Chris Brewer says!

[wynn]

HANDS UP EVERYONE WHO PAYS THEIR INCOME TAX
How do you get a prostitute to pay tax on the money she makes?



Well, it’s actually not as difficult as it seems. While the rest of us (actually we’re a very small percentage) are being screwed by the taxman she (or he) is doing it the other way round.*



And that bloke selling illegal fags on the street corner? I bet he’s not paying any tax either.



In fact, just about everybody dealing in cash probably “forgets” to mention most of their income.



And I’m not giving into temptation by starting a rant about those bastards who make a fortune out of showing people how to avoid paying tax. What I will say is that they should all be locked in a room with Jeremy Clarkson and forced to listen to him speak his mindless drivel endlessly for 24 hours a day.



South Africa relies far too much on the few of us who DO pay. They may be trying to expand the number but that idea will also fail – because income tax is so easy to avoid. The numbers vary but, essentially, out of around 18 million people who work only about 5 million pay income tax.

Even if this gap were closed significantly it’s an inherently bad idea for any government to promise a wealthy country in exchange for increasing amounts of taxation on income.



As Winston Churchill famously said: “A nation trying to tax itself into prosperity is rather like a man standing in a bucket and trying to lift himself up by the bucket handle.”



But the solution is SO simple that I’m amazed it hasn’t been done before.



So, for all those politicians reading this (I know you do because Brewers Droop has been mentioned in Parliamentary debates before) just repeat the following words several times a day until the idea finally sinks in.



Ready?



Abolish ALL earning tax (PAYE) and increase spending tax (VAT).


Then EVERY person will be paying tax to the government and its coffers will fill very quickly. The reason is simple – it’s a million times more difficult to fiddle VAT than PAYE.



Of course some items will be zero rated (like bread) but VAT on a new Merc will be 100% (and car dealers mustn’t worry because sales will go up! A high-earning person not paying income tax will have loads of cash to spare).



You don’t have to thank or reward me, it’s my gift to all mankind.

[Blurock]

Wow! Where can I vote for you?

[Dave A]

I'm feeling this one over for catches.

First problem - the only collection point in this would be businesses big enough to be registered for VAT. You're still bleeding big time.

[Garf]

Mathematically the VAT proposal could work but it is politically unacceptable. I would solve the budget deficit problem if linked to 100% Death Duty (Estate Duty, Inheritance Tax or whatever you want to call it) based on you can't spend it when you are dead, and if you really want to help your kids or chosen beneficiaries do it while you are still alive. You can give your money away in the UK (without the 20% donations tax we have here), t&c apply, to avoid inheritance tax, but a survey done there showed inheritance tax to be the most hated of all taxes even by people who wouldn't have to pay it.

[wynn]

You need a 'family trust' to hold your inheritance so when you fall off the perch one of your kids become the trustee and all the other beneficiaries remain the same only now they have your share to split up as well.

[wynn]

the only collection point in this would be businesses big enough to be registered for VAT.

Correct
If you are not registered for VAT you cannot claim input on your purchases for your business, when you spend you pay VAT irrespective
Except for the guy on the corner selling smuggled ciggies, but even he has to buy groceries and clothes somewhere, so that is where he will pay VAT on his ill gotten gains.

[Dave A]

Correct
If you are not registered for VAT you cannot claim input on your purchases for your business, when you spend you pay VAT irrespective
Except for the guy on the corner selling smuggled ciggies, but even he has to buy groceries and clothes somewhere, so that is where he will pay VAT on his ill gotten gains.

Yes, but that still happens anyway under the current system. It doesn't advance the argument for a VAT only tax collection system - to me it's a point against.

[wynn]

Yes, but that still happens anyway under the current system.

He is out the net at the moment so he won't pay tax anyway, but if Chris's proposal is accepted, when he sells his ciggies he won't be breaking any tax laws (except any duties he should have paid and criminal laws if they are stolen)

However

At the moment he pays no income tax only VAT when he goes to Mr Price or Woolies and buys that jacket, the VAT/TAX system means that he will pay tax when he spends his ill gotten gains, a half loaf better than none, takes some of the burden off me and he will get slammed when the better financed cop's catch him..

[Dave A]

Times like these I wish Graeme was still around. He was an absolute whizz on various tax systems that have been used over the ages.

I recall one he mentioned to me - a per capita tax system. It was a flat rate, per head tax. You paid it or you didn't. But if you didn't you got no access to anything from the state.

You might think the most significant "loss" would be "services and utilities", but apparently the biggie was a loss of access to justice. You could be robbed, assaulted, cheated, left unpaid and you'd have no access to the law to get recourse. This was a particular problem for the merchants of the time if they failed to pay, but it also affected the general citizenry.

Trying to remember where it was used - Venice or perhaps Italy I think.

I suggest ultimately the advantage of narrow tax collection mechanisms is they are simple and effective. The disadvantage is they tend not to spread the load fairly.