More People Sign On To The Internet
This report says that in the last year 2,000,000 more people have signed on to the Internet in the UK. A lot of those who’ve signed up are over fifty.
This is a very good thing, asa it makes it possible for the government to deliver more and more services on line to do things more efficiently and at less cost.
As an example I always get my Vehicle Excise Duty on line and it is a system that works well. Similarly, I fill in my Electoral Roll on line. That one is conpletely painless. We certainly need an on line tax and benefits system on-line, that makes sure that people are encouraged to work.
The more people that get on line, the more these systems will be possible.
Is 20% VAT Fair?
There has been a lot of fuss about raising VAT to 20%. I‘m in favour though
- Most countries in Europe have a rate of 20% or over.
- There is no VAT on food, so perhaps instead of eating out all te time, it’s time to learn to cook. After all, there are masses of books and programs on the television. There is no VAT on books.
- There is VAT on fuel, so change your driving hsbits and use less. This a good thing as we will cut carbon emmissions. Osborne should have raised fuel taxes substantially, though!
- There is VAT On building work, so perhaps it’s the time to learn to do things yourself.
- There is VAT on consumer goods, such as telvisions, but then do you really need a four metre screen. I suppose it goves a better picture for those who watch Royle Family style with endless cans of lager. As large screen TVs use a lot of energy, there is a special case for taxing the larger screens heavily. But you can always buy one before next January. It could be argued that as virtually all consumer goods are imported , that a drop in demand would be a good thing.
- But my main reason for liking VAT is that everybody pays a bit. Remember that because of pension and income tax changes, many people will have a little bit more to spend.
A Budget To Create Jobs in an Unexpected Way?
One of the provisions in the budget is that if you start a business outside of the South East, you will get a discount of up to £5,000 on NIC for each of the first ten employees.
This is very generous compared to other parts of Europe, such as France and The Netherlands, where social costs are a big cost of starting a business. Remember that over the last twenty years, the French have been one of the larger groups to move to the UK.
So will it mean that entrepreneurs will look favourably on the UK, as a plsce to start a new business, especially as UK income tax is lower than many places in Europe. For instance we have a tax allowance of £7,400 before we pay tax.
The more I look at this measure, it sticks out as a very good idea. It will be interested to see what the rules are and how they are interpreted.
But just imagine, you are something like an Australian or American software company, who needs a European support office. Leeds, Liverpool, Newcastle or Manchester, all of which possess good air links to the rest of Europe, must have moved several steps up the list of where to site that office.
Value Added Tax
There is talk of value-added tax being raised in the budget today. I feel that a rise to bring us more in line with the higher rates in Europe would not be something that caused too much pain, as most VAT consumers pay is on things like electronic goods, that are imported anyway. Perhaps we need a higher rate on things like that and perhaps a 15% rate on services, such as building work!
VAT to me is a good tax, as the system it replaced, purchase tax, ruined my father’s printing business. In the 1950s, printing work had two rates. On something like an invoice form or a letterhead, that had been printed and you could write on, my Dunlop handbills for their tennis tournaments all over the UK, the tax rate was zero, because it was not designed to be written on. Incidentally, the tax on plain paper was zero. This anomally lives on in that we don’t charge VAT on newspapers and magazines. Why not? A tax on OK, Hello et al would probably mean people read something more intelligent.
The outcome of this crazy tax regime was that more and more large businesses set up their own printing departments, buying plain paper and then using the new offset-litho techniques to create perfect copies of the originals created by craft letterpress printers like my father.
When my father had started up again after the Second World War, there were upwards of forty small printers in the old London borough of Wood Green. When he sold up in the mid-1960s there were just two.
So not having a fair tax system cost hundreds of jobs.
John Bird on Benefits
John Bird,the founder of the Big Issue.should know a thing or two about poverty and also how the benefit system works. One thing he said was that to deliver a pound of benfit to someone who needs it costs five times that amount.
He’s just been on BBC Breakfast more or less saying that no-one should get benefits unless they sign a contract to perhaps do voluntary work.
If you can see the interview watch it.
I think he’s right, as from experience of life, I know of various families, who do nothing except sponge on the rest of us. And they have done for several generations! With the budget on Tuesday promising pain for us all, those on benefit must do something in return. One thing they should do as a condition of benefits is look after their health. After all is fair to fund their drinking, smoking, drug abuse and over-eating and then have to pay further costs for their treatment on the NHS?
One thing that annoys me, is if you drive past the Job Centre in Cambridge at say ten in the morning, there are always a few scruffy individuals outside smoking and drinking lager. Surely there is something more productive that they could do!
SIngle Click Unsubscribe
I get masses of junk from all over the world and as I have two main e-mail addresses, it is often difficult to unsubscribe.
The best companies have a single-click unsubscribe, which is coded with the e-mail address.
Others however ask you to type in the e-mail address. I then have to check to find out to which the errant e-mail was sent. before typing it in.
All unsubscribes should be like the first. How about a £10 fine for every e-mail sent that didn’t have a single click unsubscribe? Governments need revenue and this would raise a lot of money, cure a problem and the only payers would be unprofessional companies. They could always get their act together to avoid the fines.
Incidentally, I’ve just unsubscribed from the Sky Player. It was one click to get the unsubscribe page and then another to actually unsubscribe. That is acceptable, as I didn’t type anything.
Onshore Oil Extraction in the UK
They’ve just talked about this on the BBC. I once discussed this with one of Britain’s foremost experts on natural resources. He told me that the most promising area was actually Surrey for oil, but they would meet lots of opposition. On the BBC they were talking about Dorset being very promising.
