Wednesday, May 30, 2007

Taxing the Rich, is there really much point?

This post was started before last nights newsnight hustings, the timing seems quite appropriate now. A few thoughts on taxation....

Let me start this post by saying that I believe that the wealthiest in society, as the greatest beneficiaries of our society should also be those who contribute the most towards it's upkeep. Let me also highlight my concern that the wealth of the richest is growing far faster than that of not only the working classes, but also the middle classes.

I think that taxation has a part to play in addressing this situation, but what got me thinking recently were a couple of numbers that were brought up on the subject in the run up to the leadership (non)contest.

These are....
1) A amount estimated to be between £97bn and £150bn pounds is lost due to tax evasion each year. (Source here, I believe it was originally sourced from a leaked treasury document)
2) The LRC proposed a taxation policy with a 50% rate on earnings over £60k pa and a 60% rate on earnings of over £100K pa. This would raise a total of £14bn (Source here).

What really surprised me was the sheer amount of avoidance that goes on, based on the figures I found on the Labour Left Forum the amount of money we are talking is huge, about the same as the NHS budget, more than either the education budget or the total corporation tax reciepts.

In comparison, the £14bn that the LRC's tax increases would have raised would been insignifigant compared to the the sheer amount that is avoided. This begs the question that, if the government were to implement an LRC style tax increase, how much of that £14bn would actually reach the treasury's coffers. Such an increase would only penalise those high earners who pay their taxes rather than those who avoid them.

The argument I would put forward is that rather than imposing additional taxes, the government must first consider what steps it could take to cut down the massive amount of tax evasion that currently goes on.

citizenandreas [at] slick47 [dot] co [dot] uk

1 comment:

Neil said...

Or alternatively, they could stop pissing so much of our money up the fucking wall.

By the way, there is nothing wrong with teax avoidance. These are legal means of reducing your tax bill. They are set in place by governments. We all take advantage of them.