Lorna Bourke: My solution to fix our costly and unfair tax system

Regarding Council Tax, if memory serves me correctly wasn't it the Lib Dems who had a view to scrapping the current form of Council Tax and replacing it with one solely based on one's earned income?

If that was the case, how likely is it now with a Coalition Government that the earnings based version of this tax could come into play?

I repeat the suggestion I have made before, that people be allowed to invest in themselves as they are allowed to invest in a business. If college students were given the same tax benefit as a small business person and deduct the cost of their borrowings against future earning they would not mind. Equally if someone wanted to skill up - say a person who takes care of old people - and wants to become a nurse - they too should be able to invest in themselves and take the cost off their tax - This way the government would not be expected to supply money out of current accounts and people could pay for their own education - and not feel they are being robbed of benefits.

The way to make money is the borrow it and invest in something that grows -

people should be allowed to do that themselves.

Taxation should be used as an incentive to do something - not a punishment

Constance Blackwell

Fully agree with scrapping NI but there is an issue with pensioners then paying more income tax when they don't pay NI. Some form of allowance would be needed?

Furthermore, I would remove (maybe in stages) the Employers National

Insurance tax. This is a tax on jobs and employers can move jobs elsewhere. Jobs can be exported but people are much less likely to emigrate. All private sector employers should then give half of the saving from not paying this tax to their employees in the form of a pay rise benefitting both empolyer and employee. Public sector employers should NOT do this. This has the benefit of redressing somewhat the balance between the two.

So if the tenant gets into arrears with his rent and it can take time to get them out, the landlord gets stuffed with paying the council tax as well.

For a tertiary-based economy, the system needs to maxmise disposable income, collecting tax when money is spent, not earned.

Taxation of earnings reduces liquidity/the need for employment in service/money management sectors.

The French tax system seemed to have its good points.

For a standard family, the husband gets 10k Euros tax free pay. If his wife does not work, he gets her 10K allowance too. He also receives a 10K allowance for the first child, 5k for the second, and 10k for each child there after.

So, the husband gets enough money left in his hands to run a household.

Tax due there after takes the usual course of escalation.

This removes all the complication of child allowance et al.

In this system, single people get their own 10k allowance.

The beauty of the system is to low income families out of the tax man's hair.

French VAT is high, ie they tax spending, which has the point of taxing tax dodgers and people trading in cash.

Reform of the NI and SS systems are long overdue. ONLY those who pay into the system should be allowed to take out.

New arrivals should pay at least five years before becoming into the system.

Only Europe is daft enough to pay out when people havent paid in.

Try collecting benefits in other countries.

In the USA, you are always classed as an alien until you have been long enough to gain the famous green card

Why should we give the MP's our views? Let them earn earn their money and let them get it right, fair and just to ALL the electorate who voted them in.

Cross-party MP's? We hear the Tories saying what a shambles they were left. We hear Labour telling us how they would fix it. Let them all deal with it - it's their job.

The truest saying I've EVER heard is that if you want to muck something up, involve a politician.

Lorna

You have an exaggerated idea of Civil Service pay. The lowest grade national scale starts at £13,285 a year and rises very slowly to £16,081. Graduate entry level is £19,051 rising to £25,328. I suspect that relatively few of those employed in Newcastle are in the higher grades. I don't know, but suspect my guess is as good as yours.

Your arguments on which taxes are cheapest to collect because the employer does all the work match those of HMRC and successive governments. Whoever does the work someone pays for it either through taxes or through employer costs passed on to consumers as higher prices. We all pay.

But the rest of what you say makes excellent sense.

At the moment people who are students, on benefits, low incomes and those who live alone can get a rebate or are exempt from council tax. If the owner paid the council tax these exemptions would not apply - but the rent would have to go up to cover the cost - or it would become uneconomic to let property and there would be an even greater shortage of property available for rent.

It's easy, scap ALL income based tax and have differential rates of VAT. Huge savings in collection costs, the low paid are protected on essentials by a zero rate and WE get to decide what to spend our gross income on. Of course. MP's will never vote to do this due to vested interests. Pity though!

VAT must be the most inefficient/ costly system known to man. Who would devise a system where you have to calculate the tax on every transaction throughout the process leading to the eventual sale to an end consumer, with refunds taking place to account for the difference in value added. When HMRC calculated the transactions costs to businesses of complying with tax requirements VAT was by far and away the most costly. It was also the tax they could do the least about to reduce administering costs because of the European dimension.

Criminals love VAT because it easiest tax to make a fortune on, with little risk of getting caught. HMRC is investigating cases where indiviuduals have got away with £ hundreds of millions and these people haven't even entered the country.

Businesses love VAT because they get to hold onto the cash, sometimes months thus improving their cash flow. There are also so many loopholes that they can quite legitimately avoid some of it. Look on at how they have receipts with say that a portion of the transaction is related to the costs for handling debit/ credit cards (because this is not subject to VAT) but try asking for this amount to be deducted from the pruchase when you pay cash (no way).

So I have concluded it is a pretty stupid tax. If you want examples of better tax - tax on hydrocarbons ie tax on petrol and diesel. Low cost to collect/ difficult to avoid and evade/ spurs people to be more environmentally friendly.

In some countries VAT is levied on everything. VAT is the easiest tax to collect so why not increase it to say 25% on everything and adjust the minimum wage and Income tax thresholds to compensate for the more expensive food and clothing costs. etc.The poorest of the population would then be no worse off and tourists and foreign students for instance would be paying a fairer share of the running costs of the country.

To me combining NIC with Income tax is a no brainer from an administrative point of view.An Annual saving of £1.325 billion you quote. The country needs more savings like this in order to prevent Income Tax Rates increasing to an unacceptable level. I am happy to see that means testing is being scrapped for top up pensions but why not also for Student Loans. How many hours are wasted by the SLC, parents and Universities administering this ? Probably more than for NIC. When a child becomes an adult at 18 he should be able to make his own decision and not have to rely on parents for further support no matter whether the parents are rich or poor. I hope that with the proposed threshold before repayment starts will also be increased annually by the cost of borrowing. The £15000 threshold as it is now was introduced in 2005 and not increased !!

The 'saving' from 53,000 civil servants at £25,000 is 1,325 million - not billion.

Employee N.I. should go as a first move and be integrated into income tax. Employers N.I. should also be phased out, possibly by some form of combination with Corporation Tax, as the cost of N.I. is a major factor in recruitment/retention of labour.

I favour a basic transferrable income tax allowance for every adult, where if one party to a relationship earns insufficient to use all their allowance, they can transfer it to their [nominated] partner. The idea of swapping an additional allowance for child benefit appeals but might not be good for the lower income earners. It would also save on administration and disbursement costs. Income tax rates should remain stepped but I would propose closer banding so that it is truly progressive rather than moving in big jumps. It would be entirely feasible to continue a system with higher allowances based on age.

