if you were an investment banker, footballer, etc.

It would also be necessary to close tax avoidance methods, e.g. no money earned in UK could be sent overseas - until it was confirmed that all taxes had been paid. And heavy penalties for trying to use devices such as phoney "payments for services" to overseas companies.

 

[northwichcat]

1. I would replace VAT by individual rates of sales tax for each class of items, the tax level being related to the effects on health and the environment. So, for example, tobacco, alcohol, sugary foods would have the highest sales tax rates - as would anything that created vast piles of waste that went to landfill, or was expensive to recycle.

At present we have some weird examples for VAT exemption:
Digestive biscuits - VAT exempt
Chocolate bar - VAT at 20%
Chocolate coated Digestive biscuits - VAT at 20%
Chocolate sponge cake - VAT exempt
Tunnocks Teacakes - disputed. They were classed as chocolate biscuits but Tunnocks took legal action.

If you want a sales tax which relates to sugar content you could have hundreds of examples like the above.

Income tax would include a local contribution to where you lived, and your tax band rate might be reduced, for example, by up to 10% if you were a nurse, doctor, waste disposal operative, etc., but not reduced if you were an investment banker, footballer, etc.

To me that sounds like you would have 'essential workers' paying a lower tax band. There are 'essential worker' categories for social housing at present and they vary between areas e.g. tram conductor in Blackpool is an essential worker due to tourism being an essential part of Blackpool's local economy but a tram conductor in Sheffield isn't seen as an essential worker.

 

[miami]

It's not difficult to understand. If overtime pays £100 gross and you're in the higher band then you'll get £60. If you were in the basic rate band then you'd get £80.

A person could value their free time such that they'd be willing to give it up for £80 but not for £60.

That's not quite true. If you earn £50k (a train driver for example) - £24/hour, your company spends £1000 to get you to work 40 hours extra - 5 days. They have to pay NI on top of that which brings their cost upto £1138.

That £1000 goes on your payslip, and Income Tax drops it to £600. NI drops it to£580, and then the hit on child benefit drops it to £401.12

So your company has paid £1138 and you get £400 in the bank, for 40 hours work, or £10 an hour.

If you then need to pay extra for commuting costs (say 50 mile round trip * 5 days * 30p/mile = £75 (45 minutes each way). You're now down to £375, for giving up free time. 90 minute commute and the 8 hours, plus you'll probably buy lunch for £5 that would normally be near free at home, so another £25.

It costs the company £1138, and you get £300, for losing 47.5 hours of your time. £6.31 an hour. Minimum wage by the way is £7.20 an hour.

There's very little incentive there to do the overtime. The company is spending £28.45 an hour for your time, but you only get £6.30 an hour.

If you have to pay for childcare you're making a loss on that overtime.

The only sensible thing would be to put it into a pension pot, which means most of the deductions are removed, but then you end up trading time and money now for a hope of having more money when you retire. If your pot isn't equitable lifed at some point in the next 30 years.

 

[Barn]

That's not quite true.

You've just made my point even more strongly by adding in NI, child benefit and other costs. We're agreeing with each other!

 

[najaB]

That's not quite true.

Damn! Why do I work 47+ hour weeks? I don't even get overtime for it.

 

[miami]

Damn! Why do I work 47+ hour weeks? I don't even get overtime for it.

Dunno what you do, however 40 hours a week is the typical 9-5 of Dolly Parton fame. The average is actually 37.4 (https://www.ft.com/content/d417b16e-2185-3124-aedf-d5fb9428d3dc), which fits in with a 0900-1730 hour for lunch schedule.

 

[miami]

You've just made my point even more strongly by adding in NI, child benefit and other costs. We're agreeing with each other!

Indeed, but you claimed that you'd see £60 of that £100. I argue it's nearer half of that for people in the £50k-£60k bracket (like train drivers).

 

[northwichcat]

Dunno what you do, however 40 hours a week is the typical 9-5 of Dolly Parton fame. The average is actually 37.4 (https://www.ft.com/content/d417b16e-2185-3124-aedf-d5fb9428d3dc), which fits in with a 0900-1730 hour for lunch schedule.

Indeed. Many people forget that lunch is normally an unpaid break and for those who work 9 to 5 they usually get a half-hour lunch not an hour lunch. Hour lunches are reserved for those who start at 08:30 or earlier or finish at 5.30 or later.

 

[najaB]

Dunno what you do, however 40 hours a week is the typical 9-5 of Dolly Parton fame. The average is actually 37.4 (https://www.ft.com/content/d417b16e-2185-3124-aedf-d5fb9428d3dc), which fits in with a 0900-1730 hour for lunch schedule.

Contracted to do 36 hours a week.

 

[Bevan Price]

Quote:
Income tax would include a local contribution to where you lived, and your tax band rate might be reduced, for example, by up to 10% if you were a nurse, doctor, waste disposal operative, etc., but not reduced if you were an investment banker, footballer, etc.
------------------------

To me that sounds like you would have 'essential workers' paying a lower tax band. There are 'essential worker' categories for social housing at present and they vary between areas e.g. tram conductor in Blackpool is an essential worker due to tourism being an essential part of Blackpool's local economy but a tram conductor in Sheffield isn't seen as an essential worker.

