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Summary
Taxation Policy in the UK is arguably a complete mess. Over the last few decades each
chancellor of the exchequer -whether it be Conservative or Labour (old or
'new'), has implemented their own unique types of tax. There are now dozens of small
taxes in addition to the standard income, corporation, and sales taxes. With so
many taxes in existance, the cost of collecting them now runs into the
many billions, involving tens of thousands of administrators and various tiers of
management, all of which is costing the UK tax payer a fortune. What is now required is the
abolition of these many small taxes, (including the much hated Council tax), and this
lost revenue to be regained from standard means
of taxation such as income/sales tax.
Introduction
The UK economy has grown almost relentlessly since the immediate post-war
period. Despite some temporary recessions, the UK population have been more
productive with each year - a great testament to the strong work ethic of the
British people.
A few points should first be noted .
-A Balanced budget is essential - and to the credit of Gordon Brown (1997-200 ?)
this has been achieved to a great extent.
Contrary to what the conservative party would like the public to believe, Brown
has done well as leader of the UK's finances. Although he increased expenditure
enormously, he has been able to do this due to a relentless period of economic
growth. The policy of making the Bank of England independent was one
particularly wise decision, taking away some of the political aspect of economic
decision making.
-Investment in Capital Projects - counting only 'infrastructure' costs across a
period greater than 30 years should not be considered an issue when calculating national debt.
-Relying on interest rates as a means to control the economy is crazy (I cite
the hundreds of thousands who lost their homes in the early 1990's , due to
chronic interest rates of 15%.
Instead of focusing on using the base rate of interest to control consumer
spending and overall consumer borrowing, other fiscal means should be used.
Taxation as a % of GDP (Gross National Product) has remained relatively stable for many decades now. With
the demographic problem (so many people living longer, and too few young people
of working age), this % will probably rise - no matter what
technological/productivity gains are made in the first haft of the 21'st
century. So, future UK governments are going to have to be stricter with their
spending and long term planning decisions than ever before.
Abolish smaller taxes
Key concept : all taxes collected should ONLY be via the most cost
effective way.
The administration costs of having many dozens of small taxes is not justified.
Therefore taxes which are costly to collect should simply be abolished. The
revenue loss would of course need to be met with corresponding increases in
income/sales tax. However, this policy would result in huge savings each year
from not having tens of thousands of 'paper pushers' administering so many minor
taxes.
Council tax,
Airport tax
Road tax
Inheritance tax
Insurance tax
The aforementioned list, are just a few of the ones that come to mind, all of
which are costly to collect. The case of council tax in particular is insane.
For those who are eligible for rebates on their council tax bills, it costs the
local authorities an absolute fortune to process each claim (with claims being
reassessed annually, further increasing costs).
*Some have suggested that the council tax be replaced with a local income tax.
Err. NO. Do you want you local authority having the power to tax your income
directly, on top of what the mainstream government already take from you ?
Imagine this scenario... you lose 30% of your gross income to the state, but
then the local authority also wish to take a further 10%. These local authorities
would inevitably be spending huge amounts on administering the local tax, which is simply not
cost effective.
Fuel tax - is a special case. Fuel
duties in the UK are extremely high. Any tax must not be overly damaging to the
industry that it effects. In the case of the road haulage industry, the issue of
UK haulers being priced out - compared to foreign companies is a crazy situation.
In terms of fuel duty, the aim should be for equalisation of fuel duty across
the Euro-zone, although the practicalities of this are enormously difficult,
especially when considering the differential in duty levels between the UK and
other nation states. As things are, the UK Govt. should be furiously pressing
other Euro countries to raise their duty level to UK levels.
General taxation
Personal allowance £10,000 starting rate 25%
Standard rate 35% Higher
rate 55 %
Married/unmarried couples will be treated the same. Why should 2 people
who live together but who lack the 'piece of paper' be treated
differently ?
Concept of National insurance will be scrapped, and the appropriate % added to
standard income tax.
Company taxation
Raise to the Euro average
ALL capital investment can be set against company profits - capital expenditure
must be encouraged, if the UK is to have a secure economic future.
Sales tax.
VAT : standardise to euro 20% (perhaps over a period of 3 years)
Basic items should remain 0% , food, fuel, water, clothing.
Implement a disposal/efficiency tax
For example...
Rechargeable batteries - 0% tax(VAT free) vs 50% surcharge for throwaway batteries,
and other similar products.
Abolish any existing
congestion/toll roads - such tolls are just another form of taxation and are a
highly inefficient means of taxing motorist.
---
Student fees, reinstatement of Grants for certain courses* (to be annually indexed) dependant
upon age and personal circumstances of each student - not to be related to
parental income..
*There remain significant shortages in certain
professions in the UK, and these courses merit special treatment. Why not ?
With a limited amount of finance available to support students, it surely makes
sense for Government to decide what Professionals are required for the UK
workforce.
I have never been impressed with the argument that the UK Government should
finance students to study the stereotypical 'media studies' type subjects, when
there are skills shortages in certain professions - with potential students not
taking the courses for fear of financial difficulties.
What I have proposed is radical. The essential concept is the abolition of the many small taxes, which would result in the saving of many billions in administration costs. The council tax for instance is becoming unworkable for many people, and the associated administrative costs are enormous in processing both working and non-employed people's yearly bills.
One important issue is that of
incentives to get people to be more environmentally friendly. To date, measures
introduced have been very limited, lacking imagination, and thus generally
ineffective. A whole new taxation policy is needed, one that will help sway
people to purchase better products that both last longer and are more efficient.
A final point of note is whether the UK people want changes in the way
they are taxed ? Do people prefer to be taxed in dozens of small ways- as is
currently the case, rather than primarily via income and sales tax ? It is a
question which I don't yet know the answer to. It just makes sense to minimise
administration cost, and that can be easily achieved by reverting back to taxing
people solely via income and sales tax.
HM Treasury
: The UK govt's finance dept, with full details on the latest Government
Spending/Taxation levels.
National Statistics
: Govt. site, providing main UK stats.
USA - some comparisons to the world's leading economy are enlightening, take a
look...
USA National Debt clock :
Watch the US debt pile up !
USA Debt
history : US Treasury
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Page last updated :
23/07/2004