With regard to Council Tax the local income tax rate appeals, provided that it is operated in unison with the mainstream income tax process and not subject to a separate bureaucracy. Tying in each locality for home ownership and the mainstream tax would be complex and it would be necessary to ensure that multiple home owners contributed for each area, as they do now.

VAT remains reasonably low compared to Scandinavian/Continental Countries and there should be scope to increase this a little to offset some of the changes to N.I., etc. A review of the scope of VAT might also be appropriate to ensure that true necessities are excluded and all non-necessities are brought within the regime.

XXXXXX - you are wrong on VAT, it is very efficient and designed so that the ultimate consumer be it you or a business, like the banks who can only recover a very low percentage of VAT, pays.

With reference to your comments "Look on at how they have receipts with say that a portion of the transaction is related to the costs for handling debit/ credit cards (because this is not subject to VAT) " - this was a Tax Avoidance Scheme which was outlawed by the Courts around 2005. All the retailers and other businesses using it had to repay to HMRC any VAT they claimed was not due as it related to the credit card transaction cost, plus interest plus a penalty. So if you know someome still using this, I am sure HMRC would appreciate your phone call.

Lorna - my understanding is that NI is still payable by employees earning over £43,875 but at 1% - yes that is one%

Constance Blackwell

Please stand for Parliament as a Libertarian and get yourself on that Committee! Government meddling in peoples lives just incentivises sloth and lethargy. Radical changes are needed to the tax system; a low flat rate tax without any "tax breaks" would be a good start. Remove a lot of the red-tape for small business and the would-be entrepreneurs would create a lot of jobs as well. The politics of envy need to be buried before they bury the UK. The message should be clear; nobody owes anyone else a living. That said, charitable giving to the genuinely needy should always be encouraged. Robbery via the ballot box will not work for much longer.

If you think that you are going to get anything resemblig Common Sense on Taxaxtion ,you have got another think coming. They like the complicated they do not want you to know, all the ins and outs. by its very complex nature it yields even more money. I have had claims from the IRS, under pain of fine, and when I have studied the actual Tax law I have had to send them the extracts from the Tax Books to prove I was right. They know not everyone can do this, and believe everything they are told by this grotesquely inefficient arm of Govt. In addition the MPs themselves,and familiys employ Tax experts who know all the ins and outs, and make extensive use of the multiplicity of Tax havens available for those who can afford to pay for it, For instance you can hive off a property say worth £5 mil into a special property trust in the Isle of man. They will charge the Trust 15%, you die 4 weeks later, and it is outside your Estate for inheritance Tax, which is 40%, a neat saving of IT of £1250000 Not a bad saving denied to the rest of us lesser mortals. It is also a very lucrative business for the Tax avoidance Industry, and the Isle of Man will also get a cut out of the 15%. No Lorna it is too big with too many vested interests to be radically overhauled. It is ingrained in the culture amongst the chattering classes. They may well tinker with you and me and the like but the top end will remain shrouded in smoke, and far away places.

Council Tax should be abolished. The money should be raised through income tax. This would be fairer because your contribution would be in proportion to your income. All of the Council Tax collection offices could be scrapped saving a considerable amount money.

This is so obvious that it should have been done years ago.

Maybe we have to start throwing fire extinguishers at policemen in order to get the media and the politicians to talk about it.

I agree with Anonymous 2 .... everyone benefits from council services , not just the homeowner , so the cost should be spread wider via taxation . I suppose this was what Poll Tax was wasn't it . Deeply unpopular at the time , but to me at least , much fairer .

We are taxed on earning, return from savings/investments (but not gambling!), housing, spending and leaving the money to our heirs. Each tax has a number of loopholes. To simplify the system, one tax needs to be chosen with all others dissolved, and then principles to ensure fairness and efficient collection applied. But I won't be holding my breath!

Anon2

The serious media and politicians have been talking about reforms to Council Tax since it was invented. You must have missed the debate for some reason concerning which I will not speculate. Throwing fire extinguishers only excites consumers of the gutter media.

The reason why we have two levels of tax raising powers are to provide some local accountability and local choice. At present central government pays for most local services and therefore seriously interferes in local democratic choice. The difficulty with pushing more financial responsibility down to the local level is that poorer areas would be able to afford only inferior services. In the case of for example education or support for the elderly this is manifestly a very bad thing.

The major impact of combining tax and national insurance will be to increase the rate of tax for a large number of pensioners from 20% to 31%, based on current basic rate tax of 20% and employee contributions of 11% between lower and upper earnings limits. This is a 55% increase in marginal tax rate. One of the fundamental principles of national insurance is that you are contributing now for benefits you may need in the future, when you don't have the same income levels.

I may have become cynical, but everytime a new method of 'improving' the tax system is made, it seems to be accompanied by an increase in overall taxation. I really would like to see the focus on cutting Government expenditure.

Who would not wish for a simpler fairer Tax and Benefits system. It is like asking us to vote for free beer.

The problem seems to be the 'thresholds' or the 'bands', both for benefits and taxation.

Fall one side and you benefit , fall the other and it is a disincentive. This is so often the source of unfairness.

Surely it is not beyond the wit of an imaginative tax man to invent a simple sliding scale, without bands or thresholds. One that escalates on a logarithmic curve. From 'nothing' to a 'lot'.

With a decent computerised system it could respond changes in circumstances in 'real time' not the awful one year legacy we have now.

On reflection, it may be just another opportunity for more Tax obfuscation.

Correct me If I am wrong, but I believe there are no Council tax, Road tax, TV tax (licence) or National Insurance payments in most EU countries. All their taxations is in employment tax which is easily calculated without spin. Consequently, I would recommend no separate Council Tax payments so that the MPs would have to pay this tax in their earnings.

I would like to see a legal cap on the total tax take, however it is raised. Say 35%. Our politicians would then have to decide how it is spent and live within those means.

How it should be raised is then a secondary issue.

stan

Jeremy Fryman

We have a computerised system now. It does not work well for a number of reasons including the real world not working as the systems analysts believe it theoretically should. It also requires the input of data by humans. Some idiot will always find a way to wreck an idiot proof system. Employers are often the weak link as many smaller ones do not employ professional payroll staff.

Stanley Spencer

Caps on taxation, notably Proposition 13 in the state of California, fail because the voters want high level services without high level taxation. The most honest and capable politician cannot realise the dreams of such people. Voters lie to themselves about what is reasonably possible and so doom themselves to perpetual disappointment.

I don't know about other countries but there are two property related taxes in France and a TV 'licence' as well - and they aren't peanuts. The good news is that you get free parking, as a tax payer, in the area for which you have paid your property tax - and parking at the train station is free too.

I stopped reading when I got to the paragraph heading that VAT is a fair tax!!!.

In fact it is the most unfair tax of all taxes and its only virtue is that it is easy to collect, difficult to evade and we do not feel it. But we already know that Ms Burke is, in economic matters, well to the right of Genghis Khan.

I stopped reading when I got to the paragraph heading that VAT is a fair tax!!!.

