Comments on: Wave the jazz hands and hope for the best

By: Nick

Nick — Mon, 25 Feb 2013 18:22:11 +0000

The converse of the well known phrase “Not taxation without representation” is a good one. Raising tax thresholds to a level that exempts a significant number of people from paying tax creates an electoral moral hazard.

By: Mike Dimmick

Mike Dimmick — Mon, 25 Feb 2013 14:29:01 +0000

Daniel Earwicker: No, actually, people paying in taxes and collecting the same amount in benefits is actually more sensible. It requires far less complex administration than adjusting the personal allowance to reduce the tax taken, and means-testing the benefit to also target it only at the ‘most needy’. The more boxes on the forms, the less likely it is that those who are in most need to receipt are likely to apply. The more rules, the more chances that someone who *does* have the resources will structure their affairs to take advantage of allowances and benefits that weren’t intended to apply to them.

There may also be greater support for the existence of some benefits, like child benefit, if everyone is getting them, rather than stigmatising those who receive them.

By: Daniel Earwicker

Daniel Earwicker — Mon, 25 Feb 2013 12:57:13 +0000

Tom says: “… there is something symbolic about saying that if you earn, even a relatively low amount, you pay something in as well…”

Much of the trouble with the tax system comes from choosing policies for symbolic reasons, appealing to our principles, etc., and ignoring the practical results. For your suggestion it would even more widespread cases of people paying in taxes and then collecting about the same amount in top-up benefits – a merry-go-round of time-wasting absurdity, like being trapped in a Gilliam-esque nightmare where we all exist purely to follow stupid rules as a symbolic act of worship to the Great Bureaucracy. (Am I getting across my feelings strongly enough I wonder…)

By: CdrJameson

CdrJameson — Mon, 25 Feb 2013 11:10:50 +0000

Unfortunately uniting Income Tax & NI would likely hit pensioners (You don’t pay NI on ‘unearned’ income) so may be politically a tough sell even if it does make a lot of sense.

The child benefit debacle won’t have helped the otherwise sensible idea of having (cheap to administer) universal benefits, but using the tax system to recover that money from the well off.

Other, simple, universal benefits like the winter fuel allowance are now being shoved towards the complexity of means-testing, rather than removing tax benefits for wealthy pensioners.

By: Rahul

Rahul — Mon, 25 Feb 2013 10:50:19 +0000

+1 for Thought Gang’s comment.

By: The Thought Gang

The Thought Gang — Mon, 25 Feb 2013 09:10:07 +0000

When Osborne tried to patch up a daft anomaly in the absurdly messy VAT code, we were treated to a national ‘pasty tax’ outage, with footage of the Labour leadership in the queue at Greggs, and forensic examination of D-Cam’s claim to have eaten a pasty at Leeds station.

The ‘tax’ was reversed. The government humiliated. The people jubilant. A country gets the tax code it deserves.

By: Tom

Tom — Sun, 24 Feb 2013 12:35:20 +0000

I agree that raising the personal allowance helps low earners more than a lower tax rate does (and tax credits help even more), but I think there is something to be said for low income tax rates paid by a large number of people. Even if it’s smallish amounts, outweighed by tax credits and other benefits that may be received, there is something symbolic about saying that if you earn, even a relatively low amount, you pay something in as well. It’s not the most efficient way of doing things, sure, but efficiency might not be absolutely everything.

By: Jonathan Andrews

Jonathan Andrews — Sat, 23 Feb 2013 10:37:34 +0000

Didn’t Osbourne promise to combine income tax and NI? Surely, even though there are winners and losers, he could make genuine steps to unifying and simplifying this?