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Taxes and the need to rethink them

This was published in 2017. It may contain outdated information, broken links, and views I no longer hold.

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It has been said that the only two things in life that are inevitable are death and taxes.

The Mesopotamians had it – taxes that is, although they also had a lot of death too – and, on the off-chance you weren’t aware, Mesopotamia was the world’s first civilisation.

So yeah, death and taxes.

Taxation has been a hot topic as of late. Nearly every day we see stories of celebrities tax avoiding, politicians tax evading, and companies – the likes of Google, Starbucks, Apple, and Amazon – ‘not paying their fair share’. We hear of tax loopholes and tax subsidies, of off-shore tax-_heavens_, and more.

Earlier this week, some of Britain’s leading tax experts warned HMRC that they were seriously underestimating the size of our tax avoidance problem. It comes after they claimed the country’s annual tax shortfall was only £36 billion!

While Google, Amazon, Apple and Starbucks aren’t technically doing anything illegal by using complex international business structures to shift taxable income from the UK to their operations overseas, it sounds unethical at best, doesn’t it?

Despite having some of the lowest tax rates in the world, as a country have a culture of not liking tax very much but the same can’t be said for the rest of the planet. The Japanese corporate tax-rate is almost double the UK’s but there, a culture of understanding what is due ensures taxes are paid on-time and in-full. It is considered culturally proper for corporations to pay their contributions to society.

There’s a reason Brits don’t like paying tax and it’s to do with misconceptions about where the money goes. The truth is that tax money pays for all manner of public amenities and private support, from healthcare to safety and crime prevention. We can all name at least one newspaper that attacks immigrants and the unemployed as ‘taking taxpayer money’, despite the fact the biggest percentage of public spending goes to their readers: the elderly.

Tax needs some good PR work – a radical re-think of the way it is perceived. Rather than a punishment on working people, it needs to be seen in a more philanthropic light. Council Tax was introduced in 1993 but before that it was known as ‘Community Charge’. They differed slightly in policy (and reception!) but the premise was near enough the same. I think the name ‘Community Charge’ is much nicer - it feels more inviting and less bureaucratic than a ‘council’, ‘tax’.

I leave you with a thought: If the (usually incorrect) stories of so-called ‘benefits cheats’ annoy you, or your misconception that a massive proportion of tax money goes to some weird hippie arts project that you simply dislike, simply imagine your money going to fix potholes, or planting trees. I don’t hate paying tax but that makes it easier, trust me.

Richard Murphy has written a great book on taxation called The Joy of Tax, which I recommend. Ironically, you can order it on Amazon.

03 April 2017

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