In fact it is the most unfair tax of all taxes and its only virtue is that it is easy to collect, difficult to evade and we do not feel it. But we already know that Ms Burke is, in economic matters, well to the right of Genghis Khan.

Jeremy Bosk

There has never been a full, honest and wide ranging debate about the abolition of Council tax. If there had have been, it would have been abolished by now and the money would be collected through income tax.

I notice that you do not address the unfairness of Council Tax or how much fairer it would be if people contributed according to their income. Nor do you address the savings that could be made by eliminating the extra bureaucracy of local tax collection.

The notion that Council Tax provides local accountability by some unspecified process is ridiculous.

Throwing fire extinguishers is not how democracy should work but democracy is not working when it comes to the issue of Council Tax abolition.

If we are unwilling to throw fire extinguishers, the question has to be, what must we do to get rid of this hated tax?

Anonymous 2

It has been argued that the Council Tax is fair because it is effectively a tax on wealth through the value of property. Income tax is less fair because there are so many loopholes and the possibility of turning income into capital gains. Yes, it is hard on people with no wealth except for their houses and low incomes.

There has been plenty of debate on the reform and or abolition of the Council Tax, not least in Parliament. A search of Hansard for the last ten years produced 35 hits.

http://www.parliament.uk/search/results/?type=advanced&adv_exact=council+tax+reform

It does not make the popular media because it is insufficiently exciting.

A search of the FT's five year archive on "council tax reform" produced 674 hits.

The same search in the Guardian produced 2733 hits.

It always helps to read a serious newspaper.

We might save money by cutting out some bureaucrats but not as much as you perhaps believe. Firstly the displaced workers would be on the dole for a long time because so many employers share your prejudice against their kind. Secondly the tax raised centrally to be spent locally would still require locally employed bureaucrats to disburse and monitor it.

If you choose not to hold your local councillor to account for the level of local Council Tax, that is your choice. Personally I contact my councillors whenever I feel either more or less needs to be spent on local matters. I also vote in local council elections. Since you believe that there is no accountability for Council Tax, I assume you do neither. It is your privilege to waste the rights that our ancestors struggled so long and hard to obtain. I say, "Shame on you".

Where I work we also employ contractors, that is someone who is self-employed who we hire for a fixed amount of time. This might be 6 months or 12 months at a time and their contract can be renewed at end so sometimes they will stay working for years on end, one of them has now been with employed buy our company for the best part of 13 years. These people have their own business which they only use as a vehicle to pay the money they earn into. They all pay themselves minimum wage which is about £6 per hour even though the rate they actually receive is about £45 to £55 per hour. The excess money above the minimum wage is taken by them as "share dividends". This means that they pay no NI on the "share dividend" and just pay income tax, saving themselves a fortune, as they would have to pay employers NI and employees NI contributions if they took this money as wages. All in all this is doing the tax-man out of a lot of money each year as they are taking wages, even if it is the form of dividends, as money to spend on a regular basis and the tax-man is not getting any employees or employers contributions, they are keeping it for themselves! The government did try to prevent this but contractors got around it by just joining up in their company with one other contractor. If anyone can afford to pay more tax it's these contractors certainly can.

With regard to Council Tax. My daughter lives on her own and therefore gets a reduction of 25%. Her freeholder lives perminantly in the United States and knows nothing of her circumstances. As it is, the most simple thing like getting the entry phone repaired is impossible let alone sorting out something as complicated as the correct Council Tax. Also the other residents in the upper floors change constantly and I suspect that sub letting goes on. There is no way that the freeholder could sort this one out!

I have not forgotten how much Gordon Brown distorted the system through approx 70 stealth taxes for purely political reasons.

Also previous governments never spent enough of car road tax, fuel tax etc. on the roads and railway infrastructure, helping to seize up our productive economy.

Lourna is right, the whole system stinks but I dont agree with her proposals.

NI is unfortunately now just used as another income tax, and should return to be based on pension funding and health in a fully transparent manner. Difficult as past governments have allowed a huge deficit.

Any property based taxes including rates and so-called wealth taxes just discriminate against the south of UK and pensioners often with low incomes left in the family home. They are not "wealth" taxes, only sops to political envy and left wing spite.

The fairest taxes are income tax and local income tax instead of rates. Local income tax is needed particularly as then everyone pays their fair share of local services, depending on income, which is not now the case.

VAT is a necessary evil and must be fair if the EEC impose it !? 20% may be good now to reduce our love for chinese imports, but in normal economic circumstances must be too high ?

UK national debt is now about 6.5 times our GDP (£10 trillion approx) and rising, and with little industry and poor infrastructure everyone will suffer reduced living standards and share the pain of incompetant government.

John16

A valuable house is still wealth just as pictures, diamonds and shares. It may be for all kinds of reasons hard to raise cash to live on from a house someone lives in. So wealth taxes could be rolled up until the owner is dead and past caring. Or of course the single occupants of family homes could help ease the plight of young families by downsizing into smaller accommodation. Just suggestions.

There is no divine right for anyone to avoid tax by turning income into fixed assets. You seem to be saying that property owners should be privileged over income earners. We used to have such a system. It was called feudalism.

Are you saying that someone who puts all their savings into buying a big or well positioned house should escape taxation on its increase in value while a similar person who rents accommodation and puts all their savings into shares should pay tax on any increase in value?

By your logic someone living in a £10 million mansion with an income of £6,475 a year should pay no tax while someone living in a bedsit and earning £6,476 should pay income tax. £6,475 is the tax free personal allowance for a single person in 2010/2011.

For at least the third time in these forums I will state that the UK is still the world's sixth largest manufacturing economy.

It's a fabrication that Britain doesn't make things any more

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article5897706.ece

In 2009 the UK produced 2.6 per cent of world manufactures despite having only one per cent of the world's adult population. This is bound to shrink in relative terms because we had only 0.5 per cent of the world's children.

Our infrastructure is inferior to say The Netherlands but vastly superior to most of the rest of the world. There are plenty of real problems in this country, don't invent new ones.

Absolutely by no possible way should we go with the French system. With the complexity of constantly changing points for a myriad of different items and changing point values almost noone gets paid the same amount two months running. The administrative burden of this system is beyond counting.

Also there needs to be a statement as to which party or politician is in favour of people getting richer. If it is agreed that we want people to get richer then lets not constantly send them back to to the bottom of the chart for every generation. This is called "fairer" - that we should all start life at zero wealth. It won't get any votes but I have a feeling that we would all get richer much quicker if we did not keep doing this.

A key is that we lack the depth of people with enough money to take a flier on new things without risking their security. More rich kids might be unfair but I suspect that they would spend, lose and invest in a way that does us far more good than handing the money to a government.

The argument for bringing aligning CGT to income tax rates is that at present the wealthy can switch to the former, which is more favourable. By the same token, the rich can avoid tax on pensions, (a) because of the NI cap and (b) by getting tax relief on contributions (up to GBP 250K p.a., IIRC). Tax relief should be there for a basic pension, not for a gold-plated one : if people want to save more, they will !

