Taxation - more details

It isn't rocket science!

It may come as a shock but taxes don't pay for things.

"Wasting taxpayer's money" is nonsense. "Wasting money" can, and does, happen - HS2, F-35 fighter jets, etc.

Where does the money come from for you to pay your taxes? Yes, it comes from work, savings etc. but where does it come from originally?

The only source of money is the government - it can print it (not much) or move it around electronically (most of it). It pays public sector salaries and it pays for national projects and infrastructure. The money circulates through the public and private sectors making the system work.

However, there is a big problem.

If the government keeps pouring money into the economy there will be inflation - too much money chasing too few goods. So, to keep control, the government has to take some money out of the economy - and it does this with tax.

Technically it doesn't matter which taxes it uses, as long as the money comes out inflation will be kept under control. However, the government has a choice of which taxes to use - it can select those which end up with the rich getting richer (as now) or it can reward people for hard work by using taxes that are fair - like Land Value Tax.

The FJP will:

End dual nationality - you are either a UK citizen or you aren't.
End non-dom status for tax purposes.
Convert trusts into companies. Trustees become directors, beneficiaries become shareholders..
End the use of tax havens by UK citizens and UK residents.
Funds currently held in tax havens must be returned to the UK and tax paid on them.
Ensure that UK citizens and UK residents pay UK tax on all income no matter where from.
Tax paid outside the UK, on income from outside the UK, will be deducted from UK tax due.
End the use of charity status to avoid tax.
End the use of tax relief as a method of promoting government policy.
Tax relief creates loopholes - find other ways to promote such things: loans, shareholding, etc.
Complete the Land Registry so we know who owns all our land.
Introduce Land Value Tax (LVT) initially to replace Council Tax and Business Rates.

Anyone not willing to contribute their fair share to the UK social good is free to settle their affairs with HMRC, surrender their UK citizenship and passport, leave the UK and take up citizenship elsewhere.

Please see our policies page for more details.

The current system

What sort of tax system do we have when:

our tax law contains 12 times more than the number of words in Shakespeare's collected works - 10 times more than in the Bible!
page after page on the government's own web sites advise people to "talk to your financial advisor"?
tens of thousands of "tax avoidance advisors" make a living telling people how to avoid tax?
local authorities and citizens advice charities employ staff to ensure people "take up their allowances"?

The answer is: a system that is far too complex and designed to protect wealth.

Tax can be both fair and simple - it is currently unfair and complicated.

Keep it simple!

Our aim is to simplify the tax system, and to make it fair, while bringing in at least as much as the current system to pay for all the things we need: health service, education, etc.

A complicated tax system is full of loopholes and easy to fiddle. Some of our best brains are wasted finding ways to avoid tax - we would prefer those brains to be used for the social good.

A simple system doesn't require "allowances" or "exceptions" or tax advisors.

Simple is best

The simpler something is, the harder it is to find ways round. A few years ago a famous tennis player had a contract with his manager. The contract said:

"Mr A agrees from this date onwards to pay Mr B x% of all future earnings made by Mr A in return for Mr B acting as Mr A's agent."

That was it - duly signed and witnessed. No get-out clauses, no "ifs" or "buts", no end date, no pages of definitions.

Mr A tried to get out of the deal - and failed!

Lawyers argued about it (and they still argue about it) as their fees rise higher and higher.

The real world

We live in the real world and giant steps take time. The changes we propose will have to be phased in over time so people get used to them and can plan for the future. We therefore have long term and short term plans.

Long term

In the long term we would like to scrap:

all tax on earned income - income earned through work.
For most people "earned income" is effectively what is now covered by PAYE - what you earn for doing your job. We want you to keep everything you earn from working.
VAT.
VAT is a regressive tax - those on lower incomes pay a larger part of their income in VAT than those on higher incomes. VAT is also a tax on sales - products cost more than they need to so fewer are sold.
Abolishing VAT, along with tax on earned income, will act as a major economic stimulant - people will have more money to spend. Coupled with restricting imports from cheap-labour countries this will also stimulate new UK manufacturing.
Council Tax and Business Rates.
Council Tax is grossly unfair. Those in South Derbyshire pay almost three times as much as those in Westminster for homes in the same tax band. Business Rates are a disincentive to business.
Inheritance Tax.
There will be no death tax.

We will replace all these with:

UIT: Unearned Income Tax.
UIT is income other than that received for doing a job. In most cases it equates to non-PAYE income.
LVT: Land Value Tax.
LVT is a tax on the market value of land - not on the land itself, not on homes, not on gardens!
LVT is simple, fair and unavoidable.
For more about LVT please visit this site.

