In search of a fairer sys­tem of tax­a­tion

The Guardian - Journal - - Letters -

Polly Toyn­bee’s sug­ges­tion that higher taxes for all are in­evitable (The re­fusal to raise tax has be­come our na­tional dis­ease, 6 Novem­ber) ig­nores nu­mer­ous dif­fer­ent ap­proaches, changes in pri­or­i­ties and po­ten­tial sav­ings that could mean we can all en­joy higher lev­els of in­vest­ment in pub­lic ser­vices with­out rais­ing taxes or in­creas­ing bor­row­ing.

In Septem­ber, AAT pub­lished a short re­port high­light­ing £27bn of an­nual sav­ings that could be made with­out rais­ing taxes or in­creas­ing bor­row­ing – by scrap­ping car tax and fuel duty and re­plac­ing it with a pay-as-you-drive sys­tem, by sim­pli­fy­ing in­her­i­tance tax, and re­mov­ing higher rate tax re­lief for pen­sion con­tri­bu­tions, to name just three of our pro­pos­als. Such changes might re­quire politi­cians to tell some un­com­fort­able truths but, given that the out­come would be a sim­pler, fairer al­ter­na­tive to rais­ing rev­enue, they are truths the elec­torate would be more likely to ac­cept. Phil Hall Head of pub­lic af­fairs and pub­lic pol­icy, As­so­ci­a­tion of Ac­count­ing Tech­ni­cians

It is not the case that the Bri­tish tax sys­tem has gone wrong re­cently, as the head­line on Polly Toyn­bee’s ar­ti­cle pro­claims. It has been un­der­mined from the out­set. In Adam Smith’s time it was en­vis­aged that the state had the right to levy tax be­cause in­creases in eco­nomic ac­tiv­ity re­sulted from its suc­cesses in keep­ing the peace, sup­press­ing epi­demic out­breaks and do­ing noth­ing to pre­vent cit­i­zens do­ing busi­ness with each other.

This would have the side-ef­fect of rais­ing land val­ues so that it was, ac­cord­ing to Smith, a sim­ple mat­ter of levy­ing a na­tional land value tax to raise the na­tional eco­nomic level to benef­i­cent heights. Nat­u­rally the landown­ers’ party was not happy with be­ing cut out of the ac­tion and over the years has suc­ceeded in pri­vatis­ing the na­tional land value up­lift for the selfish ben­e­fit of its mem­bers and hang­ers-on, al­though they have sel­dom done any­thing to raise land val­ues by im­prove­ments.

Now round here we have unlovely coun­try vil­lages where young cou­ples at­tempt to bring up chil­dren in a low-wage area while pay­ing £8oo a month in rent to grasp­ing elderly ren­tiers. Th­ese ren­tiers are di­vert­ing na­tional land value up­lift into their own pock­ets while young cou­ples are de­prived of ba­sic spend­ing power. David Reed


Agreed that “the re­fusal to raise tax has be­come our na­tional dis­ease”, but there’s a far more ap­pro­pri­ate source of un­tapped fi­nance. Wage earn­ers help fund the health ser­vice, etc, by pay­ing na­tional in­sur­ance, yet older peo­ple like my­self who typ­i­cally ben­e­fit most from such ser­vices are, bizarrely, ex­empt, how­ever great their in­come. Of course, the fe­ro­cious NI regime im­posed on work­ing-age peo­ple should not be ap­plied to pen­sion­ers, but im­pov­er­ish­ment of those with lower in­comes could be avoided by set­ting the thresh­old for con­tri­bu­tions well above the up­per limit of state ben­e­fits. How­ever, I fear that no party would dare in­clude such a fair and sen­si­ble pro­posal in its man­i­festo, given that older peo­ple are the most likely to vote. How tragic. David Wil­liam Gold­ing

As­so­ciate, In­sti­tute for Sus­tain­abil­ity

Polly Toyn­bee calls for taxes to be raised but doesn’t men­tion the vast for­tunes not col­lected from tax eva­sion and avoid­ance. The last fig­ure I saw es­ti­mates this at £34bn, which would trans­form the econ­omy of this coun­try. We haven’t scratched the sur­face of this il­le­gal and im­moral in­dus­try and we could start by mak­ing it a crim­i­nal of­fence to pay for goods and ser­vices into any­thing other than an ac­cred­ited busi­ness bank ac­count and also to fail to is­sue a proper VAT or till re­ceipt. Ralph Jones

Rochester, Kent

I agree with Polly Toyn­bee that we must raise more tax. Here are some op­tions. Im­pose VAT on UK gro­ceries (es­ti­mated to be worth by 2021 £197bn) ac­cord­ing to their un­health­i­ness, not lux­ury. This would in­cen­tivise healthy eat­ing.