CGT exemption on PPR only, indexation relief only on multiple properties.

John Aislabie

For centuries we had a system with a relatively small number of very rich families with almost everyone else mired in poverty. It was called feudalism. Only glacially slow technical and economic progress was made until the rise of capitalism and the middle classes. This was funded by the individual efforts and savings of ambitious workers. The feudal landowners would not dirty their hands with trade or manufacturing.

Look at modern countries with extreme disparities of wealth and concentrations of land ownership. You will see a few families content to be big fish in a little pond and happy that nothing changes from one generation to the next. Stagnation.

The object of taxation should be to pay the necessary expenses of government - keeping the peace, defence of the realm, protection of the poor, . There is no moral justification for taking people's money away just because you think they look a bit too rich and comfortable or you think their children should have a hard time. All governments, central and local, are inefficient and wasteful. The socialist obsession with social engineering ends up with more and more complexity and pointless regulation and a mindset that is totally negative and uncreative. I hear that New Zealand has no IHT and no CGT - maybe they don't spend their time hating each other at the behest of politicians.

As council tax is supposed to cover the cost of the services provided by the "council" it should be paid by those using these services - not based on property values. We pay utility bills according to consumption dont we?? Household (people) size is proportional to consumption. Sounds like poll tax to me!

Jeremy,

When Thatcher made it possible for us all to buy our homes the greed factor came into play.

In 1981 I got married and bought a small cottage for £13,000. In 1990 I sold it for £27,500, bought the house I'm in now for £38,500 and it's now worth about £100,000. I live with my wife and daughter who's attending a very local university, and who is in the final year of her studies. When she finishes up she'll be looking for a job and (hopefully) a house.

We currently live in a 3 bed semi-chalet villa about a 20 minute drive south of Glasgow. Once (if) my daughter (ever) moves out I can assure you there's no way I'm going to downsize. Why? Because I bought it and I can sit in it for as long as I want until the time and price is right for me. The same also for those who have mansions and live alone.

When you take into account just how much you pay the mortgage provider over a period of 20, 25 years or whatever then you've every right to stay in the house you bought and get back just as much as you can for it. I would be very interested to know just how many socially conscious people there are out there who would downsize just to sell on a house to ease the plight of any age family.

I'm pretty sure we all came out the same way, the same opportunities were there for us all and those who could, did - and those would couldn't, didn't, so there's no social conscious here, unless the price is right or my circumstances aren't.

No tax can be called fair. Some people will always find a way to get around them, others will always end up paying the full whack. To make it fair, have a wide variety of taxes of different flavours, then more people will be treated unfairly, and more will pay what is due.

No tax can be called fair. Some people will always find a way to get around them, others will always end up paying the full whack. To make it fair, have a wide variety of taxes of different flavours, then more people will be treated unfairly, and more will pay what is due.

Council Tax will never be abolished, it being a Tax on immovable property and by and large it is reliable to collect and cheap to collect. It is only difficult in transient sectors of the population .Tenants who are responsible for the Tax constantly moving without a forwarding address. This is one area where you will certainly get reform. They will make it the responsibility of the Landlord to pay the Council Tax. When this happens my advice is to increase the rent by the amount of the Council Tax plus a handling fee of 10% plus the Tax due on the handling fee. This will point out in no uncertain terms how inflationary Taxation is. This will require a substantial uplift on rent allowance benefit to meet the extra costs doing the Local Authority's work for them..

Most of us relaise that we have to pay income tax, but when we hear all of it is spent on welfare, it kind of takes the urgency away. Car tax must be abolished and put on fuel thereofre the dodgers and overseas visitors will not be able to get away with not paying it. Council tax is the most unfair tax there is and its composition is ludicrous. Imagine if we were chaged, electricity, gas, water etc based on the value of our house in 1991. TV licence should be opotional for those that wanted to watch the BBC rather than us being forced to pay for it - we are in a democracy after all. If the government wants to save then yes, get rid of the NI contributions if it is going to save as much as you have predicted. I dont mind paying tax if it is used wisely and is spent on those who require it most but the sheer financial incompetence of the last labour govt had really got to me - so much so that I am soreley tempted to run my turbo diesel on frying oil - even if it means making the family eat chips every night.

Forgot to mention VAT on trying to keep warm - govt should be ashamed of themselves on this one as warmth is a basic survival need, especially in this country. With all the hype about energy prices, it should be removed. We never had it in the 80's, so why do we need it now.

On Council Tax, the suggestion that landlords should pay is unfair since it is the tenant that benefits mostly from what the this tax supposedly pays for.

When you dis-establish a Government post, the saving the country makes is at the capitation rate for that post which is a lot more than the pay point. It takes account of pay, allowances, pension and administration of that post. It is likely that the capitation rate for a £13000 pa post is at least £20000. But that was a bad goof on the "£1325 billion", Lorna.

Robin McEvoy,

It is a complicated business pricing the cost of employing someone in the government for these reasons. When they pay someone they get a certain amount back in the form of:

income tax

NI contributions.

That person may uses some of the money to buy goes with additional tax on e.g. Fuel, Cigarettes etc...

They also have additional costs as while they employ someone it is going to cost them more in future for pensions.

As a rule of thumb the actual cost to the government is about half the person's wages due to the return in income tax, NI, VAT and other taxes.

But they also have to factor in additional costs for benefits and redundancy payments when they do make people redundant

So I don't think Lorna's estimate of £25,000 is too far out. Though I find it hard to believe there are 52,000 people just dealing with NI.

Jeremy Bosk

Council tax is unfair and expensive to collect. The idea that it is fair to base a tax on the value of one’s home is devoid of any merit. The home is bought using income that has already been taxed and once bought, it does not provide an income. If it is ever sold the proceeds are usually put towards another home.

There has not been enough discussion about the abolition of Council Tax. The items that you refer to indicate a level of awareness, but not a debate sufficient enough to bring about the abolition of Council Tax.

A considerable amount of money can be saved by eliminating the bureaucracy required to collect Council Tax. You have to remember that there are many offices around the country, all duplicating this task. The idea that you should not eliminate waste because of the unemployment benefit cost is ridiculous. On that basis you would never sweep away any unnecessary bureaucracy. Unemployment benefit is a short term benefit and far less than a council salary and pension.

If Council Tax is abolished you will still be able to contact your councilors as often as you like. Their response to you should not be different simply because the tax collection system has been improved. Your right to vote would not be affected in any way.

Your assumptions about me are both wrong and irrelevant. The point is this, Council Tax is a bad tax because it is expensive to collect, unfair and disproportionate to income.

How about changing Income Tax so that when you reach the top of one band you next lose half the tax allowances and therefore don't move to the next higher band until your income is 'tax band' plus 'allowances'.

After that ALL your income is charged at the new rate until you get to the top of that band when the process is repeated.

When you have reached the highest tax band and exhausted your allowances everything is charged at 50% (or 99% if you are an MP)

Anonymous 2

Everything is bought using income that has already been taxed unless it is inherited. Should someone who saves from taxed income to buy shares have the same exemption from tax on any profits? Your arguments definitely do not apply to inherited wealth.