The Brexit dividend

One of the advantages of becoming a sovereign country following Brexit is that we don't have to wait for the EU when it comes to taxation.

We can now:

Define our own list of tax havens (see below ).
Stop the use of tax havens by UK citizens, UK residents, UK registered companies and non-UK registered companies who trade in the UK.
Even Rishi Sunak, as UK Chancellor, set up one of his own companies in the Cayman Islands to avoid tax!
Those with funds or assets held directly or indirectly in tax havens will be given six months to repatriate those funds and pay any outstanding tax on them. It will be a criminal offence to deposit or retain funds in a tax haven and, if found guilty of doing so, 100% of the funds will be forfeit.
End "non dom" status (enjoyed by people such as the owner of The Daily Mail) which allows UK citizens and residents to avoid tax by pretending they are "not resident in the UK for tax purposes".
End dual nationality status - it should not be possible to pick and choose where your social responsibilities lie.
Ensure that all UK citizens, UK residents and UK companies pay UK tax no matter where they live/operate or where their earned or unearned income comes from. There will be provision to prevent double taxation. If you live and work in Spain you may deduct any taxes you pay in Spain from taxes due in the UK.
Ensure that all non-UK registered countries who trade in the UK also pay tax in the UK.

Personal freedom

UK citizens who do not wish to honour their social responsibilities by way of paying tax are free to settle their affairs with HMRC, give up their UK citizenship, surrender their UK passports, leave the UK, forfeit all rights enjoyed by UK citizens and become citizens of any country of their choice.

Don't pay - don't stay.

Countries defined as tax havens

The UK is the world's largest tax haven

As far as the rest of the world is concerned, the UK, its crown territories and it dependencies are the world's largest tax haven. Monaco is a poor relative.

One look at the amount of money laundered through UK banks, and invested in UK property, makes this clear - let alone the billions buried in The Cayman Islands, The British Virgin Islands and all the other tax havens associated with the UK.

Russian oligarchs, rich Arabs, dictators and corporate thieves pick London for a good reason - it is easier to avoid personal and company tax in the UK than anywhere else in the world.

There is an obvious reason for this. The British legal system was established by wealthy landowners to protect their wealth (that's what Magna Carta and the Civil War were all about). Parliament was created by landowners to protect wealth, lawyers came into existence to protect wealth and the public school system is designed to turn out people who will continue to protect wealth.

There are about 38 million people in work or seeking work in the UK. There are 135,000 solicitors in the UK (0.36%) and 16,000 barristers (0.04%). In 2015 61% of UK MPs came from "the professions" or business with 14.2% being solicitors or barristers.

The registration of any company or legal entity, by a UK citizen, UK resident or UK registered company, in any country in the world with a lower level of corporation tax than the UK, shall be considered an attempt at tax avoidance unless it can be shown, to the satisfaction of HMRC, that it is for the genuine purpose of trading in that country and will not result in loss of tax revenue to the UK.

The top 15 are described here.

These countries are assumed to be tax havens unless, in the opinion of HMRC and the UK government, they can be used without suspicion of avoiding UK tax.

Afghanistan
Albania
American Samoa
Andorra
Anguilla
Antigua and Barbuda
Armenia
Aruba
Bahamas
Bahrain
Barbados
Belize: almost owned by multi-million pound Tory donor, Lord Ashcroft.
Bermuda
Bosnia and Herzegovina
Botswana
British Virgin Islands: including Necker island.
Cabo Verde
Cayman Islands; a favourite of the UK chancellor.
Cook Islands
Costa Rica
Curacao
Dominica
Ethiopia
Faroe Islands
Fiji
Grenada
Greenland
Guam
Guernsey
Guyana
Hong Kong
Isle of Man
Iran
Iraq
Ireland: as used by Apple and by Jacob Rees-Mogg.
Jamaica
Jersey
Jordan
Korea (South)
Korea (North)
Labuan Island
Lao
Liberia
Liechtenstein: as used by some Labour Party members.
Luxembourg: used by Amazon and many others.
Macaco
Malaysia
Maldives
Marshall Islands
Mauritius
Monaco: a very crowded place swarming with tax avoiders. Even decent people get greedy as they get richer.
Mongolia
Montenegro
Morocco
Namibia
Nauru
Nevis
New Caledonia
Niue
Oman
Palau
Panama: as revealed in The Panama Papers.
Peru
Qatar
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Samoa
San Marino
Serbia
Seychelles
Sri Lanka
Swaziland
Switzerland
Syria
Taiwan
Thailand
Trinidad and Tobago
Tunisia
Turkey
Turks and Caicos Islands
Uganda
United Arab Emirates
Uruguay
US Virgin Islands
Vanuatu
Vietnam
Yemen