Whichever way you turn, they'll getcha! (UK taxation)

Member Name: opinions4u

Product:	UK taxation
Date:	10/04/03 (213 review reads)
Rating:

Advantages: We got to pay for decent services

Disadvantages: We don't want to disincentivise our people!

Just in case what I have written below gives you the wrong impression, I believe in taxation. The state raising money for the greater good of the nation is a good thing.

Unfortunately, in many cases, I am a believer that given choice, incentive and opportunity, most people will spend their money in a way that is usually more cost effective than state spending.

In other words, the state should provide a basic infrastructure (well funded schools, hospitals etc not blighted by political interference), while giving the people a freedom to think, choose and spend in a way that they see fit. If we want the Iraqi people to have this, we should want it for ourselves too!

An article in the Daily Mail reminded me just how many ridiculous taxes we have. While I have not deliberately "stolen" the article, it was chillingly accurate in reflecting my own thoughts.

1. INHERITENCE TAX. The fabulous concept that if you die, and your estate is worth more than £250,000, the government should receive 40% of it. An easy take for the Treasury. One that actually costs more to administer than it raises in revenue though. It has the added advantage of, in many cases, forcing people to sell the family business when a loved one dies, to pay the bill! In other words, it costs jobs. And should the children really have to raise loans to pay the bill before they can sell the home that caused the tax?

2. CAPITAL GAINS TAX. Yes, if you make a profit on the sale of something (usually shares when the market is buoyant) the state takes 40%! You earn your money; you pay income tax and invest your money. You then are clobbered again for being enterprising or investing in enterprise. Madness. Another tax that costs the nation more than it raises.

3. ISA TAX. If you have invested in a stocks and shares ISA, you would expect it to be tax-free. Wrong. The Treasury taxes income generated by your shares at 20%. This is only a ta

x break for higher rate taxpayers. The complexity of ISA rules frightens people off saving anyway!

4. STAMP DUTY ON PROPERTY. As if moving house is not already expensive enough, the 1% tax on buying a house is a killer. This rises to 5% for properties over £500,000. Mobility of labour is a key component of a successful economy. Taxing mobility stifles growth. That statement should be considered when traffic authorities consider congestion charges. Interestingly, the Inland Revenue made a perfectly legal lease back deal with an overseas company on its own office buildings. This meant they avoided paying £millions in stamp duty.

5. STAMP DUTY ON SHARES. You may only occasionally buy or sell shares. So, a 0.5% tax means nothing to you. Actually, an average earner will pay £8,000 during his lifetime. Through endowment policies, pension funds and supposedly tax free ISAs. Its abolishment has been announced by two Chancellors, but never actually enacted. Most overseas markets do not charge this. Not surprisingly, London has a reducing share of international share trades and thousands of jobs have gone in the City. Not all of them on excessive bonuses! Strangely, share purchases in foreign firms are exempt, directly encouraging British people to invest outside the UK!

6. PENSION FUND TAX. Despite the fear of an ageing population crippling the state within a generation, the current Government has openly chosen to take money out of the existing workers pension funds and pay it directly to todays pensioners. My retired Dad earns £20,000 a year, but he too receives fuel allowances and full pension increases. Meanwhile, employers have made a decision to pass retirement responsibility back to the state, by closing final salary schemes up and down the country. Talk about storing up a massive problem for tomorrow, when Brown and Blair will be long gone.

7. AIR PASSENGER TAX. Yes, if you choose to go on holiday, you wil
l get charged £20 each in tax for flying. £100 for a family of five. Plus, tax at 17.5% on travel
insurance. This is not what the airline industry needs in the current climate!

8. HEALTH INSURANCE TAX. If an employer chooses to provide private health cover for an employee and their family, the state will collect a tax of 22% or 40% on the cost. Perhaps as much as £200. Surely, it would make sense to incentivise employers and employees to arrange such health care privately, freeing up the NHS to deliver at the point of contact. But do not tax it.

9. INSURANCE PREMIUM TAX. Insure your home and contents against theft, because the government ties the police up with red tape, and you are taxed for it. Insure your car, you are taxed. Insure your health to allow you to meet loan payments if you are ill, they tax you. Insure your income against unemployment, they will tax you.

10. SAVINGS TAX. Earn your money. Pop it in the Halifax. Get a little bit of interest. Pay tax on it. BUT I ALREADY PAID TAX WHEN I EARNED IT!!! This is a ridiculous tax on the elderly. It hurts them the most. It penalises those who have saved for their retirement and should be abolished. God forbid the Government should encourage savings!

Many of these taxes disincentivise the economy as a whole. Therefore, while they are seen by the Treasury to raise money, you cannot measure the lost VAT and Income Tax that would have been paid if these taxes did not exist.

While aimed at the rich, clever accounting moves can mean the wealthy avoid many of these taxes, but Mr Middle Class policeman, married to Mrs Middle Class nurse end up paying the full whack.

Perhaps if we did not have such waste across our education services, health services and, in particular, local authorities, all 10 of these taxes could be scrapped.

www.inlandrevenue.gov.uk

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