My suppositions about your voting habits were the logical conclusion to be drawn from your comments about the alleged lack of accountability for Council Tax. I was applying reductio ad absurdam to your arguments. Irony does not always come across in writing.

I am unconvinced by your assertions that wealth taxes are wrong in principle or that Council Tax is disproportionately expensive to collect. Income Tax itself is expensive to collect when you consider those costs born by employers.

How about making income tax like house stamp duty. So if you earn less than £43,000 you pay 20% on everything, then if you earn over £43,000 yor pay 40% on everything? So if you earn £42,999 you pay £8300 tax but if you earn £43,001 you pay £17,200 tax.

"At 12.56 Redundant (older timer?) says XXXXXX - you are wrong on VAT, it is very efficient and designed so that the ultimate consumer be it you or a business, like the banks who can only recover a very low percentage of VAT, pays."

I find your comment breathtaking. Where is your evidence to back up what you are saying?

Let us look at the facts. HMRC estimate using KPMG's analysis that the administrative burden placed on businesses of complying with all tax requirements was around £5.1 billion in 2006. Of this amount compliance with VAT obligations cost around one half of the total or around £2.5 billion. VAT as a percenatge of total tax receipts is around 15%. It is a very costly tax to administer.

HMRC estimates that it loses around £40 billion in tax a year (covering all taxes) ie tax which it should collect but doesn't because of things like evasion and avoidance. This represents about 8 per cent of total taxes. Compare this to the situation on VAT where HMRC estimates it loses almost £15 billion a year or around 15 per cent of the tax collected (double the average overall for all taxes). I would conclude that VAT is a very leaky tax indeed.

Combine the costs of collection with the leakiness of the tax and it is not one of the taxes I would view as the best for a country to have. The USA looked at it some years ago to replace their sales tax and came to the same conclusion.

You sort of prove my point about the tricks businesses get up to. Sometimes they succeed, sometimes they don't. HMRC estimate that businesses avoid VAT through various unacceptable schemes to the tune of £2 billion to £3 billion every year. My understanding is that banks are thought to be some of the worst offenders.

With reference to your comments "Look on at how they have receipts with say that a portion of the transaction is related to the costs for handling debit/ credit cards (because this is not subject to VAT) " - this was a Tax Avoidance Scheme which was outlawed by the Courts around 2005. All the retailers and other businesses using it had to repay to HMRC any VAT they claimed was not due as it related to the credit card transaction cost, plus interest plus a penalty. So if you know someome still using this, I am sure HMRC would appreciate your phone call.

-Flat rate of VAT @ 12% even on current zero rated items.

-Raise personal allowance to £8500 for everyone.

-Flat rate of income tax thereafter of 12% for everyone regardless of income.

-Abolish all tax avaoidance schemes.

-Abolish tax relief on pension contributions.

-Abolish child tax credits.

-Flat rate of stamp duty land tax of 2% regardles of property purchase price but with 70% of it going to the local authority the property was bought in.

-Abolish inheritence tax.

-Lower the state pension from 2020.

-Leave job seekers allowance unchanged for next 5 years.

-Fix student loans at CPI interest rate.

-Flat rate of corporation tax at 12%

-Flat rate of capital gains tax of 12%

-Abolish vehicle tax and replace with higher tax at the pump.

-Offer 5 year tax holidays for businesses investing in deprived areas.

-Get out of the Middle East and save £280m a month

-Sell the Post Office.

-Sell the govt stakes in banks.

Sit back and watch all the World's top companies re-domicle in the UK and clean up with the tax take for zero investment our side. They might even be able to employ all the out of work accountants, tax advisors and revenue collectors. If Switzerland can have a low tax environment with a high quality of living and decent public services then why can't we.

What more can we expect from a tax system that still defines a high income person as someone earning over £8,500.

The problem we have is that the legislation is being layered. Instead of examining prior legislative changes, things are just layered - the result is now 7 books of the yellow and orange tax handbook for 2010/11

..........and close the loopholes that seem to be endemic in the UK.

Anonymous 4

You have my vote but the trouble is the politicians and bureacrats would not like this. It would severely deplete their ranks and mean that they have to become leaders at the sharp end of earning a living. And of course, lets not forget to mention all the "Pauls" who like the system where "Peters" are robbed to provide for the most times, undeserving "Pauls".

Without the government "middlemen" consuming the nation's wealth, that would indeed be a big saving and could go into productive investment rather than attempts at social engineering.

Why not do away with the'ROAD FUND LICENCE@ and add it to the fuel tax?

The more you use your car the more tax you pay.

It would reduce the number of staff at the DVLA.

All in all this would save money for the goverment therefore reduce the debt!!!

Funny how LB just casually states get rid of 53K Northern workers. Perish the thought of touching the workers of the Metropolis that is the Self Centered South !!

anonymous 4 ...now that is creative thinking . I really like it . But it is too radical and would need great political courage to introduce .

John sy23 2ja,

Doing away with the Road Fund Licence can only work for domestic users (ie cars). If you start involving commercial users (artics, rigids etc - anything over 7.5t) then the prices you pay in the shops will hike up radically. I was a Transport Manager and my trunkers were driving from Glasgow to Birmingham and doing somewhere in the region of 220,000 kms annualy. Just imagine all the artics on the road and you'll have an idea of what the added on cost would be to the consumer. Compare the cost of fuel to the cost of RFL (£1,200 per annum top rate) to see how much you would be passing on.

anonymous 4, I've got a feeling these are random uncalculated guesses by you? Everyone would probably vote for your massive tax cuts for until they realised that there was not enough money raised to provide for the services we expect.

Council Tax is the most unfair Tax in existence. I bought a house 4 years ago, and after a while of residence I thought the Band for my Cottage was rather high. I went to the District Council and examined all the surrounding properties. Clearly there had been a mistake over my Band "F" and I was paying far too much. When I looked into it I discovered I was entitled to appeal ,having recently moved in. This information was Not sup[plied by the Council. I then asked The Property Valuation office of the Inland Revenue to review my Banding. I was visited by one of their evaluation staff. He tried to convince me that the valuation originally was right. I demanded a tribunal and began to prepare my case . I gathered all the local evidence on banding ,I obtained Newspapers from the evaluation date showing prices I took photographs, and waited and waited for the date of the Tribunal which they were going to fight their corner and try and keep the valuation. I was so confident of winning I was releshing the challenge. Finally I got the date and I was fully armed. 18 hours before the Tribunal I received a phone call to check whether I was going to the Appeal. You bet I am!. Later I received a further call from the Inspector telling me they had decided to reduce the Banding on my Property. They funked the tribunal but held out to the last hours to give in and surrender. There is no proper valuation policy there is No fairness, it is what they can get away with. My Council Tax was reduced by £350 p.a plus a rebate since I began. Thje previous owner paid 7 years at the higher rate an extra £2450 . NOW HOW CAN THIS BE RIGHT AND FAIR??

