Re: Any here actually believe that unbaptised children will suffer some detriment?

Gareth McCaughan wrote:
Gordon gets scarcely any of it. The government gets it, and then
spends it on things like the NHS, schools, benefits for poor people,
roads, killing Iraqis, stockpiling weapons, police cars, etc.

If we seriously treated taxation as theft, as your language implies,
then we'd have to abolish it altogether, which would mean abolishing
the government. I don't know about you, but I'm not a great fan of
total anarchy. The government has plenty of faults, but I like it
better than I'd like no government at all.


This seems to me the key issue in Roger's anti-tax tirade.

It is possible to imagine a society in which there is no government or minimal government. Robert Heinlein does it quite interestingly in some of his Sci-fi novels. Services are then paid for by the users more or less directly. This was perhaps the ultimate Thatcherite goal. There's another sci-fi story which I love but whose title I've forgotten, in which there is no money but simply a system of mutually accepted obligations; free-riders don't get away with freeriding for long as they soon become known. But this only works in a closed and fairly small system.

In many ways all this is attractive, but it also tends to create a devil-takes-the hindmost society and generally we have felt, rightly or wrongly, that some kind of safety net is needed. That brings us into administered and and at least partly subsidised services - redistribution of income through some kind of tax system.

Any system has to deal with two questions:
- the general issue of fairness, however we determine what is fair. This is a political, moral and philosophical question; and
- those who want to buck the system. Given human nature, they will always exist. No one wants to part with money, especially to some system which they don't control; or in which they only have the kind of control that one in 50 million or more people can hope to have.

So, suppose we have a very, very simple, flat rate across the board, tax system. Say, everyone pays 10% of their income, period. Very straightforward. But the system bucking types will soon come up with at least two get-outs:
one: plain cheating which will probably be illegal, but often difficult to spot; (tax evasion, in the jargon). Without some checking and enforcement system, they would get away with it.

two: legal argument: eg, what constitutes "income"? "This money is not income but, say, a gift or a windfall." This is exactly what has happened in our present system so that statute has to define what income is, hence all the different schedules; and even then the courts have to decide what exactly comes within each category of income and whether a specific sum is or is not income. Already we are into complexity.

The next stage is that when it becomes clear that people are trying to exclude certain kinds of payment (for the sake of argument we'll say "gratuities") then government amends the act to specifically include gratuities as income. But that only partially solves the problem because the unwilling payer then starts to say that his payment is not a gratuity; and one again the courts may end up having to decide. And so on.

Then Mr X says, "10% may not seem much but I'm on the bread line already and that tax deduction means I am near starvation." So you introduce a low income exemption. Fine, but you have to compensate by making cuts or raising the basic rate. More complexity.

And politican Y says "It's not fair that poor people should pay 10% of a low wage when then have no spare capacity; while the rich only pay 10% of millions when they have masses of excess money. So, you introduce higher rates. More complexity again, and more incentive to cheat.

And some unwilling payers find it worthwhile to employ agents to design schemes that magically turn "income" into "non-income". This is what is meant by legal tax "avoidance", as distinct from illegal "evasion". It is true that the lower the tax rate (and here marginal rates do matter), the less the incentive to hatch such schemes. But even a 10% flat rate is a lot of money for a millionaire, more than enough to make a scheme worthwhile.


(Characterizing tax as "how much does Gordon steal" is just as
silly as treating employers' and employees' national insurance
contributions as if they have nothing to do with one another.)


Yes. I was not saying that the two kinds of NIC are not related or that both are not an imposition. But it was false to imply that the employers contribution was an impost on the employee. It might work out that way, but only if one can be sure that the employer would increase wages were he to be relieved of the NIC.

I am not saying that our present system is ideal. It isn't. It has many faults; some of these are down to bureaucracy, it is true. The Revenue's first attempt at computerisation was an absolute and very expenisve nightmare of centralist thinking. But other faults are down to political tinkering. It is a sad result of our election system that politicians think short term; each new minister wants to make his mark before being moved on, and this usually means making noticeable changes to the system. Education and Health are the worst victims of this problem at the moment; but it affects taxation too. No chancellor has time to do a root and branch overhaul; so they introduce changes at the edges which lead to even greater complication.

Political mood also matters. When I resigned from the Congregational Church ministry, thirty plus years ago, I looked for a secular job which might still be of value to society. The choices were limited by personal factors too, of course, but I joined the Inland Revenue (don't laugh) because I genuinely believed that government was essentially good and that it needed finance, and that the Revenue would seek to treat people fairly. And indeed that was the ethos of my training as a tax inspector; yes, we were there to raise money, but we were taught that we had an obligation, within reasonable use of time, to see that no one paid more than they should as well as that no one paid less.

Thatcher changed all that. I was already beginning to sense a renewal of the call to ministry, so I might have left anyway. But the Thatcher influence also had an effect. Not unreasonably, she wanted value for money from the civil service and was pledged to cut waste and so on. But, at my level in the Revenue, this meant that tax inspectors now had to record every penny of extra tax we achieved through challenging a set of accounts or through tackling evasion. That was fair enough, but that led to promotion by league table. You no longer had time to help someone reduce their tax bill even if that was appropriate. And you were also assessed not just on sheer revenue but also on numbers of settled cases. The pressure therefore was to go for easy cases for numbers and a few big ones that yielded real money.

The result was a bit like those stories of policemen, years ago, who filled their notebooks with car number plates, so that lots of drivers could be booked for parking offences, while major crime was seen as less productive an area to work in. In our case, we would work on one or two cases that might yield major extra tax, but which needed a lot of time and effort (just before resigning I had one individual who ended up with a half million pound extra tax bill because of my work; but it took over a year to pin him down), but also chased up large numbers of people such as London taxi drivers from whom you could quite easily extract an extra four or five hundred, and clock up another win for the statistics. Meanwhile lots of the really big boys were getting away with evasion schemes which lost the nation tens of millions, because we didn't have time to chase them up properly.

That is Thatcherism; that is the market economy when applied to bureaucrats! It was a transformation from when I joined the Revenue, and I wasn't prepared to stay with such a system, so I got out.

I understand people's opposition to bureaucracy and to the complexities and injustices of the tax system. But so far I have not seen anyone come up with a realistically workable alternative. And, as so often, campaigning groups want to pay less tax, but other groups (sometimes with overlapping memberships) want more money to be spent on their good causes. The sums don't add up.



--


Revd. Eric Potts

"Go in peace, in the power of the Spirit
to live and work to God's praise and glory."
.

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