A govern­ment-run and -reg­u­lated cannabis in­dus­try (es­ti­mated to be worth £7bn pa) would be safer for cus­tomers and would save the £361m spent on its polic­ing. The same can be said of other cur­rently il­le­gal nar­cotics. Af­ter all, such drugs are no more dan­ger­ous than to­bacco and al­co­hol, which are al­ready reg­u­lated and taxed. Pros­ti­tu­tion (reck­oned to be worth close to £5bn pa) would be safer for women if con­ducted in govern­ment es­tab­lish­ments pro­vid­ing cor­rect med­i­cal at­ten­tion and phys­i­cal safe­guards.

The over­seas aid bud­get

(cur­rently £12.2bn) de­serves our sup­port. But why not take from it the £1.8bn spent an­nu­ally by the NHS on for­eign visi­tors? David Hughes

Chel­tenham, Glouces­ter­shire

Polly Toyn­bee raises is­sues of huge pub­lic im­por­tance, but I would sug­gest that the un­der­ly­ing is­sue is the dystopian first-past-the-post elec­toral sys­tem, in which the two ma­jor par­ties at­tempt to bribe no more than 250,000 float­ing vot­ers in mar­ginal con­stituen­cies with prom­ises they can’t keep, and, in a tax race to the bot­tom, refuse to con­sider re­forms to what has be­come a re­gres­sive tax sys­tem, for fear of not get­ting elected. Coun­cil tax non­re­form is a clas­sic case of this.

A fully pro­por­tional sys­tem would have the im­me­di­ate ef­fect of nul­li­fy­ing the need for govern­ment to avoid mak­ing the right de­ci­sions in the na­tional in­ter­est, as in the present po­lit­i­cal grid­lock it would al­most cer­tainly re­sult in a demo­crat­i­cally elected coali­tion in the near fu­ture, with a more con­sen­sual style of govern­ment. In­deed, there was a strong case for a Tory-Labour coali­tion Brexit govern­ment af­ter the 2017 elec­tion. The fact that 42% of all work­ers cur­rently have in­comes too low to be li­able to tax speaks vol­umes about the re­gres­sive ef­fects of 40 years of Tory/Labour eco­nomic mis­man­age­ment and is an in­dict­ment of the UK’s low-wage econ­omy. Of even greater con­cern is the fact that none of this was the ob­vi­ous re­sult of our mem­ber­ship of the EU and that Brexit will not change any­thing. Adrian Ber­ridge

Clac­ton-on-Sea, Es­sex

With “a fifth of work­ers earn­ing be­low the £9 na­tional rate set by the Liv­ing Wage Foun­da­tion”, Polly Toyn­bee’s ideas for “most of us” to pay more tax need tweak­ing. De­pend­ing on uni­ver­sal credit should ex­clude many house­holds from a higher level of in­come tax, but those with aboveav­er­age in­comes must pay more.

It makes lit­tle sense for those earn­ing £49,000 to be pay­ing the same rate as those on £149,000, nor should those earn­ing £500,000 pay the same as those get­ting £200,000. The Laf­fer curve was only cre­ated to en­able Rea­gan to lower taxes so it needs to be dis­cred­ited, and dra­co­nian mea­sures in­tro­duced to en­sure that the rich pay their fair share. Let’s start with a 90% tax on in­comes over £1m. All tax avoid­ance should be made a crim­i­nal of­fence, as should giv­ing ad­vice to en­able it to take place. And of course, VAT needs to be im­posed on pri­vate-school fees. Bernie Evans


Polly Toyn­bee cor­rectly high­lights the con­se­quences of low tax rates. I can re­call when I first started work­ing 44 years ago that the stan­dard rate of in­come tax was 33%, so a mod­est rise of 1% or 2% would be no great hard­ship for most peo­ple. Ian Arnott


A govern­ment-reg­u­lated cannabis in­dus­try – es­ti­mated to be worth £7bn a year – would be safer for cus­tomers David Hughes

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