Graham

It is neither right nor fair. The Revenue receive instructions to "resist" certain quite legal claims. This applies to other taxes just as much. In practice this means try to wear down appellants by demanding unrealistic amounts and quality of evidence and simply delay in the hope that they will go away. These instructions are ultimately political and relate to half-baked targets set by ministers for revenue raising.

This is one of the drawbacks to trying to run government as though it was a business rather than a public service.

Jeremy, thank you for your erudite support. I sincerely hope that Lorna has MPs reading these submissions. It is appalling that Council Tax is conducted in this way. Just as well the second valuation was not carried out, you can imagine the size of the Appeals from the Conservatory Building Classes. I believe that there are thousands like me being valued incorrectly. The Revenue approach was amateurish and unsupported by facts. They would have stood very little chance of succeeding. The trouble is people lack confidence to take them on, which they trade on of course. I am sure you are right in your observations.

In a nut shell. Our owm manufacturing base is simply not there. What we are doing is assembling for other manufacturers.

We are basically a Financial Service country. We are in fear of loosing that as well due to the goverment cutting down on those tax loop holes.

Firstly, its those nice and complicated tax structures that attracts a lot of wealthy individuals to this country. Cut the tax to one band hence it would encourage individuals to retain their money in the country and invest for higher returns.

Keep interest rates low as eventually people will get used to low rate of returns thus encouraging money to go back in the markets. There are low risk investments out there and with better financial services regualtions even the low risk investors should fair well.

Look at Hong Kong.

Keep the pension tax relief as that will encourage more money in the markets. Let there be a limit.

If we dont even our financial industry lead will shit to another country.

In a nut shell. Our owm manufacturing base is simply not there. What we are doing is assembling for other manufacturers.

We are basically a Financial Service country. We are in fear of loosing that as well due to the goverment cutting down on those tax loop holes.

Firstly, its those nice and complicated tax structures that attracts a lot of wealthy individuals to this country. Cut the tax to one band hence it would encourage individuals to retain their money in the country and invest for higher returns.

Keep interest rates low as eventually people will get used to low rate of returns thus encouraging money to go back in the markets. There are low risk investments out there and with better financial services regualtions even the low risk investors should fair well.

Look at Hong Kong.

Keep the pension tax relief as that will encourage more money in the markets. Let there be a limit.

If we dont even our financial industry lead will shit to another country.

Graham

See under Circumlocution Department:

http://www.bl.uk/learning/histcitizen/21cc/lang/control1/circumlocution1/circumlocution.html

Or think of the dismal stories of Equitable Life and the radiation poisoned soldiers from British nuclear testing. People die but officialdom lives for ever and can afford to wait.

You will not find any official to admit it because they are gagged by the Official Secrets Act.

Atul Patel comments we don't have a manufacturing base - The UK - i.e. under Thatcher sold off North Sea Oil rights - it did not use that money to re-industrialise instead the mid-lands was turned into a waste land - I did a tour once to little start up industrial estates where highly trained men in metal work were trying to use their skills to start up little companies - without any real financial backing. If the UK had the postwar German mentality of building an industrial base - life would be very different. Everyone talks about the German family run businesses in Germany - in the UK it was once that way -

The area where there is a great deal of individual initiative and establishing small businesses is in the creative businesses - and it has grown while the banks made such a mess of things.

This brilliant government wants to cut funding to them -

One almost thinks that though some went to Oxford - or lived during the university years these types never learned about either the culture that drives the country or gained a true respect for English enterprise.

Some of our leaders then went into the advertising business, selling time and space and advocating soap is not the best place to learn about either the structure of society or the kind of training of the mind essential for a dynamic economic (including the humanities and arts) base. They have made one mistake after another. At least the sports people are making them think again.

Constance Blackwell

Constance Blackwell comments: I am in agreement with what you have mentioned. My point , GB once upon a time was envy of many other countries of British being the best. But, as you rightly put it we destroyed that whilst the Germans built on what they had and so are the French. Look at Japan, I remember about 40 years ago their cars were inferior and so were so many of their products but today we buy Japanese why, because it is the best.

What we need to do now is remember the mistakes of the past and build on what little we still have. Yes, Mrs T. was responsible in breaking the manufacturing base but on the other hand she made the Financial Sector world leader. Yes, we are making mistakes etc...but than what are the regulators here for. Even today if we look at the mortgage and other lending industry the Lenders (Bank Managers) of the past use to visit the clients site, not only to get to know the business but also to know the client, his or her life style and to judge if the client was worthy of lending and if he was the manager himself would sanction the loan. That now unfortunatly is all replaced by people behind the desk and making judgement on what the documents in front of them says and what the market trend is and this is for small businesses. If you happen to be a very large industry with a blue chip name they would lend them money blind folded. Where is the logic here.

At present we still have a strong Global Financial Services industry and I fear that too is going to be lost to Germany or some other European Country maybe even China, India, Dubai who knows. We are pricing ourselves out. Later in a few years we will say the same time over again. Look what happened to this and that.........Today with so many wealth being created globally we are we even letting this slip away.

Most people accept that income tax is the fairest form of tax. They may not like paying it, but at least it is proportional and fairer than the alternatives.

The most hated of all the taxes is Council Tax. It is not based on income and it is not based on the number of people living in a property (with the exception of single occupancy). It is expensive to collect because of the bureaucracy that is duplicated in the many local collection offices.

A considerable amount of money could be saved if the money was collected using the existing income tax collection system. This would be simpler, consistent across the country and much fairer.

If there is any doubt that the majority of people would like Council Tax to be abolished then we should have a referendum on the matter.

humm - that is not what I wrote - I criticized those currently in power for not helping the creative industries - which are booming - now and that Thatcher destroyed the industrial heartland and did not use the money from north sea oil to rebuilt the industrial base

The UK is still the world's sixth largest manufacturing economy. Industrial production is at or close to all time highs. I have provided the figures several times in these forums, so if you disagree: do the research and prove me wrong.

That others with greater populations have overtaken us is hardly surprising. You don't see much of what we make because it is generally sold overseas to factories rather than within the UK to consumers. We are still good at things requiring high skills and higher education.

Thatcher undoubtedly did a lot of damage but for the survivors: "that which does not kill me makes me stronger".

I entirely agree that the current budget cuts are damaging, ill targeted and more severe than needful. I definitely agree that aside from entertaining rock, football and film stars, governments are very little interested in our generally successful creative and entertainment industries. They should be.

Constance their is plenty of Enterprise in Britain. There is also plenty of legislation both home grown and EU to stifle it. Have you ever tried to run any business in Britain? Well I can tell you You spend vast amounts of company time and money trying to satisfy . Govt. Depts and Busibodies on everything from Packaging Levies to trying to turn Delivery men into Airline Pilots at vast expense. It is the Labour Party Jobsworth Economy at work. It is enough to put off the most determined of business people. Britain has slipped to 18th in the World of Countries in which to run a successful Business Costs are constantly piled on Business, This coming year we have yet more to face Green carbon taxes,and the compulsory Pension costs which all have to come out of profits. If you examine the top 100 companys in Britain you will see that over 70% of earnings are made in other Countries. Now what does that tell you? Osbourne has a long way to go to make Britain a great place for business. He is just starting to scratch away the layers of hindrance from Corporation tax. to bureaucracy. We await events.

