Leader: A fair tax system is what’s required
Tuesday 20th December 2011, 12:30PM GMT.
Prime Minister David Cameron is keen to emphasise at every opportunity that we are all in it together. Some people, however, are clearly far more in it than others.
Britain’s top taxman today came under fire after it emerged his office had failed collect £25 billion of unpaid bills from some of the UK’s biggest hitting businesses.
The Public Accounts Committee claims officials have been bending rules for the likes of finance firm Goldman Sachs, which had an £8 million bill waived.
This, of course, is the same tax office which dedicates a sizeable chunk of its time hounding ordinary, hard-working individuals for what are, by comparison, paltry underpayments – often caused by miscalculations in their own bafflingly complicated tax codes in the first place.
And, far from waiving these debts, it does not think twice about imposing stiff penalties for individuals who refuse to comply.
So why a different rule for big businesses? It is little wonder that HM Revenue and Customs stands accused of having an “unduly cosy” relationship with top firms, and that the Government is viewed in many quarters as cosying up to the City far too closely.
All people want is a level playing field. One rule book, against which every person and company is judged, no matter how great their wealth, influence or political usefulness.
The Public Accounts Committee is right when it claims there appears to be little or no sense of personal accountability when things go wrong.
How many more millions are being lost to the public purse in a similar fashion, and wringed out of those who can least afford to make up for such mistakes.
The coalition talks tough on tax evasion. Now is the time for George Osborne to turn words into actions, and force the tax office to come clean on the details of its deals.
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The main problem appears to be that all governments love to tinker with the tax system, seemingly giving away “breaks” to their pet projects whilst increasing the tax burden on other areas with smoke and mirrors regulations. The overall impact is fiscally neutral but it gives good headlines. Rather than continue with this ever increasingly difficult tax system (that only benefits accountants seeking to mitigate monies owed by their clients and the increasing number of HMRC staff required to enforce these complex rules) what is required is a simpler system that bands income and scraps all other aspects of taxation (VAT, Fuel Tax, NI etc). Calculate what we require as a nation and then construct a system around this. As an example (and before a litany of bean counters pull it apart, it is an example) anyone earning under £10k pa pays no tax, £10k to £15k pay a flat 5%, £15k-£20k pay a flat 10% etc, capped at a flat 40% at £50k onwards. The less loopholes and the fairer a system seems the less likely people are to attempt to avoid/reduce their tax liability. A simple system without the myriad of excemptions/allowances, easier to enforce, easier for people to understand and buy into and finally the lowest earners in society are not penalised with the unfair taxes like fuel duty and VAT…..just a thought!
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Your leader writer is missing the point.
HMRC policy is dictated by government. If they are being soft on certain types of taxpayer then it is because that is goverment policy.
The committee are right to point out that these taxes aren’t being paid, but news this afternoon indicates that Cameron is denying that these wealthy companies are getting an easy ride – well there’s a surprise, given that the financial services industry provide more than 50% of his party’s funding – he knows on which side his bread is buttered!
And let’s not forget, the missing money here is over and above the billions allowed to the wealthiest, which allows both corporations and very wealthy individuals to pay far less tax proprotionately speaking than the rest of us.
It’s a national disgrace, especialy at a time of such austerity – but don’t blame HMRC – they are simply following the lead given by their political masters.
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‘Prime Minister David Cameron is keen to emphasise at every opportunity that we are all in it together. Some people, however, are clearly far more in it than others.’
A bit late perhaps but looks like the penny has finally dropped at the Star.
Not quite sure how this view squares with your idea of Cameron as a modern-day Churchill for continuing to ring-fence his city chums from nasty old Europe but, for now, I’ll settle for one small step towards a bit of sense.
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As billionaire businesswoman Leona Helmsley once said, when charged with tax evasion on a huge scale, “only little people pay taxes”. If the government is prepared to turn a blind eye to those who have the most ability to pay whilst screwing the rest of us then we live under a regime as evil as any in the world.
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Don’t you people understand ‘Trickle Down’ economics ?
If large companies can’t squirrel away billions in tax avoidance, how can they possibly pay millions to their chief execs ? And it’s those millions that trickle down to the rest of you.
Yes, you lucky people.
You must be rich by now, it’s been trickling down for about 700 years now, if you’re not, well you’ve only got yourselves to blame.
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‘Trickle Down Economics’ – that’s where the debt trickles down leaving a layer of pure wealth at the top?
It seems to be working pretty well!
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One area where money could be saved is VAT.
Example: in our business we buy raw materials, and we pay VAT.
We produce goods and sell them, in many cases charging VAT (some are zero rated). Often a VAT-registered business buys our goods.
Now …
The VAT we paid to our suppliers gets sent off by them to HMRC. We then put in a claim, and the ‘VAT-man’ sends the same amount back to us.
We send the VAT we have charged our business customer off to HMRC. The customer then claims the same amount back.
So money is going round in circles, being ‘administered’ at every stage, and the tax-payer doesn’t see a penny of it. It’s not quite that bad, as we balance off the VAT in and the VAT out and just claim or pay the difference, but still – only individuals who are not VAT registered actually pay VAT once the merry-go-round stops.
Far more sensible if we could prove to our suppliers that we are VAT registered and then just not have to pay it – and similarly not have to charge VAT to our VAT-registered customers.
Same outcome, loads of administration saved, far less cash having to be shepherded round the system in ever decreasing circles.
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As usual, it’s the hard working, so called “Little people” (see John Howard above), who are forced to pay taxes. I also despise the fact that I contribute towards lazy, cheating, benefit scroungers, who for the most part get away with not having to lift their backsides and work for a living.
That said, why should rich companies be waived when it comes to tax payments? We certainly get no leeway. Mr Cameron, I do not think we are “all in it together” somehow.
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The plain and simple truth is that because our tax system is deliberately complex to allow for the accountancy profession to create work for itself. The sting is that you have to have wealth to employ them, and if you have enough, (like vodafone or top shop for instance), then you can afford better accountants than HMRC, so they can bully their less gifted fellow professionals into complying with their clients’ demands- if that fails they can also afford better lawyers and HMRC is scared of being humiliated in court.
Of course this is an utter disgrace and for the other commentators who raise VAT as an issue – this is shocking. While the concept of a luxury tax is sound – ie taxing those who spend the most in addition to those who earn the most how can 99% of the items considered “luxuries” be viewed as such by any rational person? Fuel? oh ok then I am poor I will freeze to death! Clothes???? Well the last time I checked I am not allowed to walk down pride hill devoid of these “luxuries” – or plod will have me. And, because this heavy tax is levied on all of the items we NEED to live – or at the very least conform with society’s rules then it is of course a tax levied squarely at the poor.
Also, while we are at it income tax was an emergency tax brought in to fund the napoleonic wars – last time I checked we were no longer at war with the french, so why are we still paying?
However, despite everyone seeing how unfair the system is at the minute, nothing will change as those at the top are laughing all the way to their off shore accounts and we can keep being squeezed and squeezed and squeezed… I fail to see the difference between the system now and King John’s time – apart from the fact we have no forests left to run to hide in when the tax collector comes a-calling.
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