Should We Re-Jig Our Tax System?

[Hypognosis]

A growing proportion of our population do not make their discretionary spending in areas which, traditionally, have been major revenue gernetators: they don't drink, do not indulge in games of chance (lottery, gambling) and smoking has declined to a minority activity.

With, proportionately, fewer people paying extra taxes, voluntarily, in these ways, is it time to increase PAYE rates, across the board?

If our abstemious fellow citizens decline to come to the pub with us for a drink and a chat, we need to get the missing tax take off them, somehow.

How about taking tax off booze cigs and gambling altogether and lumping it all onto PAYE so that we, the electorate, know at a glance what it is costing us to run this country?

[sunny-dave]

I disagree - indirect taxation (VAT and excise duty on goods and services) is a damn sight harder to avoid than tax on incomes and investments.

We should move to decrease taxation of income and increase taxation of expenditure. Much fairer.

[tamborine]

SDave is right, increase tax on confections, crisps, fast foods & booze. If wages are taxed more it wont be worth working.

[Hypognosis]

@Sunnydave

Clarification: I didn't actually go as far as saying to scrap VAT.

It would be useful to have some numbers to mull over, at this point.
For somone who has already earnt £10,000, for each subsequent £100 earnt:
£20 income tax
£7 NI conts
Of the £73 discretionary spend, let's say half of it goes on food and other non VATables (£36.50), meaning 17.5% on everything else (£6.39)

Total tax rate (excluding Excise Duty) 33.39%

Now start factoring in duty on 'fun' stuff, then fuel tax, council tax, RFL, TV licence and everything else.

It's creeping towards the 40% mark.

@Tambo I'm not suggesting PAYE should be elevated on top of all these other taxes on discretionary spending, I'm suggesting trading off some of these selective taxes against directly equivalent changes in PAYE and VAT. It will be exactly as worth going to work as it is now and everyone gets a monthly jab in the ribs to remind them what living in this wonderful country is all about.

[Old_Geezer]

Collection issues should not be a reason to apply unfair taxes rather than fair ones. If there are such problems then the correct response is to solve them not avoid them. Also this has nothing to do with whether folk now drink less than they used to or not. Society's coffers should be filled by taxing citizens according to how much they benefit from society. i. e. those who obtain a small income pay a little while those who managed to grab a larger share of society's wealth for themselves repay a larger percentage. That means income tax is the only equitable tax and government should need a very good excuse to apply any other, regardless.

[Old_Geezer]

Why didn't you go that far, get cold feet ? We pay tax on our money when we earn it, we should not be taxed a second time on the same money when we spend it too.

[Gizmonster]

/// How about taking tax off booze cigs and gambling altogether and lumping it all onto PAYE so that we, the electorate, know at a glance what it is costing us to run this country? ////

.... what about people who either don't earn enough to pay taxes, or aren't working/claiming benefits, etc ??
They won't pay any extra due to your proposed tax increase; but they'll be netter off financially, due to tax being abolished on certain items. How do you think that'll make the average tax payer feel ??

[Gizmonster]

*They'll be better off financially*

[Old_Geezer]

Surely if workers are paying more PAYE, mirroring that welfare payments would be reduced accordingly, as receivers would no longer have to pay tax on the listed purchases. It's just a case of working out the details.

[New Judge]

Your calculations are incorrect, Hypo. NI is levied at 12%, not 7%.

But better then all of this the government should find ways of spending less money instead of devise ways of raising the same or more.

[EDDIE51]

Suits me I am on pension credit.
One reason the tax on alcohol is dropping is because there are so few pubs left and supermarkets sell it at below cost price as a 'loss leader'.
As I posted on here a week or two back, my home town that 3 years ago had 7 pubs is now down to 3. A lot of villages now have no pub at all and no public transport to get to one (or to a shop)

[Hypognosis]

@Old_Geezer

You're right (02:29). VAT was such a weasly addition to our way of life. I was too young to indertand it at the time but, retrospectively, I see it as being implemented by a Government who wanted more dosh but was fearful of doing it 'properly', by raising PAYE, as this would have cost them in both riots and in loss at the ballot box.

Instead we had taxes on lifestyle choices… at the time, these (booze & cogs) were the over indulgences of the working classes and the 'sensible consumption' by the more well off. It was aimed at behaviour-alteration/moderation and, in that regard was a punishment.

