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Archive for January, 2013

I know nothing about taxes but I was recently asked to sign a petition demanding that Amazon should pay UK corporation tax, presumably on the basis that, if not a UK corporation, they sold a lot of goods in UK.

I remembered my late father, who was a Senior Principal Inspector of Taxes in his day, opining that all that was needed was one tax on every transaction, rather like VAT but with no recovery of input.  Just every time a pound changed hands, a shilling would go to the treasury.  I dare say it would be a larger proportion today, but I wonder how much.

As I understand his scheme, it’s a simple turnover tax, payable at every stage.  It has a moral and ideological basis: transactions are possible only because there is currency.  Currency is guaranteed by government.  It’s entirely reasonable that the government be paid for the use of the currency.  Before my friends with ‘local’ currencies ike the Brixton pound start saying, “Oh good, he doesn’t mean us!”, those currencies are really ‘piggy backed’ on the national currency and ultimately protected by the law of the land and thus the government.

With no corporation tax, it wouldn’t matter where a company was based.  Customers would pay the tax.  It wouldn’t matter where anyone lived, any payment from UK would be taxed, as would any payment made in pounds overseas.  Money imported would be taxed too.  There would be no income tax as such.  Every pound paid by an employer would be treated as a transaction and accompanied by its tithe or what ever the figure needed to be.

Of course a flat rate tax isn’t progressive.  As I see the scheme, A government would still be able to levy a separate progressive tax but it could be honest.  No confusion between paying for government and its deficits on the one had and social adjustment on the other.   A tax to pay for government separate from a tax to solve problems of inequality.

No doubt there would be technical problems, but isn’t that what the Civil Service is for, to solve problems?

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