I tend to agree with Constance. Fact is ignorning the 3rd world countries about there democracy. Do we have one here? We vote them in based on their promises, only to find later ........excuses. Its a power thing I believe. Something even more crucial When are they going to clear the snow. I am sure Mr Brown being from Scotland must have a hand in this snow fall. Unable to get to work. No money earned, No deliveries hence no tax earned.

British children are not educated to admire entrepreneurship and industry - because their teachers tend to be anti-capitalist, and focused towards state employment. A cultural change is needed, maybe by enabling independence in the education sector this will happen.

This is a bit off subject but it does have a bearing on tax.

Jeremy says Britain is the world's 6th largest manufacturing country.

There are lies lies and statistics and I would suggest this is one of them.

It flies against all knowledge of our industries.

Britain might still be a large manufacturer but how is it defined (assembly?) and to whose benefit? How much of the profits often untaxed go overseas?

We have very little Electronic manufacturing now owned in UK. GEC, Racal and Plessey are no more.

Steel is owned by india.

Cars and lorries are assembled here by Toyota, Renault, GM etc etc..

Cadbury was allowed to go to Kraft.

Most of our utilities are foreign owned (which is a disgrace that only a stupid government could allow).

There are many many more examples.

A lot of this is because of lack of sensible protections

(eg1 Cadbury went because of short term Hedge fund profit speculation eg2 Utilities had golden share removed, and are monopoly industries so not in our national interest to allow overseas sale)

Whilst the Germans French and other countries have been protecting their industry by all means, ours has been sold off to an undesirable degree.

It is no use harping back to Thatcher for the blame for this, there has been continuing decline in the last 13 years, and it could/should have been reversed.

re. rates

As I said before, I agree they are a thoroughly bad tax, and give rise to all kinds of anomolies and problems described.

They are really a property wealth tax with all its inherent unfairness.

Why should just a houseowner pay for local services many more receive?

Rates:-

a) have no bearing on peoples income

b) make only the houseowner pay for all local services. Most people do not, which is morally wrong.

The only fair tax is income tax, in this case local income tax. Then everyone would have to contribute towards the local services they receive, depending of course on means and income. Most poor people would be exempt, particularly when the first tax exempt band goes up.

re. Jeremy and others comments on budget cuts

Because of the huge figures involved it is difficult to conceive the scale of the debt that previous governments have left us, for whatever reason or excuses they might give.

UK, thanks to Brown and Co., carried the highest debt of any OECD country into the recession in 2008, over 450% of GDP (source, McKinsey Institute), but labour are still blaming the bank crisis for our problems.

The situation now is hugely worse. If you add all debt including government, personal, company, pension liabilities, PFI, then is about £10 trillion, or about 6 x UK GDP (GDP approx £1500 billion). (source EU Commission Eurostat, Morgan Stanley research). The official debt figures only show official government borrowing and excude off balance sheet items such as PFI and pension liabilities. If you add in provision of 2xGDP for cost of aging then our national debt goes up to 10xGDP.

Despite the modest cuts, the current year is still £150 billion in deficit.

It is only the deficit deniers and socialists who have got us into this mess, and it is intensely depressing that there are still people like Ed Balls and on these forums arguing that cuts are not necessary at all.

Unfortunately, unless exempt, under the circumstances, budget cuts and tax increases are a fact of life for us all.

John16

"It flies against all knowledge of our industries."

Once upon a time everybody believed that they knew the Earth was flat. You will probably agree that they were wrong. So what people believe and what they know are two different things. Your idea of British manufacturing industry comes into the flat earth category.

But I must apologise, the latest figures show the UK in only seventh place having recently been overtaken by France.

"UK slips in league table of top global producers"

http://www.ft.com/cms/s/0/a9d059da-7ccb-11df-8b74-00144feabdc0.html#ixzz173iVRZQn

The study is by IHS Global Insight.

To have a sensible discussion we need to define our terms. My figures on UK manufacturing industry refer to the value of goods made in factories located in the UK whoever owns them. I suppose it would be technically possible, although difficult and time consuming, to produce figures which exclude foreign owned factories. But then, logically, we would have to include production of all the British owned factories in the rest of the world. Our overseas investments are enormous. Figures that simply ignored the facts of international trade and investment really would qualify for your denigratory comments.

I do not doubt that the UK has enormous debts and that the figures have been fiddled by all kinds of "off balance sheet" accounting. However we are much better placed to pay off our debts than most other countries because of the repayment profile - our debts do not have to be repaid until far later than the average country's.

Undoubtedly Brown took unnecessary risks in not saving for a rainy day. Even so, Balls and others are right in laying some of the blame on the banking crisis. If the economy had continued to grow instead of being thrown into recession, then the naturally rising tax take would have paid off the debts. Tax revenues have been slashed by the recession. When expansion really gets going most of our debt problems will disappear. A rising tide floats all ships.

We live and learn. Just hope we dont carry on living in the past and blaming previous governments. Previous goverments did have a minor role in this but it was the previous goverment to that, that promoted Financial Industry and killed the manufacturing trade. Banking crises is the main reason for global recession and not just Labour goverments of UK, US, Portugal etc.......... If there is a finger to point it really should point to those who did not protect our home industries. Yes, France may have leapfroged us and Germany ahead of us. Both have strong manufacturing bases. Let us learn and move on and hope that the new leaders of the future work for the country and not their ego. Lib-Dem certainly not a role model.

Just hope that the debates in Parliment are more productive as oppose to blaming John & Mary. We need a simply tax system and encourage smaller industries and retailers. Otherwise what we may find is Tesco Banks, Tesco Newsagents, Tesco Petrol stations, Tesco chothing etc.....and do you think they are going to pass on their bulk buying discounts to us. Not a chance. We should Promote Independent businesses, Protect local industries, Encourage personal savings, Promote IFAs, Education and include subjecst in studies that are going to be practicle, Control the banks and regulate them properly. Let Bank managers have a greater say in authorising lending and not totally with the credit teams who never see the clients.

Promote North of England such as New Castle so wealth is evenly spread. Create tax free zones for manufacturing bases.

And most important of all I hope Sainsbury's delivers my groceries today. they are late already.

Jeremy,

I will let other readers judge for themselves whether your statistical quoting holds up and what has happened to industry in this country.

I am not offended by your comments, I just think you are misguided and one of the many brainwashed academics who have done much to damage this country.

If the picture is so rosy in our industrial heartland, why is UK, despite the benefit of oil and gas and overseas investments, still running a massive balance of payments deficit?

If a large part of our industry is overseas owned and profits taken abroad, then it may very well still show up that UK is a large manufacturer, but to whose benefit? This is not flat earth, just seeing through bad statistics.