The fact that people indulged because those products were cheap (at the time) and that people needed a palliative for the rottenness of the daily grind was, evidently, lost on the think tank at the Treasury.

Then it got steadily worse. These days, we have so many piddly this-and-that taxes, with associated loopholes, get-out clauses (for the three-homed mega rich**), ways for unstoppably growing businesses to be treated as "zero profit"*, it all begins to look like a devious job creation scheme, made by accountants, for accountants.

* I keep meaning to create a thread about that but keep reading other people's threads. I need to search to see if it's already been done.

** I think residency rules have been tightened, in recent years, such that 3 months' stay attracts tax. cm,iIaw.

[EDDIE51]

^^ sorry but I can't make sense of your last post.

[Hypognosis]

@Gizmonster

//.... what about people who either don't earn enough to pay taxes, or aren't working/claiming benefits, etc ?? //

So, you acknowledge that the people in your chosen categories are, in a restricted way, also taxpayers, as things stand?

I hadn't intended this Q to be a trap but you appear to have fallen into it anyway.

So, when Cameron carps on about taking low-income families "out of tax altogether", he is only truthful in the pedantic sense of taliking about income tax.

This phrase played an odd pschological effect on me, at the time, tricking me into believing that these families are "non taxpayers" and I nearly got as far as posting a Q to ask if they are, technically, disenfranchised by this - in that they are denied the right to use the phrase "I'm a tax payer and I think that the government should XYZ…"

[EDDIE51]

Putting all tax on PAYE is daft, people would just avoid it by working cash in hand or going 'self employed' with all the dodges to avoid showing a profit and pay tax.

[Hypognosis]

@OG

//Surely if workers are paying more PAYE, mirroring that welfare payments would be reduced accordingly, as receivers would no longer have to pay tax on the listed purchases. It's just a case of working out the details.//

Shrewd observation.

We are already in the position that benefit rises need to be curtailed, such that the gap is widened between the life on benefits and the life in the lowliest jobs (recall the claimants' oft-deployed rejoinder that at least they're not cleaning other people's lavs all day), so root-and-branch re-evaluation of living expenses would be required.

Except that I don't think booze and cigs are even factored in to benefits calculations (the fact that they indulge, regardless, is their own lookout).

Hmm. Need to think about that one.

[EDDIE51]

The phase 'taxpayer' has always meant someone who pays income tax.
I have never thought anything else.

[EDDIE51]

You are right , alcohol, tobacco and fuel tax are not factored into benefit rates. if you are on benefits you are assumed not to need those things.

[EDDIE51]

I meant 'road fuel' as in petrol not gas and electricity.

[Hypognosis]

@New Judge

//Your calculations are incorrect, Hypo. //

I know. I caught myself out by starting to type before googling for the info. I reckoned it would be less embarassing to underestimate it than to exaggerate it.

//NI is levied at 12%, not 7%.//

Thanks. Bumps my ballpark figure up to 38% and the other bits bump us over the 40%.

//But better then (sic) all of this the government should find ways of spending less money instead of devise ways of raising the same or more.//

Government deducts and then does things with it that the electorate instruct them to do - build highways, and railways do that we can get to our various jobs and ship goods to one another, run a health service and education system, stop ugly housing being built in your rural idyll and so on.

Of course we could aways have 25,000 different charities, all clamouring for our attention.

Can you imagine if policing (see Quizmonster's Assange thread) was left to a voluntary donation system? How much would a certain segment of society (the "avoidance, not evasion" brigade) stump up to keep their mansions free from rabble?

For that matter, what about defence? Who rilly, rilly, rilly, wants to cough up for the annual maintenance on nukes?

[Hypognosis]

@Eddie51

The post you didn't undertand was a reply to OG, further up the page. I'm typing as fast as I can but can't keep up… :-O

//
Putting all tax on PAYE is daft, people would just avoid it by working cash in hand or going 'self employed' with all the dodges to avoid showing a profit and pay tax.
//

I would really be interested to know how many businesses in the UK are exclusively run as a tax loss. Typically, it is people whose earnings only just cross a threshold into the hugher rates who indulge in this sort of behaviour. Whi knows, they may, nevertheless, be providing useful services in quiet parts of the nation where there just aren't enough customers to make a business properly viable?

As for cash in hand, you're talking about small businesses, dealing direct with members of the public who are willing to collude in the dodge. Most of us are with an employer which is big enough to need payroll computer services. Paying electronically did away with the risks of vanloads of cash moving around in predictable ways.