Tuesday, September 14, 2010

The taxman cometh...

I know that I am somewhat late to this party (because, as usual, real life has been intruding on my blogging time), but there are a few pertinent points that I would like to make about the monumental tax fuck-up that has been doing the rounds over the last few weeks.
Almost 1.5 million workers face demands to pay back an average of £1,400 in tax after an error was found in calculations over the past two years.

HMRC has admitted that 5.7 million people have paid the wrong amount of tax due to errors in the tax code system.
The figure includes 1.4 million who have paid too little and will face demands for repayment as well as 4.3 million who paid too much and should receive rebates.

None of this is a surprise, really; many of us have been banging on for ages about the complexity of the tax system and, given that HMRC are a bunch of complete numpties, it was only a matter of time before something like this happened.
The Coalition blamed the last government for the fiasco. A senior Tory source said: “This happened because the last government failed to comprehensively reform the PAYE system. We are now dealing with that mess.”

A Treasury source said: “A decade of meddling and intervening made the tax affairs of millions of families and businesses across the UK extremely complicated.”

Yes, yes: so what are you going to do about it?
George Osborne, the Chancellor, has said he will introduce a fairer and simpler tax system. He is certain to use the meltdown at HMRC to push for further and swifter reforms to the way tax is calculated and collected.

Good. Just for the record, because it bears repeating yet again, here is how I would like to see the tax system operate (given a similar paradigm to the current one. Naturally enough, my preferred system is rather different, and involves consumption taxes as the primary tax source):
  • A Personal Tax Allowance of around £12,000. Not only is it deeply immoral to tax the poor and then make them beg for a few nuggets of their money back, twelve grand is roughly the earnings of a full-time minimum wage earner. Further, the Rowntree Foundation have, oddly enough, calculated that the absolute poverty line is about £12,000 minus tax: if we don't tax low-earners, then we have raised thousands of people out of absolute poverty—result!

  • A Flat Tax of around 22% on all personal earnings. Rather than worry about the source of the earnings (there are different rates of tax for salaries and dividends, for example: for more details, ask Richard Murphy), let's just tax what people receive—it's much easier to administer and we can remove some of the distortions from the market. And, for the record, Timmy agrees with me.
    Better by far to abolish corporation tax altogether and simply tax the income/returns when they arrive with people.

    After all, companies don’t pay tax, only people do: and we also know that 70% or so of the corporation tax burden is carried by the workers in the form of lower wages.

    There should be no exemptions (except possibly for pension, healthcare and unemployment contributions. Let's get people used to paying into these as soon as possible, in order to soften the blow when we finally abolish the National Insurance Ponzi Scheme).

All of this will make life far simpler. It will also make collecting tax far more efficient, reducing fiscal churn and enabling the money that is collected to have far more purchasing power.

However, I don't expect George Osbourne to be anything like this radical because he's a weaselly little bastard with no balls—and the same applies to his massively-foreheaded twat of an organ-grinder.

Although, there are a couple of rays of hope that maybe—just maybe—George is thinking of something slightly radical. The first is the fact that, only a few days after the news of the mistakes were reported, the Treasury came out with this utter toss.
HM Revenue and Customs could take direct control of every worker’s monthly pay cheque under plans to overhaul the error-prone income tax system.

Instead of employers deducting income tax then paying gross salaries to employees, the gross monthly payment would go to an HMRC-run tax “calculator”, which would then pass the net salary to the worker.

So, let me get this straight: HMRC—which has proven its colossal incompetence by not only fucking up the PAYE tax assessments of millions of people but was also, lest we forget, responsible for one of the biggest data losses of all time—thinks that it can make things better by taking on the monthly (or weekly) pay assessments of every single worker in the country.

Are these bastards insane?

Not only that, of course, but it undermines the fundamental point that it is our fucking money—earned by our hard work. It doesn't belong to the fucking state, and these absolute cunts should be absolutely fucking ashamed that anyone—anyone—could seriously suggest this measure (even were these incompetent bastards actually capable of administering such a mammoth system with any degree of competence).
Brian Stenhouse of Armstrong Watson, which runs payroll services for more than 2,000 companies, said people should have “deep concerns” about the central deductions plan.

He said: “Are people going to be happy to give HMRC their bank details and trust HMRC to make the right deductions and pass on their salary every month?

