Other reforms to accompany LVT
LVT is not a panacea, it can't fix everything.
The tax industry
Tax law is unnecessarily complex and the exceptions built into it create loopholes to be exploited by those with enough money to pay expensive tax advisers, accountants and lawyers. Think how society would benefit if their intellectual abilities were put to more socially worthwhile tasks!
A whole industry has grown up with the sole purpose of depriving society of the income necessary to support the services we all share.
This is done in the interest of those who are already wealthy, it is done in the interest of greed.
When reforming the tax system the rule must always be:
Trusts are designed to:
- avoid personal responsibilities,
- hide the ownership of assets,
- avoid taxes relating to death - a trust can't "die",
- avoid the splitting up of assets on death.
If you own a few thousand acres of land, and you want to "keep it in the family", your friendly tax advisor will recommend putting the whole lot in a trust - preferably based in a tax haven.
David Cameron's father in law uses such schemes.
English law was written in the self-interest of those who wrote it - those with wealth and land. Trusts are a unique feature of Anglo-Saxon law and were seen as an obvious fiddle during the French Revolution. Napoleonic Law, the basis of most law in Europe, has no concept of a trust, instead it has the concept of "absolute person ownership" - the ownership of an asset can be traced to a living individual who is responsible for it.
Napeloeon, despite over-reaching himself on the way to Moscow and developing a slight case of megalomania, had some good ideas about fairness - which is why he was so hated by the British ruling class and why so many working class lads died on the battlefields of Europe defending the wealth of landowners in England.
Trusts should be abolished and replaced with the concept of absolute personal ownership.
Charities are great for us because they allow us to support "good causes" and most of them do great things.
Charities are great for governments because they often clear up the neglect and mess left by politicians - without raising taxes!
Charities are big business and the organisations that create products and systems for them, have become an industry in themselves. Let's not forget that charities have directors, employees, offices, overheads, consultants, systems and expenses that have to be covered from donations before the remainder is spent on good causes.
In 2017 Channel 4 investigated how much actually reaches the intended recipients.
The voluntary sector has 800,000 employees. (Retail: 3 million, NHS 1.4 million).
CEOs of the UK's top 100 charities are paid a mean salary of £264,000 a year. Fifteen of those paid their highest earners more than £300,000.
- Welcome Trust: £3,200,000.
- London Clinic: £1,300,000.
- Consumers' Association ("Which?"): £825,000.
91% of all registered charities have no paid staff at all and are run by volunteers. The remaining 9% provide jobs for 800,000 people. Fewer than 1% of charities employ a member of staff earning £60,000 or more.
Charity law is weak and the Charities Commission is relatively toothless when it comes to policing fiddles - can we honestly say that 185,000 registered charities in England and Wales are all "a good thing"?
Charities can claim back the tax paid on donations based on the complex rules of "Gift Aid" and the amounts of money involved provide a serious temptation to those who see it as a way to make money from taxpayers.
About charity giving
- Many (most?) of us give to charity out of our take-home pay or pension - our post-tax income. We hand over the money or the goods (as a gift) for the charity to sell.
- It starts to become complicated because you can also give up to £3,000 a year out of your pre-tax income.
- If you complete a Gift Aid form charities can claim 25p from HMRC for every £1 you donate. Again, this is subject to the £3,000 limit - HMRC will chase you for the tax if you give more than the limit.
Charities are reclaiming tax that you have already paid - so there is a problem if you haven't paid enough tax to cover the reclaims. You will receive a bill from HMRC for the amount it has given back to charities above the amount of tax you actually paid. You need to know how much tax you have paid before you can give it away!
- Everything is fine if you "give" something to a charity shop without completing a Gift Aid form - the charity now owns the item so it can sell it and keep all the income.
- Things change when you take something to a charity shop and complete a Gift Aid form. The charity acts as your agent to sell it but you still own the item and you are still legally responsible for it.
When the charity sells the item it should notify you and, if you wish, you can keep 100% of the income generated from the sale. So, if grandfather's watch, which you thought was worth a tenner, fetches £10,000 when sold at auction by the charity, you could keep the lot!
The reason for this is easy to understand. Goods are being converted to cash but under Gift Aid the goods remain yours until sold - just as if you had sold them yourself. At that time you can donate all or part of the income subject to the £3,000 limit.