His solution to the opposition was very simple. For each barrel of oil or tonne of mineral ore, there should be a local extraction tax paid to the local authority. At present all goes to the Treasury to waste, but just imagine how an English county could be tranformed with the revenue, spent according to the needs of the local people. They would welcome the inconvenience and jobs, but on their environmental and contractual terms.
Cloud Cuckoo Politics
I listened to Chris Giles of the Financial Times last night on BBC Radio5’s Drive programme. He said that the various parties promises on the deficit don’t add up. They have promised saving in the order of ten billion or so, when documents from the Treasury show that we need to save around three times that much.
I’ve been in Newcastle over the weekend as you have seen and up there, they are worried about losing jobs when the new government cuts and cuts hard. After all large numbers of jobs in the North East are either directly with the government or strongly supported. Many too, are in-line for savage cuts because of new technology.
So would NuLabor tell the truth in the North East? No! But the Tories and the Lib Dems have nothing to lose there, so they would at least do the dirty deed after the election.
So what can be cut, what can be improved and how can we raise more revenue?
There are government programmes that can go like Trident, ID Cards, the two aircraft carriers, the Joint Strike Fighter and some other defence projects. Most though will not show up until about 2017.
I have one bitch on what can be improved in the NHS. Every time I go between my GP and Addenbrooke’s I have to tell the other doctor what the previous one, as the two doctors do not have access to the same database. How much does that cost the NHS? And how many other systems show a total lack of joined up thinking?
When we talk about efficiency savings, that is what we’re talking about and it will cost jobs in the NHS and agencies like the Police. But these will mainly be in back-office clerical areas. Well! They should be, but will government really bite the bullet.
Most taxes don’t raise more than about five billion.
So if you want to raise large amounts of taxes, then you increase the big ones like Income Tax, National Insurance, VAT, Corporation Tax and energy taxes.
Income Tax needs to be restructured with perhaps a 50% top rate and very much higher thresholds at the bottom. But I would allow tax relief on any salary you pay to others. So if you employed a nanny or a gardener, then this would be allowed. This may seem something for the well off, but it would also enable anybody to investigate ideas without having to go to the expense of setting up companies and finding loopholes in the tax system.
In other words you restructure Income Tax so that it is basically tax neutral for individuals but creates more jobs, which therefor will increase the tax take and also decrease the benefit take.
I’d also abolish National Insurance and combine it with Income Tax, as that is what it is, a secondary Income Tax.
At the same time, I’d also abolish Inheritance Tax and put three pence on the top rates of Income Tax. This would mean that a lot of rich people would move here and they would create employment. It would also have other employment benefits as people would do what was best at the time, rather than spend fortune avoiding Inheritance Tax.
I’m afraid VAT will probably have to go up. There is no other way to raise significant revenue. As VAT is generally only paid by consumers, as companies offset it, I would prefer that the tax rises were here, than before people got their money.
Corporation Tax is already high compared to other countries in Europe. If it is raised we are in danger of losing companies abroad. So raising it is a no-no, but lowering it may well raise more revenue as other companies would move here.
Now we come to energy taxes. They should be raised substantially. If coupled with increases in Income Tax thresholds they would publish the profligate. I would abolish Vehicle Excise Duty and just have a Vehicle Registration Fee for every time a vehicle changes hands.
Now, I am a control engineer by training and a lot of this is standard control theory, where you do something and you get lots of secondary effects. You just have to make sure that the secondary effects create jobs and thus raise Income Tax take and reduce benefits.
NuLabor has dug us into a big hole. We will only get out by being radical. Correct that; very radical.
Let’s Abolish All Taxes Except One
This article in The Times by Kit Malthouse will get massive hoots of derision. But I think the principle behind it is right.
These are two early paragraphs.
So if all taxes, including VAT, form part of the price of the stuff we buy, why do we bother to charge and collect them separately? What would happen if we were to lump everything together, phase out all taxes and just charge higher VAT? Well, several things.
First, everyone would receive their income gross. No more PAYE or self-assessment and, of course, no further need for the Inland Revenue. All that money and all those people currently wasted on arguing about the dozens of different taxes would be redeployed. Billions of pounds and thousands of people, tax collectors (£5 billion) and accountants (at least another £5 billion) liberated for investment and production. Tax would be collected painlessly in small increments if and when you buy stuff.
Years ago, my accountant at the time was a Labour supporter. But he applauded Mrs. Thatcher in the way she stopped tax loopholes on the one hand and reduced rates on the other. The result was more tax collected and lots of out-of-work accountants, who then went on to develop more productive skills in areas like budgeting and planning, which created jobs.
The trouble too with our current taxation system, is that it creates anomalies. The honest get penalised by those who cheat, so good companies and individuals cease trading. They also give up because of the fact they spend too much time on working out tax.
I have a personal interest in tax anomalies. They ruined my father’s business. In the 1950s the purchase tax on print and stationery was about 40%, whereas that on plain paper was zero. Brochures and other things you didn’t write on were also zero-rated. So as this was at a time when the new offset litho technology was being introduced, companies who needed printing done setup departments to do their own. A lot of printers went bust, but if VAT had been in operation then, it would have been a level playing field and the best would have survived.
This would apply with the proposals in the article.
So I’d give a couple of cheers for Kit Malthouse.
In addition, I would of course raise the taxes on energy, so that we reduced our carbon footprint.
After a dinner of some very nice pasta, I’ve had more thoughts about this.
Supposing that it was linked to a system similar to I proposed in Cutting Unemployment. All you’d need to do was deduct the VAT on your services and that was it. It gets simpler and simpler.
But there is the problem about how you would account for those who didn’t charge VAT on their services. I’m sure that one of the accountants made redundant by abolishing all of those taxes would know the solution.
The Anonymous Widower 