Friday 3 May 2013

UKIP Friday

May as well join in the fun, given UKIP are going to be the story of the day.

Rather than drone on about what are fantastically boring local elections, except to comment that the Labour By-election winner in South Shields appears to have had a lobotomy which I fear is an increasing trend in the criteria for selecting prospective MP's, let's look at one of UKIP's ideas on tax...they have not got a settled policy as yet but this is what informs them:

1. Low rates of tax will generally raise more money than higher rates
2. The earnings of employed people are not a legitimate target for taxation
3. Every attempt to tax wages sets in motion a “shifting” process whereby the tax finishes up as a corporate impost anyway
4. You cannot “tax” the earnings of those who are paid out of taxes
5. Regeneration starts at the “margin”
6. Tax on corporate added value  (by which they mean added value equates to turnover minus those costs which form part of their suppliers’ turnover).

UKIP are attacked for being all about common sense but having unviable policies and knowingly told they will struggle to implement anything.

However a tax system based on the above principles would be far and away better than what we have now. Just the simple idea of not putting employment taxes on state workers should save the Country a fortune in  revenue collection costs.

UKIP has the added bonus of looking at things from a zero base, all the other parties have to look at the disaster that they have enacted and defend them, this prevents real radical reform by either Labour or Conservatives. Perhaps UKIP will produce eventually the thought leadership needed, even if they never achieve power.


hovis said...

"Perhaps UKIP will produce eventually the thought leadership needed, even if they never achieve power."

We can but hope, in the mean time they are an excellent stick to use to beat (and hopefully smash) the LibLabCon corportist consensus.

O/T I was listening to someting about the Putney debates after the first Civil War - quite precient as all the major parties beleive my vote 'belongs' to them. How mistaken they are.

Bill Quango MP said...

That South Shields drone made one of the worst acceptance speeches I've ever heard.
Just a tick list of party slogans jammed into a sentence.

“We har gownar bee a wun nashion layber purrty thart is ah-ghainst the Towry-led coe-ar-lition coots of the predator sew-sci-eti. Oor barn-ker’s tarx will purt food on thar teebles of the poowerest hurdwurkin’ farm-erlies in sew-sci-eti.

And oor mansion tarx will provide hoemes for British wurkers and not fat cat barn-kers bown-arses, like.”

Idiot woman.

andrew said...

No 4.

The idea of no taxing state workers sounds good but...

- incredibly socially divisive
- someone on 25K in the private sector cannot really rell if the job at 20K in the public sector pays more or less, so markets are distorted
- many low paid workers getting tax credits work for the state so hte calcs will need to be amended at the govt end
- most payroll systems work on the basis you pay tax
- does a contractor working for the govt pay tax?

This is a simplification that isn't.

Better to get as many as possible out of the Tax/NI/Tax credit system completely (No 2) and stop before you start trying to get clever.

CityUnslicker said...


1. Really? Why?
2. That is a farily easy thing to compare. i cuold get a website up to do the calcs in no time.
3. They have to do this anyway, although agree there is no saving here.
4. Hmmm...and these sytems cant be chaged? no one would see the profit in building a new one?
5. No, he receives less money, that is the point. Stopping the merry go round.

rwendland said...

Another problem with not taxing state workers, is second jobs (or investment income) would probably be untaxed as well - as I assume they would still have the tax free-band to play with. Not all state workers are well paid and not needing second jobs, eg NHS domestic and portering staff outside London area earn in the £14,294 - 15,013 range. Or part-time state workers with second jobs (quite a lot of NHS admin jobs are part-time). Details, details.

Phil said...

@CityU Obviously economically the government could just pay it's employees an untaxed salary & the net result would be the same. But the state isn't a monolithic entity & there are plenty of institutions which are partially state and partially private funded -- university research departments for instance. What are they supposed to do? What about charities who receive some money from the government and some from private donations?

To drill down into the university example: although most academics are directly funded by a specific research grant (and therefore could in principle pay tax or not depending on the origin of the grant) all universities funnel something like 50% of the grant into overheads: librarians, cleaning staff, and all the other support staff. Is the university supposed to calculate a custom tax rate for those staff at the end of each tax year according to the proportion of university funding which came from UK government sources? That sounds like a complete nightmare!

The advantage of a single tax system for all is that you don't have to expend effort working out where the money came from in order to work out whether it should be taxed differently. It also means you can move entities in and out of the government (privatise bits of them them, nationalise other bits etc etc) without having to tie yourself in knots over tax issues.

