Interesting paper by the Institute for Fiscal Studies on reform of the tax system in the The review will be published in the next few weeks. http://www.ifs.org.uk/mirrleesreview/pamphlet.pdf I was particularly interested in the discussion about "neutrality". The tax system in the United Kingdom is far too complicated, and generally it is fair to say that most people mistrust the fiscal process because they do not understand the intricacies of the system; they do not trust the politicians and civil servants who administer the system; often they do not agree with the way taxes are spent (this is especially the case when parties in power attempt to bribe some sections of the electorate with money taken from other sections). On the whole I do not like indirect taxation. I would like to see more direct taxes (especially income tax) but with hypothecated spending (this is where money is ring-fenced for particular purposes). Ideally we should then ask the electorate to vote on the spending for each hypothecated sector (by multiple choice I would guess). Difficult to do on a national scale, but not so difficult if more taxing and spending decisions were to be devolved down to county and municipal borough level. The technocrats and civil servants would not like this system, but it would remove opposition to paying taxes since every pound sterling spent would have democratic endorsement. Such a system may also throw up surprises. Funding via taxes might actually be increased if people could be sure where their money was going. Local hospitals might be saved, local post offices might be retained, free care for the elderly voted in etc. At the moment we are expected to hand over the money and hope it will be spent in ways we agree with. This is not really acceptable. The old model of "trust me I am a politician", "trust me I am a civil servant", "trust me I am a tax collector" is broken. |
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