UK journalists have been paying attention to tax anomalies this week, as I have in this morning's main video.
This comes from the FT:
Amongst the other comments were this:
I provided the framing for this article with the idea of tax spillovers.
The Taxing Wealth Report did, I know, help the article's development. It is having more influence, I think, in this election campaign than I dared expect. Most certainly, the Greens, Paid Cymru, and Lib Dems have so far been very obviously influenced by issues raised in it. Reform has, rather bizarrely, picked up my thinking on central bank reserve accounts, and overall debate around tax inequalities and the need for reform is figuring much more prominently than I expected. All of which is good news.
I am expecting more on this theme tomorrow.
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It does seem you are having considerable influence across the parties – they should acknowledge it.
But the ‘conspiracy of silence’ about the ‘no money’ fiscal rule, between Tory and Labour, underpinned by the omerta among the media still needs blowing open and probably wont be.
Why not a different type of political panel/debate – where for example the parties are asked to respond to some key alternative economic ideas? Anything to get away from the endless repetition of key phrases designed to avoide addressing any actual ideas.
There is much to work on after this election….when we get a miserable government
I am glad you are getting noticed on this, it is where your experience and expertise – and clarity of thinking about it – carry the biggest weight.
It would certainly make sense to have a consistent rate of NI, and in turn that would enable a simple surcharge for non-salary income to align overall marginal tax rates. I suggest it would need a bit of tweaking of other income tax rates and thresholds so that there is a logical progression as incomes get higher, but as you say (in the other post today) that could mean removing other anomalies like the clawed-back personal allowance.
I like the implied approach that such changes to income tax and NI could be done to be neutral overall, but creating a simpler framework would make it relatively straightforward* to align tax for non-salary income (e.g. rents and realised capital gains). Removing that particular anomaly wouldn’t be increasing tax for “ordinary working people” (which I think is the current Labour phraseology), would raise tax to balance the needed government expenditure on public services, and would need a justification for the current unfairness to argue against.
That other post also mentions the odd effects around the Child Benefit threshold. I would prefer Child Benefit not to be means-tested but balanced out within the tax system (which is what I read your position to be), but there would still need to be some sort of threshold/claw-back for other means-tested benefits.
[*Although thinking about it there would need to be a change from a flat rate CGT to graduated rates dependent on overall income, which it could be said is not entirely straightforward. However I suspect it is a small minority who pay CGT anyway, and they will already be filling in tax returns].
I want nothing to do with changes that are neutral overall
We have a regressive tax system and need a progressive one
But, thank you
Whoops not clear. What I meant was that net revenue from combined tax and NI on salary income via PAYE could stay about the same, but consistent NI allowed the rates and thresholds to be designed for a progressive impact without excessive complexity – while at the same time the overall tax revenue would increase by applying the same inclusive rates to things like CGT and rental income which are received predominantly by the relatively wealthy.
Ah, ok
How is this for an election anomly. Sky News has just reported a “vast new” MRP poll of 22,000 people by Survation that forecasts near extinction for the Conservatives; reduced to 72 seats, and 456 for Labour.
Until I realised two things. SNP had disappeared completely, not even mentioned. Odd, not actually saying why. Then I realised the figures only totalled about 594 seats. Scotland missing. not even mentioned.
This is a general election. we are told Scotland is part of a Union. Endlessly. an election comes. Scotland disappears.
QED.
anomaly.
Bizarre
The tax system is a dog’s breakfast, dinner and probably supper too. But Chancellors love tinkering with it, give a bit here take away a bit there, reward your supporters with some tax breaks and a few cuts while clamping down on the idlers and malingerers. And so anomalies accrete and any concept of tax justice gets lost in a miasma of bungs and special cases.
The tax system seems to be the result of political gaming (especially before elections) rather than methodical analysis aiming for justice, social fairness and progression. Probably another result of the party system and FPTP.
By way of confirmation of your influence.
I heard Richard Tice on any questions last week, He stated that if the government stopped paying interest on the money it “borrowed” from the BoE it could save £40bn per year and make this available for spending. The chair then put this point to Paul Johnson – so he could say if it was true or not. He confirmed that the government didn’t need to pay the interest. The debate ended up being about whether it was £20bn (Paul Johnson) or £40bn (Ricrahd Tice). The other panels just didn’t seem to get it and the discussion moved on without this causing an any reappraisal of government finance and what we are being told about being able to afford things.
Rice overstates
Johnson probably understates
Neither fully understand it – or the tax dimensions
I’m sure the tax code will remain as large and complicated as it is, because it serves a purpose – if you have enough money you can pay a tax adviser who know the loopholes in the code and who can run rings around HMRC to ensure that they pay little to no tax.
There are a lot of anomalies some of which appear to have been caused by changing some things and not others.
For example. Someone out of work can claim contribution based JSA if they had Ni contributions in the relevant year(s). As it is contribution based, household income is ignored. The claimant is allowed to work up to but not as much as16 hours per week. The benefit is worth about £90.50 per week, any increases to that amount have not taken NMW increases into account. Although household income is not taken into account, the claimant’s income is. Minimum wage is now £11.44 per hour. Working the permitted 15.75 hours/week gives a weekly income of £180.18. This income reduces the amount of the benefit £ dor £. So the only people who receive anything is those who work less than 8 hours per week.
None of the JSA guidance mentions this.
Thank you
https://www.theguardian.com/politics/article/2024/jun/16/hmrc-has-failed-to-fine-a-single-enabler-of-offshore-tax-in-five-years
Another shocking state of affairs …
Agreed
Excellent reminder. The fact that the tools are there does not mean they are going to be used, or even that it was intended to use them. This is classic neoliberal government. When in trouble, pass a law that promises transformation. You can then say you are ‘tough’ on whatever failure or scandal neoliberalism has visited upon everyone.
The point is, the new legislation means nothing if it is not enforced. How do you stop someone in the bureaucracy doing the right thing, and enforcing. Easy, and much preferable to failing to legislate. Just ensure there is nobody to enforce it; starve the selected medium of action of resources, and effectively enforcement is shut down. This is Britain. Nobody will notice, and the media is so inadequate and ill resourced with real thinkers or doers, or (lets be frank here), full of neoliberal key boards easily bought and sold; criticism isn’t going to happen. Too complicated, too boring for journalists to bother.
And that is how it is done.