Mad tax idea of the year

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I know Nicholas Sarkozy has proposed it and now it is catching on: the latest craze is tax-free overtime. Malta is the latest mimic. As Maltatoday reports:

Alfred Sant has once again set the country's agenda by proposing that all overtime should be made tax-free.

You just have to presume those who propose these things are either mad, naive or are trying to undermine the tax system. There's no other possible explanation.

As has been reported of the Maltese proposal:

[The] proposal has been met with scepticism by former finance minister Lino Spiteri and veteran economist Karmenu Farrugia, who have warned that if overtime taxes are removed, employees will be encouraged to shift income from their basic pay, which will still be taxed, to overtime hours which will become tax-free.

Too true. But let's imagine the benefit to the self-employed for a moment. They will set a basic hourly working requirement of 35 hours a week for which they will pay minimum wage or little more, and then pay massive overtime rates. It would make the dividend wheeze that is currently causing so many problems in the UK look like small beer by comparison.

This idea is mad. I just hope the French realise that is the case before they try it.