Tuesday, March 11, 2008

The Samizdata Budget

I have to say that, generally speaking, instead of listening to that irritating, badger-faced moron, I would far rather that Samizdata's Guy Herbert was delivering tomorrow's Budget.
Mr Speaker,

Income tax is an evil. It is an evil not because it is a tax, but because of the way it works.

First, it takes from the citizen the choice of how to spend his money. Indirect taxation, though often in the past tweaked to show the state’s displeasure at certain choices, still leaves you a choice; to spend or save, and whether to have booze, burgers or broccoli for lunch.

Second, it requires the tax authorities to enquire how you obtain your money and how you spend it. The existence of exemptions and allowances, of deductible business expenses, returns and taxes management is essential to the operation of a system that would widely be seen as unfair if it fell as heavily on the pauper, the producer, and the rentier drone. But the existence of allowances and schedules, and latterly tax-credits, means people rightly use their rights, and the Revenue is incentivised to regard everyone as a cheat, to treat careful self-management as a form of fraud, and press for more powers and more bureaucracy. The system becomes ever more complicated, by special pleading and anti-avoidance; the complication allows for ever closer investigation of personal affairs, ever more complicated and impenetrable forms, and ever harsher treatment of the negligent, confused or exhausted taxpayer.

The result tends to a system of brigandage, where the law of collection is as uncertain as the Tax Inspector’s patience, where the small taxpayer is as much prey as he has fat on him, and only someone rich enough to fight a case as far as the House of Lords will ever find out what the law is. Having made the travellers empty their pockets, the suspicious highwayman will resort to strip searches, then to probing body orifices. Anyone who has made tax or tax-credit returns for a few years has had a similar experience.

Third through PAYE and deduction at source, it takes and spends your money before you get it. You may never notice it has gone. And if you do, and your financial knowledge is small, you may not realise how much of it has gone, nor make the connection between your vanishing money and state spending. That makes it easy for tens of millions of people to believe that it is always someone else who is paying for political promises.

Yes, income taxation is great evil. It tends to destroy liberty, privacy, and personal responsibility.

All of which is entirely true and ran through our minds when we decided on the first LPUK policy of abolishing Income Tax. However, Guy has an unexpected announcement to make...
It may come as a surprise to the House and the country, therefore, that I, as the first Samizdatista Chancellor, am proposing to increase the rate of personal income tax.

There are worse things than high tax rates. My predecessors in this office have amply demonstrated what those are by their practice. They have each chased headlines by purportedly “reducing” the rate of income tax from time to time. Meanwhile, inexorably, ineluctably, and invisibly to the average member of the general public, the burden of taxation has risen, with a few pauses and breathing spaces, for more than half a century.

This has been done in two ways. By the imposition of more “invisible” taxation on the nation’s payrolls, and by the extension of the tax-man’s reach through complicating the system. My Right Honourable Friends have explained how we intend to slim the state; my task today is to reveal its weight, and start to reduce how heavily it rides the citizen...

Go and read the rest; if only it were real, it would be more than a good start...


Anonymous said...

The government doesn't spend tax revenues very wisely, but does that mean that income tax itself is an evil? Shoudn't your finger be pointing at the system itself? In what ways do you envisage our economy to be different after the abolition of income tax? And how shall/should the government deal with a narrower tax base?

Tomrat said...

Anonymous 6:02,

A Liberterian government wouldn't be dealing with a "narrower tax base"; taxation at the point of sale instead of earnings would simplify the taxation system, reducing the burdern created by the inefficient HMRC, and would follow massive investment into this country in terms of business and in terms of spending; whether or not the government collects exactly the same amount in sales tax as it did with income tax is dependant on consumers spending habits - more money in the pockets means its burns a bigger hole. ;-)

You do have a point though when you say we should be point at the system itself - and many on the web have been doing it for years (such as the ever excellent Wat Tyler, for instance). What Samizdata's pointing out with this is not so much an alternative to what has gone on for a century (though it is refreshing) but points out precisely where the bars to a rather gilded cage have always been; it is mine and (I hope) the LPUK's wish to smash that cage up altogether; though perhaps provide a perch?

Mark Wadsworth said...

Before we argue and bicker about whether VAT or income tax is worse*, can somebody work out WTF these apparently superfluous five million taxpayer funded employees do all day long?

* Apologies if I insist on looking at this from an economist's rather than a politician's point of view, the answer is of course VAT.

The Sage of Muswell Hill said...


In the words of Paul Daniels (husband of the beautiful Debbie), the answer to your question is "not a lot".

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