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- Transparent in how revenue is raised and spent
- Simple to understand and navigate
- Proportionate to citizens’ ability to pay
- Fair, with every person and organisation paying their correct sum
- Certain, so everyone should know what they’ll owe, in a system that rarely changes
- Supportive, with consistent advice and help for citizens; and
- The system should not punish people who do the right thing, it should not discourage work, saving or planning for your family’s future
Having been given that brief they were then given expert tuition on how the tax system works and given two days to look at the issue, talk about how it could be improved and make recommendations.
Unsurprisingly, in a jurisdiction which has a notoriously complex tax regime, the jurors started out favouring a flat-rate tax system; however because of what some consider is a regressive feature of such a system, they back-tracked on this; presumably this was partly because they'd been given the time to consider the issue in depth and perhaps also as a result of the guidance from the assembled tax experts. A telling quote was "Simply knowing what you owe, is felt to be out of reach of most ‘middle-income’ taxpayers, never mind any comprehensive understanding of the system as a whole." Another great quote from an individual juror which appeared to be representative of the group as a whole was “There are different levels to the system. There’s the people at thebottom that don’t have to pay it, and the people at the top whododge it and avoid it, and then there’s the majority in the middlewho actually pay for it.” I'm not sure you'd need a briefing from a tax expert to know that...I thought it was general common knowledge. In fact, were you to read Nicholas Shaxson's Treasure Islands you'd know that even HMRC takes advantage of tax loopholes if it can.
I thought it was general common knowledge that middle income earners get ripped off by the tax system.In terms of recommendations the group didn't fancy taxing assets much because it was felt that individuals were doing the right thing by working hard and saving to increase their personal asset base to support themselves and their families. So they also recommended abolishing inheritance tax because that was penalising people by taking away assets on which they felt the tax had in effect already been paid. I'm not sure that would apply to everyone in the British isles with lots of assets, but certainly it would be the case for the majority of middle income earners who might easily be caught by the increasing value of the family home, paid for out of taxed income if the IHT nil rate band doesn't rise significantly.
One of the recommendations was to radically tidy up VAT – with all 'essentials' being VAT free but a 20% rate for everything else. I'm not sure how they felt essentials would be defined in a society that for example has difficulty in the NHS working out what's essential and what's supporting a lifestyle choice...for many people their mobile device is an essential. Even with food it's not straightforward. A manager of a poultry farm told me once when we were discussing the price of free range chickens, "...some bacon, tin of beans, an egg and some toast...that's under a pound and it's a meal isn't it?" If you want to make the most of your budget when you are really struggling below the lower earnings limit, you're working hard and you want someone to help you then what you need is for the price of oven chips, doughnuts and pizza to be held down because they give you cheap calories. Oven chips would still be cheap as chips even if you added 20% VAT. What that will do to NHS costs in the long term I'm not sure. I would have thought that you'd be better of making sure that people earning below whatever the same lower earnings limit is don't pay tax to help lift themselves out of poverty, then have a flat rate above that because there'd then be less point in avoiding tax for those working hard in the middle income bands. The 40% tax band dropped a long way before the lower earnings limit went up to £10K so I doubt that most middle income earners would be wildly enthusiastic about paying 40% tax, even if their allowance went up.
The Price Waterhouse Coopers summary of their tax jury is here. If you're an enthusiast the report itself from BritainThinks.com is here.
What the musings of 22 people designed to represent "Britain" will actually change, especially if Scotland leaves the union I really don't know. Ireland has been independent for some years and there has long been a thriving cross border trade, sometimes also known as smuggling. That border between England and a new independent Scotland would be much harder to police than Calais.
With the benefit of age and wisdom I now understand that when I first started out as an assistant in large animal veterinary practice I would have been better off not as an employee, but as a self-employed person. The judgement now is more fine because in the intervening years successive (mainly labour) governments have given employees more "rights". Even so I still suspect that in the long term most veterinary graduates would be better off if they were self-employed professionals with a good understanding of whatever tax regime ends up being in place and control of their own pension funds.
I'm still musing on The system should not punish people who do the right thing.....
No system should do that should it?
Whether that's true or not I don't know but certainly small business and entrepreneurship play a key role in the rest of the UK economy; between them income tax, national insurance (which is just another form of income tax) and VAT account for 2/3 of the total UK tax take. According to the FSB, small and medium sized businesses account for 99.9% of businesses in the UK and 59.3% of private sector employment. Since the recession, small businesses have also been key in job creation. According to the Herald, Scotland, in the decade to 2010 almost 64% of new jobs were created in the public sector in Scotland as compared to 34% in London and 44% in the South of England, i.e. they were funded by the taxpayer. If the Scots do vote for independence I can't imagine that the rest of the UK would find it acceptable to have their tax money spent on jobs in Scotland, especially if Scotland's exit damages the rest of the UK economy.