- You are responsible, not the charity shop, if an item you "gave" to the charity under Gift Aid proves to be faulty.
- There are two ways to ensure charities benefit by reclaiming tax if you are on PAYE. You can complete a Gift Aid form when you donate or you can join a "Give As You Earn" scheme if offered by your employer. There is no requirement for employers to join such a scheme
- Life is too short to go into the complex rules relating to charities and Capital Gains Tax or Inheritance Tax!
Are you getting the impression this is complicated? That's because it is!
It gets worse as this advice to higher rate taxpayers makes clear:
Higher rate taxpayers and charity giving
If you're a higher rate taxpayer you can claim from HMRC the difference between the basic rate of tax claimed by the charity on your donation and the higher rate of tax you actually pay.
Here's an example to help explain:
- Sue is a 40% taxpayer and donates £1,000 to charity.
- The charity claims back basic rate tax of 20% from HMRC. That's 25p for every £1 donated so the charity claims £250, making Sue's gross donation £1,250.
- Sue can claim the difference between her 40% rate of tax and the basic rate of tax of 20% claimed by the charity on her gross donation.
- That's a 20% difference. So, Sue claims 20% of £1,250 - a total of £250 - from HMRC.
- If Sue was an additional rate taxpayer - paying 45% on her income - she would be able to claim the difference between her 45% rate of tax and the basic rate of tax at 20% claimed by the charity on her gross donation.
- That would be a 25% difference. So Sue would claim 25% of £1,250 - a total of £312.50 - from HMRC.
This is a dog's breakfast - lawyers and tax advisers love it.
We recommend removing the tax advantage enjoyed by charities.
That doesn't stop them doing good things and it doesn't stop us donating to them out of our post-tax income. Things would soon settle down and the number of questionable registered charities would drop like a stone leaving the genuine ones to carry on doing a good job.
Stop and think about it for a moment. The current system of charities claiming back tax was designed to encourage giving and to provide an additional pool of income - tax that would have been paid on donations (subject to a limit). The tax that would have gone to national and local services has gone to charities but the services still have to be provided and paid for - so taxpayers have to make up the loss.
Governments wishing to support specific charities (as they do now) can continue to do so by making donations in the name of taxpayers.
For individuals tax havens are second only to trusts as a way to avoid social responsibilities by avoiding tax.
For multi-national companies tax havens are the most popular way to avoid tax.
- All UK citizens' income, no matter where generated, to be taxed in the UK - with a suitable provision to prevent double taxation.
- UK citizens to register all assets held outside the UK.
- UK citizens given six months to repatriate assets held in tax havens.
- All income generated in the UK to be taxed in the UK - especially for the likes of Google, Amazon and Apple.
- Any company wishing to trade in the UK, and wishing to use "cross billing" or "IPR licencing", most obtain the approval of HMRC before starting to trade.
- No company will be permitted to trade which uses cross billing or licence fees paid to companies registered in tax havens.
"Non-dom" and "dual nationality" are used as reasons to be "not resident in the UK for tax purposes."
We recommend ending non-domicile and dual nationality status - you are either a UK citizen, and subject to UK taxation, or you are not a UK citizen.
Citizenship is a privilege and requires certain personal responsibilities. Those wishing to avoid their responsibilities are free to surrender their UK citizenship and become citizens of whichever country will have them.
Non-UK citizens living in the UK will be subject to the rule that all income generated in the UK will be taxed in the UK.
We support a free and fair press.
Do we want foreigners telling us how to run our country?
Do we want tax avoiders telling us how to run our country?
Media ownership in the UK should be restricted to UK citizens resident in the UK for tax purposes.
Over the last few decades every effort by UK governments to "reform" the system has been a disaster.
There is no easy answer to how we provide a fair welfare and benefits system.
We recommend investigating two systems which encourage everyone to work while recognising that not everyone can contribute in the same way.
- A Citizens Income or Basic Income paid to everyone.
- A Job Guarantee - those out of work will be employed by the state (local and national government) to engage in socially valuable work. In return they get a living wage and they are free to return to other employment at any time - probably to earn more or to take a job more suited to their skills and abilities.
Everything tried so far has failed - that in itself is sufficient to justify looking at alternatives.