Tax Basics |
||||||||||||||
UK taxes are complex and unfair By Sarah Pennells
As the old cliché goes, there are only two certainties in life: death and taxes. But maybe it needs updating - perhaps there is only one (and it's not taxes). It's been over a month since Gordon Brown left the Treasury and Brown's love affair with new tax rules has resulted in a spectacularly complex tax system (just type 'Gordon Brown', 'complex' and 'tax' into Google and you'll get the idea). But the biggest criticism is that our tax system is also very inconsistent. How else would recent research show that of the 350 or so super-rich in the UK (defined as those whose wealth meant they could be earning £10 million a year), only 65 paid income tax? Is the current tax system unfair? You'd expect the unions to have something to say about this, but they're not the only ones. The Association of Chartered Certified Accountants (ACCA) also thinks the current tax system is unfair. It's not just about bosses of private equity firms "paying less tax than their cleaners", as was hotly debated at the Treasury Select Committee in June; it's about many more seriously wealthy individuals who are able to reduce their tax bill to a tiny fraction of that paid by most of us. Great if you're one of those seriously wealthy, but not so great if you're in the vast majority on a relatively modest income, for whom opportunities to legitimately reduce their tax bill - especially if they're on the PAYE system - are pretty limited. Organisations like ACCA say that a lack of transparency, simplicity and consistency is so bad that it's seriously reducing the respect that taxpayers have for the system. One of the defences used by a number of the bosses of private equity funds as to why things should stay as they are is that private equity is a massive benefit to the UK economy. That may be so, but I'm sure a lot of people who pay tax at the standard rate reckon they do their bit for the economy as well. The difference is that they can't afford to pay expensive tax advisers to reduce their tax bill. The Treasury is currently looking at whether to change the way private equity fund bosses are taxed and will make an announcement in the autumn, but maybe Alistair Darling should be looking at something a little more radical. When Brown became prime minister he spoke of the need for change in the NHS, schools and affordable housing, but what about taxation? I'll leave you to work out the odds of that happening.
|
||||||||||||||
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View