They just hide the many mistakes that have been made and too easy sale of many of our best companies and utilities.

At least we have BAE, RR and BP, but the vultures are circling ever more whilst sterling declines and makes them more attractive.

I think the flat earth flogiston theories only come from socialist economists who deny debt and think it does not ever have to be paid off. Even with this governments slightly increased cuts and payback, the yearly deficit will not be eliminated for many years (4 or more), still leaving massive debts a burden and increased taxes on future generations.

There is no way, that as you say "the naturally rising tax take would have paid off the debts". I have already outlined the huge debt figures involved. This is just dangerous propaganda not in the national interest which shows ignorance of the huge figures involved.

John16

Whoever owns the factories in the UK they provide employment for British workers and they pay taxes to the British Government. Agreed they pay more in the UK if the profits are retained here. But the last time I looked at the BP website there were more American shareholders than British. It is the same with most of the large UK based companies, ownership is dispersed all over the world.

It is the same of course for large American, German, Japanese, whatever companies. The difference being that there are so many more Americans, with so much more money than the rest of us, that they tend to dominate everywhere they invest.

All I am saying about UK manufacturing is that it still very substantial. Certain sections of manufacturing have suffered terrible job losses and even disappeared while others have thrived. We now import a lot of things we used to make here because other people make them either better or cheaper. We sell to others mainly on quality. Given the right policies and a little luck UK manufacturing can begin to grow value and jobs again.

The short version is that you are too pessimistic, reports of the death of British manufacturing are exaggerated.

Jeremy, You are right of course, overseas business here still employ people but often of lower skill. They pay taxes but often minimised internationally by their corporate treasury departments.

Also I did not count the businesses that UK companies buy overseas, which does counterbalance it to some extent.

Nevertheless it has been too one-way in recent years due many reasons outlined before. The bad balance of payments is testament to this.

I note there was an item on the news this morning that some Cadbury operations were being transferred to another Kraft subsidiary in Switzerland, partly to avoid UK tax. Surprise surprise, more jobs lost , less revenue for HMRC and worse balance of payments.

Am not suggesting a return to protection, but think we need to be a lot more nationalistic to stop the economic decline and be a successful industrial nation. Governments of any colour have to show the right leadership and support.

Let us hope with a more positive government attitude to industry, liberal industry secretary and some bad recent examples like Cadbury, things will improve from now on.

John16

I think we have more areas of agreement than disagreement.

Most of our problems seem to be in three areas: education / training, lack of self-belief and distorted values in our choice of role models. The latter - admiring "celebrities" more than, say; great scientists, engineers, architects, business achievers, writers and artists may be a part of education.

You will note that I include people who will have studied non "productive" or non-vocational subjects at university. Man does not live by bread alone. Or put another way, what is wealth creation for? We need a reason to live beyond money and conspicuous consumption.

That is not to put the cart before the horse: we need both.

Jeremy, I agree almost entirely. I would suggest an urgent slimming down of the universities curriculum to exclude the nonsense degrees much criticised is necessary.

However I would add to your problems above the difficulties caused by insufficient investment in all categories of infrastructure.

If we were more successful as a nation, or dare I say it been led better, then we would all be paying less taxes and possibly not having this discussion at the same intensity level.

Observer got it right - Adopt the French system of tax and allowances.

In addition - tax all benefits over these allowances - purchase all building land at existing use value for the benefit of the ratepayers - Charge double Council Tax on all second homes - Councils to give lifetime mortgages at a fixed rate of say 5% to first time buyers - No VAT on utility bills - prohibit all tax evaders from owning property in the UK and require them to apply for visas to visit - Make all accountants responsible for seeing that each client pays a minimum % of gross earnings to the tax man on pain of paying it himself - That should get things moving - plenty more ideas available

what a clever person -

and ah - I like that prohibit all tax evaders from owning property - I suspect some of our recent Russian property owners might find that interesting

vj

Double Council Tax on 2nd properties... nice try but what about some of our friends who always use the names of their families and relatives when buying their investment properties. I knew a few like that in Slough, didn't seem to like paying income tax and CGT and a few pulled in benefits as well.

Send the scam mongers to jail, oh no bad idea - that'll cost us more too!

The police can confiscate cars when the drivers have broken the law - why cant the revenue confiscate the scam mongers assets??

The Revenue can and do prosecute tax evaders. The courts can fine such people, send them to jail and confiscate their assets. The problem is not one of deterrent punishments but of catching the miscreants and proving their guilt.

i used to work in the Inland Revenue. It's changed dramatically in the years since I left (1978). The biggest problem that I make out is that in conversations with those still in it at the biting edge of the Revenue - going after those who don't comply - is both undermanning and under-resourcing. It's taking too long to catch those who evade their taxes and when they do the payback is usually negotiated. Those who won't negotiate or payback are the ones who are prosecuted.

It's a sad indictment of our society when law-abiding workers have to pay through their nose for those higher up the tree who can but won't pay. They're the ones who should be shafted + interest + deterrent fines. They should also lose their house and any other asset they hold to pay back to society what they took out. If they've managed to get up the tree then, then they should also be able to work their way back up from scratch.

Sadly Steven McCann ....many of those who have the ability to pay more tax also have this affliction whereby they cannot bear to pay any of their wealth away in tax . It's a sort of greed cancer that consumes them .

I agree with you that there has to be some punishing deterrent or deterrents which sorts these folk out once and for all . Requisitioning their assets sounds a great idea .

Derek, I also believe that there is too much of a soft touch when it comes to bankruptcy, having reduced it from two to one years. It's beginning to be a social status thing, that it's fine to spend your way into oblivion, as in a year's time you'll be free from it again. Some of the jack-the-lads don't seem to realise they'll have the "social status" stigma of having the term - discharged bankrupt - on their credit recor for a number of years. There is a distinct lack of transparent advice on just what the perils are if you fail to pay your way. There really does need to be a wake-up call from the courts and the small print in credit agreements needs to be large print - a bit like smoking and cigarette packets. If you're self employes and can't pay your debts, what chance of them paying their tax.

I think we should increase tax on all the things I find personally annoying:

1) tax children: if you have kids, you pay for them. This would also discourage the lower classes from breeding uncontrollably and burdening the State with the next generation of criminals

2) tax X-factor - anyone who tunes into the programme to be hit with a £50 fine per viewing, or charge on a pay-per-view basis with proceeds to charity

3) tax food, especially fast food and anything with a high content of sugar, fat or salt. The poor are disproportionately obese and this would be a good way to fix it

4) punitive taxes on: betting shops, national lottery, shellsuits, baseball caps, anything by Burberry

5) swingeing taxes on mobile phone conversations and txts, with supertax on annoying ring tones. All mobile phone taxes to be quadrupled if the phone is used on public transport or in a public place

6) my personal favourite: all council property rents are a benefit in kind so all council rents to be taxed at the individual's highest marginal rate

Merry Christmas!