If you want to argue that the current tax system is too complicated even for ordinary employed workers then I'm all ears (The hassles I've had trying to claim the class II NI exemption for the small amount of work I do on the side of my PAYE job: I'm not quite at the point where I'm thinking "actually, why am I bothering with this?" but it's getting close.) Adding complexity by splitting the employed into two different classes according to the source of their income doesn't sound like a great idea to me.

Budgie said...

I have to agree with Andrew et al that not taxing state workers is, at best, an impractical idea.

CU, it is tailor made to be socially divisive; for a start it is intrinsically different treatment for people doing a similar job ; web site or no website it would be difficult to assess fairly and convincingly; and all the other issues raised here make fairness even more problematic. There is enough envy and disgruntlement in the land without introducing more, gratis.

I would prefer to see: transferable personal allowances (newborn to get a personal allowance); scrap all child allowances, tax credits etc; tapered negative tax rates to a living wage; NICs and IT rolled into one; no more than two tiers of tax rates.

Diogenes Sinope said...

Why not remove tax from the UK and levy it on Jersey, IOM, Monaco etc. That's where all the cash is.

Or have I missed something?

PS It's Friday and UKIP are droning on as if it's important.

andrew said...


1. Really? Why?

(a) If a good fraction of the population don't pay income tax, don't you think that they may be quite likely to vote for tax rises on those that do?

(b) We have quite enough google bashing because they dont pay more tax than they need to

(c) Some newspapers will start to call for public sector workers to wear red badges and shave their heads

(d) MPs not paying income tax...

I think Rwendland, Phil and Budgie have said many things better than I can.

The good thing about the old tories was that at least some of them were businessmen and so understood the plumbing of money.
Nowadays the issues we have are in many ways about the efficient use of information on a mass scale and I do not see a great deal of background / expertise on that.

CityUnslicker said...

OK OK, total defeat!

Timbo614 said...

@CU not total...

Most of the above about tax falls into the "complicate it, PC it trap, a simpler tax system would be better. Remember Income Tax is only just over 100 years old and is STILL A TEMPORARY LAW that has to re-ratified annually (On or by the 5th of April). If we had a political crisis like Italy, that spanned the right period of time and no laws could be enacted, there would be NO income tax at all!

The thing with Nigel and "his" party is that he is quintessentially British, Pint in one hand, ciggy or cigar in the other, very big winning smile, coupled with "lets do something simpler something that makes sense, common sense if you like! "

Given the crap going down today and in the recent past... what's not to like?

Anonymous said...

The responses from the political world do not leave me hopeful for any "thought leadership."

There are a number of reasons people voted UKIP, and so far the main parties seem to be focusing on a referendum.

This may have worked a few years back, but fighting today's political battles with the last wars tactics hardly seems to be a smart move.

Anthem said...

I can't remember where I read it now (possibly even on this site) but taxation laws apparently runs into something like 11,000 pages.

Picking it apart would be a Herculean task but surely we can simplify this and UKIPs policies, whilst obviously requiring more vigorous analysis, seem to be a step in the right direction and, as you say, anything that perhaps prompts whoever ends up as Government into thinking along these lines has to be a good thing.

Unfortunately, I fear that UKIP are still viewed as a largely "one policy party" with the other stuff bolted on to give it credibility as a "serious" option for Government and their economic policy is not why people are voting for them in droves.

That said, I will be voting UKIP from now on and, any party which has had a hand in our current debt and budget deficit situation is hardly in a position to criticise another's economic policy!

Ryan said...

I think the point that was being made was that taxing the public sector makes no sense because the money is just going round in a circle. So that's a 1/3rd of the working people that can't really be taxed right there. So why tax the other 2/3rds?

The money is generated by private sector wealth creation. So why not tax the creation of wealth. Makes some sense - you can only tax when welath is actually being created. Then it become clear to all how wealth is made and just how much of it can be taxed. The current system obscures how wealth is made, which becomes particularly useful to socialists that want to give the impression that money "grows in trees".

Agence communication said...

well said and interesting one thanks really for sharing it with us ..."" UKIP are attacked for being all about common sense but having unviable policies and knowingly told they will struggle to implement anything.

However a tax system based on the above principles would be far and away better than what we have now. Just the simple idea of not putting employment taxes on state workers should save the Country a fortune in revenue collection costs. ""