“Given they’re not going to have a complete monthly payslip any more, people are going to be in dark about what’s been deducted. And if there is an error, they’d be reliant on HMRC to correct it.”

Anyone confident in HMRC's willingness to correct mistakes in a timely manner? No, I didn't think so.

Oh, and don't forget it has been ruled that HMRC are not responsible or liable for any errors that they make—so good luck trying to pursue any damages claims against them.

My rage, contempt and indignation is, of course, shared by Timmy...
Concentrate instead upon the moral logic of this. All of our money isn’t really our money. It’s the State’s, all must be reliant upon that beneficient State for every penny of whatever dribble of income they might allow us.

Err, no. “Treasury ministers” who are advocating this can fuck off and die: and the Coalition they rode in on.

... and my impecunious Greek friend (whose peripatetic ways mean that he would not be currently affected—a fact that does little to dampen his ire).
You have to be fucking yanking my baws. Giving the state all my money and then petitioning them to tell me how much they took? No, no, I think not, you dickless fucking cretins. You've just demonstrated that you can't even add up correctly; I'm certainly not giving you my wallet while you count off the tenners you plan to leech off me. I'd be better off throwing it into the fucking sea.

Indeed, the angry baby describes a tax system that would, I feel, be rather better than the current one.
No, I propose the exact opposite. Every year, I propose that each taxpayer receive an itemised statement from HMRC, providing a detailed breakdown of how every penny of your taxes has been spent—£431.20 on the NHS, £193.31 on the police, 59p subsidising MPs' booze, 2p on duck houses, etc. etc.—and countersigned, for good measure, by your local MP. Is it value for money? Does it reflect my priorities to some minimal degree? Am I happy with the political representative that nodded it through? If so, then I may - generously, if through gritted teeth—cut you a cheque; and yes, you can just fucking wait three days for the money to clear like the rest of us, you fucking bastards.

You work for us, you unspeakable cunts, not the other way round. Don't forget it.

So, given the predictable outrage, either this is a bunch of disgruntled Treasury Civil Servants attempting to direct some fire at their Coalition masters, or something rather more subtle is going on.

And this brings me to the second point—one which was rather well articulated, over a beer, by Simon Goldie (the kind of libertarian LibDem that I could see myself working with, by the way).

Simon's contention, and it is one that I was mulling myself, was that all of this was softening up the various vested interests for a massive simplification of the tax structure by Our New Coalition Overlords™. Tax simplification has been opposed by many barking fucking loonies, arrogant and ignorant ne'er-do-wells, and evil arseholes (both of them); however, it would be difficult for even those tits to oppose something with a massive groundswell of public opinion.

So, the announcement of the balls-up in PAYE taxes plus the absolutely insane solution proposed above might get people thinking that maybe HMRC is not people by fluffy bunnies and do-gooders and that, just possibly, there might be a better way of handling this whole tax thing.

With Osbourne's Spending Report coming up soon, now is the time to start agitating for a simpler system that doesn't involve us begging the state for our money.

Let us hope that George has something good for us—frankly, Our New Coalition Overlords™ have not impressed me yet (and they certainly haven't made my life better by even one iota) and I'm getting slightly tired of waiting...


hrothgar said...

One shudders to read a libertarian proposing income tax of any kind....

Perhaps just cutting massive amounts of expenditure would solve the problem of revenue the 22% is meant to account for?

After all, the government is best which governs least.

Anonymous said...

You need to transition to a libertarian state.

FlipC said...

"undermines the fundamental point that it is our fucking money" um no it's the Bank of England's money; we just get to play with it.

With the tax cock-up if it's over a year old and not a mistake on your part it can be written off... though this is at the discretion of those that messed it up in the first place.

As for letting HMRC hand out salaries piss-ups and breweries spring to mind.

Onus Probandy said...

Mark Wadsworth has recently been going into some detail about an alternative to what you propose here.


- Scrap the personal allowance
- Introduce citizen's income in its place.

Throw in a flat tax on all earnings (as you advocate), and voila.

This solves the taxation problem, benefits problems and pension problems in one vast simplifying gesture. What's not to like?

Chances of any politician raising that as an option? Nil.

Lendusaquid said...

Whoever cuts the pie owns the pie.They do own everything you earn.What do you think backs government borrowing?.The only way to win is to not play the game.Cash in hand anyone?

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