Just add a small amount to income tax to cancel it out.
Then - get rid of all the extra pencil pushers who would otherwise be
needed to decide if the family passes some means test to get it.
Result is a net saving in administration.
In fact, why not pay unemployment benefit and all the other benefits to
everyone, and then take it back in taxes (VAT and income tax) - even more
I didn't vote for him either ;-)
I think it's daft to have separate taxation and benefits systems. It's
less effecient a more prone to error.
Define a minimum income. Anything above this gets taxed. If income
is lower the rest is made up by applying a negative taxation rate.
Trouble is, there's no incentive to work if you get an income
regardless. That's why we've got so many scroungers, particularly from
And shouldn't high earners pay more tax proportionately? If not, will we
ever get the deficit down?
Child benefit is and always has been paid regardless of income.
What you probably mean is child tax credit.
Yup. None of them will ever do it though. It would mean a very large
rise in income tax rates which all governments seem obsessed with
lowering because people are stupid enough to think low income tax
rates means low taxes. Even after Gordon the moron proved them wrong
again and again with all his stealth taxes.
No, there's no incentive to work if you don't gain anything from
working because you lose all your benefits. Means testing discourages
work. What the OP proposed was not means testing benefits, so those
who get up off their arse and get a job will be better off than the
My reply was to Mark rather than the OP. Mark's suggestion WAS a means
testing of a sort because you get above or below a minimum income and
this then determines an addition or a subtraction from your income.
I don't think that there is the slightest chance of it being means tested by
income for precisely this reason.
Because there would be a ('n even larger than there already is) subset of
people who would decide that there was no need to work for a living
Au contraire - I meant child benefit. There is a groundswell of opinion
to get it means tested. This would add to admin costs.
What I would like to propose is that all allowances / benefits / credits
are scrapped and that instead every adult UK citizen gets paid a fixed
sum by govt every year. Call this A (it'd be around £5000 each). All
other govt handouts would cease.
At the same time, the tax system is changed so that everything is taxed
at the same flat rate - that's income tax and VAT. Call this X (it'd be
around 20%). In future VAT would apply to ALL purchases. The budget would
have to be drawn up to decide what that rate needs to be, to balance the
exchequer and pay off our national debts. All personal tax allowances are
The incentive to work would be there for everyone: Simply put, if you
want more than the basic allowance, then go out and get it.
The simplification would be enormous - How much is your tax bill? well
its 20% of all your earnings. No need to have armies of experts sorting
There would be no exceptions or loop holes. e.g. If you decide to have 10
kids, you'd better get a job, because the state would not be picking up
the tab for more than your £5k / year.
A left wing govt might be inclined to have a high A and a high X. A right
wing govt might cut both.
Like all great systems it has an elegant simplicity.
Potentially a huge one actually!
From what age?
Including convicted murderers and pick-pockets?
So I have to be VAT registered to sell my kid's bike to my friend? And keep
the VAT receipt showing the Input VAT when I bought it 5 years ago?
Similarly for my house?
Except for the handful of people who check the resulting 40 million VAT
returns every 3 months.
What are "earnings"?
Do you mean my village shop-keeper's total takings, with no allowance for
his purchases and other costs?
Will universities have to pay 20% tax on their fee income?
What about the money I get from my insurer after my car's been stolen? (I
already paid 20% VAT on the premium).
I wasn't aware this country has an army of anything approaching "experts",
so where's the saving?
Actually, £10k / year if I remember my biology correctly.
Until you stop and think about it.... And discover that, like all "great
systems", it's unworkable.
IMHO, of course...
In message , Martin
I would assume he means whenever they leave education which would be 16+
Only if they then had to pay 5k p.a. for their keep whilst detained at
Her Majesty's pleasure.
I hope not otherwise that would defeat the concept of simplicity.
There would be little unemployment then :-)
Probably the balance of income after deduction of allowable expenses.
Hope not, he should be allowed to deduct cost of purchase etc.
I thought that most of the experts are on usenet and unpaid :-)
It is good to think outside of the box though and there is some mileage
in exploring such ideas. I never have understood why we pay some people
more to stay at home and/or breed umpteen children that they cannot
afford to have and give them more than they could earn if they were
employed doing something constructive.
There is a kind of implied "means testing" in my system but it is only
done once rather than multiple times for every single benefit.
To respond to your previous post in this thread I don't believe that
my system would reduce the incentive to work. Anyone working will get
more money than someone not working. Isn't that enough motivation?
The tax rates can still be graduated so that the richest pay more (and
the poorest get more).
In fact I really don't understand why there is so much hysteria about
"scroungers". Unless someone is fiddling the system they can't get a
reasonable standard of living without working, can they?
Another issue is that, in attempt to hurt the "scroungers", any
measure taken is likely to have an adverse effect on the poor who
are genuinely unable to work. And there are far more of these than
the "scroungers" IMHO.
Not really - if they merged it into the CTC which is already means
tested the admin is all already there. They could increase the CTC by
the CHB rates, and possibly remove or bring the family element of the
CTC into line the withdrawal rules for the rest of the CTC and that
could *reduce* admin costs (as less people would be eligible).
A "citizen's income". It's a good idea, I've argued for it.
It would have to be much more than 20%. I think I worked it out income
tax would have to be about 45% or so last time I did it, assuming
other taxes stay the same.
Eh? No "child benefit", which you were arguing for paying non means
tested? You'd need an amount for children, otherwise those who don't
provide the next generation of taxpayers to pay their "allowance" when
they're no longer paying taxes would be sponging off the kids of those
Depends what you mean by reasonable. A family on the dole generally
gets about 90% of what they'd get on a single average income (I've
provided the figures many times).
Virtually everyone is capable of some sort of work, the problem is
that the benefits system (and to some extent employment laws) can't
cope with someone who can perhaps only work intermittantly, who may
need short or long periods off etc. For such people and their
employers, the massive hassle involved is simply not worth the effort
of trying to work, coming off and on benefits, sorting out employment
admin (eg holiday, sick pay etc). So they don't bother.
With a simple "citizen's income" and a flat tax rate, going in and out
of work frequently, working intermittant hours etc would not be a
In message , Mark
I have been wondering if anyone here actually knows any "scroungers".
I don't, though I have had problems with tradesmen who, when asked for a
receipt, say: "I can give you one if you like, but then I'd have to
charge you VAT". By implication, they must have a sizeable business
to have to make a VAT return (AIUI), so they are part of the black
Cameron/Osbourne are using the alleged "extravagance" of the last
government to make the kind of cuts they were going to make anyway.
You can't go on paying invalidity benefit and at the same time restrict
the poor CEO's bonus increases to only 17%, and their pay increases to
That's only double the inflation rate, poor devils...
Absolutely right. Although you do have to have some system that
prevents the world and his dog coming to the UK simply to cash in.
But it raises the headline rate of income tax and politicans are all
scared of doing that.