Quick answers:

1) NIC is a fact of tax life, almost the world over. It spreads the tax base, and ensures people like pensioners are not liable. That is its benefit.

2) Re capital receipts, the aim is to have a lifetime allowance for receipts (indexed over time) and all receipts in excess of that are taxed. Obviously, it’s a little more complex than that in reality!

3) I do not agree. Tax may be at its limit now because there is a perception of government waste. That has arisen almost entirely because of the dogma driven desire to introduce ‘choice; and ‘competition’ into public services when the former is not possible due to geographic and resource constraints and the latter undesirable because it simply creates vast amounts of admin, and ignores the fact that big business does not compete (see supermarkets and the fact that they appear to price fix, as one example). If an honest public service, based on the notion of public service not quais public gain were introduced then I think that as in the Nordic states the capacity for taxation would not have been reached. The tax we pay would also go further, now.

4) I approve of state funding of political parties. And MPs expenses being on the public record. I do not approve of fixed allowances.

Richard

1 The fundamental principle of fairness in taxation, that all who derive income from activities in this country must be subject to the same rules - and unable to avoid these rules by virtue of their wealth and presumed power - must drive any rethink. In my opinion, this would have huge popular support.

2 However, even if such principles kicked off a major rethink, popular support would very quickly be lost unless the worst tax avoiders were seen to have their taxation privileges reined in before moving on to other “softer” targets such as the self-employed. The highest profile abuses of the current system must be tackled first.

On the detail, I question your conclusion that adding an 11% surcharge to investment income would discourage the taking of investment income rather than earnings from small limited companies. Forgive me for saying so but this suggestion has a hint of Gordon Brown tinkering about it. Although it would bridge a gap, it would not compensate for the loss of employer’s NICs, thereby leaving an incentive, albeit a smaller one, to continue current practice.

Why cannot tax and NI be consolidatedm with hypothecation of appropriate proportions for health services and state pensions - this is after all what happens with NICs at the moment - to address concerns about financing those 2 key issues? Having one tax rather than two would surely greatly simplify designing a more just system.

I couldn’t agree more with what you say on inheritance tax. As a single parent with 2 kids, I find it absurd that they get less than a single child with 2 parents in a similar financial positiob to me, not only by virtue of there being 2 of them but also by virtue of my being single. A capital receipts tax, with an individual allowance per recipient, would be far more rational, although I suspect there would be a wind band of opinion on what the individual allowance should be!

Keep up the great work!

I certainly accept the principle of your suggestions for a more progressive approach to taxation and your suggestions re ‘abuses’. To my mind no one has provided a good policy reason for reducing CGT to a flat 18% even for short-term gains. It all but begs advisers to recommend how income can be converted to capital gains so as to reduce the tax thereon from 40% to 18%.

The Labour Land Campaign’s manifesto, which is posted on http://www.labourland.org, demonstrates quite clearly how annual land value taxation can replace Council Tax, National Non-Domestic Rates and Stamp Duty Land Tax in a progressive and efficient way. The bottom of the land price cycle (c 2010) is the ideal time to introduce LVT. Moving the rate upwards a replacement of Income Tax at the standard rate could eventually be achieved, together with correction of the dysfunctional land market.