My idea is that all tram / bus drivers, etc., would be regarded as "essential", along with most other workers in socially useful jobs. But. for example, anyone working in the tobacco industry would not be regarded as "essential". People like farm workers would be treated as essential, and so on.

 

[Bletchleyite]

My idea is that all tram / bus drivers, etc., would be regarded as "essential", along with most other workers in socially useful jobs. But. for example, anyone working in the tobacco industry would not be regarded as "essential". People like farm workers would be treated as essential, and so on.

I think that's way too complicated. Just take the tax anyway, and spend it on paying state-run or state-subsidised industries to up the wages in "essential jobs" a bit.

 

[Abpj17]

I'm not sure it's terribly easy to fairly define 'socially useful'

 

[DynamicSpirit]

I would agree that the UK tax system is over complicated, and often unfair.

I would agree with this - but with the proviso that what is 'fair' is highly subjective. I doubt that it would be possible to come up with a tax system that would be universally regarded as completely fair. In the end, any tax system is going to represent a balance between fairness, enforceability, workability, simplicity, minimizing bad economic side-effects, and political acceptability. Also, while I agree that some of the complications in the UK system do seem to defy logic, bear in mind that some complexity is an inevitable side-effect of making the system robust against tax avoidance (and of trying to make it reasonably fair in a world where - bluntly - finance is complicated).

3. Assuming that the government could ever make computer systems work.... - I would make income tax the main method of revenue collection, but with individual tax adjustments for everybody, wiith tax reductions for those doing socially beneficial jobs.

Income tax would include a local contribution to where you lived, and your tax band rate might be reduced, for example, by up to 10% if you were a nurse, doctor, waste disposal operative, etc., but not reduced if you were an investment banker, footballer, etc.

That sounds like a well-meaning administrative nightmare to me. How do you decide what counts as a socially useful job? Only doctors? What about the receptionist who works at the GP surgery? Or the surgery cleaner? And if you include the surgery cleaner, does that mean s/he would pay a different tax rate from a cleaner doing identical work but for the accountancy firm round the corner? And where do you stop? After all there are relatively few occupations that aren't socially useful in some way.

I think part of the problem is you're suggesting using income tax for something that is much more effectively done using some form of VAT/sales duties/etc. Because what is socially useful usually is really a product (medical care, public transport, etc.), rather than an occupation. You think of doctors as being socially useful, but really what's socially useful is 'medical care' - and that's provided as result of people working in a huge range of occupations, of which Doctors and nurses are merely the most publically visible.

So if you want to reduce tax on socially useful stuff, simply putting a lower (sales/VAT/etc.) tax on the product is going to be massively simpler than trying to figure out all the possible occupations of people who might have contributed to the product. In other words, the simplest way to reward 'socially useful' would most likely be to carry on roughly as at present, but increasing the number of products that attract lower or zero VAT rates.

Also, why not investment bankers? Yes, I know they are not popular, but investment bankers do actually play a very important role in the economy - just one that is less visible than - say - doctors. I wonder whether your idea of 'socially beneficial' is actually more like 'people in occupations that are politically popular', or where there's a common perception that those people ought to be paid more?

It would also be necessary to close tax avoidance methods, e.g. no money earned in UK could be sent overseas - until it was confirmed that all taxes had been paid.

Are you sure about that? So if I want to buy something online from a company based outside the UK, or I want to give some money to some friends abroad, I have to get it confirmed with HMRC that I've paid tax on however I got the money first? That doesn't sound like making the tax system simpler!

 

[northwichcat]

My idea is that all tram / bus drivers, etc., would be regarded as "essential", along with most other workers in socially useful jobs. But. for example, anyone working in the tobacco industry would not be regarded as "essential". People like farm workers would be treated as essential, and so on.

What about retail staff? Having a supermarket could be seen as essential but if a new supermarket opens in a town which already has more than one then the new supermarket is unlikely to be essential.

In the town of Northwich the largest employer is The Hut Group so they are essential to the town but I'm sure the general public would still be able to purchase the same products online from another retailer if they collapsed, so on a national level it would seem they aren't essential. If you allow local councils to decide who is and isn't essential you can have corrupt councillors giving preferential treatment to their preferred businesses.

You've also got the complication that someone might do a receptionist job at, say a doctor's surgery but they lose their job due to budget cuts and then have to work in a different industry which isn't seen as essential so they face the double blow of redundancy followed by higher taxes.

 

[Tetchytyke]

I'm not sure it's terribly easy to fairly define 'socially useful'

The attractive young woman who works in Pret and has,my coffee waiting every morning is socially useful, but I wouldn't say Pret coffee shop staff were essential.

As for bus drivers being essential, I've not been on a bus for weeks.

 

[Barn]

I do sometimes think that employer's NI could be reduced in certain circumstances.

We've done it for apprenticeships for under 25s, perhaps it could be done also for people leaving the military, people returning to work after long-term ill-health, perhaps even in areas where lots of people have been made redundant when a major employer closes.

But as with all tax incentives, it is yet another set of pages to add to an already bloated tax code.

 

[furnessvale]

I'm not sure it's terribly easy to fairly define 'socially useful'

Exactly. Just like road hauliers attempts to get cheaper diesel for lorries by claiming an essential user rebate. How do you define "essential user" when hauliers would use cheaper diesel to undercut rail and abstract traffic to road?

What is "essential" about that?