Think the unthinkable - let's help the coalition with some blue-skies thinking...

carolt

I thought the wealth of creative, brilliant minds on this forum could help our new government along with a few suggestions for how/where to make changes in the system.


My suggestion first, to get the ball rolling:

I'd like to see the disparity between the tax and benefit systems removed, whereby benefits are awarded on the basis of family needs (eg size, disability etc), but tax is taken on an individual basis only.

This means that, currently, a typical family with 1 parent who works and gets a good salary pays the same tax as someone with no dependents. Tax allowances are not transferable betwen spouses, even if 1 parent is a low/no earner, and having extra needs eg dependents is ignored.

But if the same family don't work, their needs are taken into account, and they are rewarded financially for every additional child - leading to the situation where for many families, it's just not worth bothering to work - particularly larger families - as by the time they've added up the free accomodation costs they get through LHA, free council tax, child benefits and tax credits, income support and other extras like free prescriptions, free milk, extra child trust fund payments, EMA, etc, as well as work-related costs saved (like transport and clothing), it just makes no sense for either of them to work.

Even for those on lower incomes who do get some of their tax back through child tax credits, would it not make more sense (and vastly simplify the admin costs and the opportunities for large-scale fraud that have been reported) if instead they just got taxed less in the first place, so they could actually live off their earnings themselves, rather than the ludicrous system of taking with 1 hand and giving back with the other?

We need to MAKE WORK PAY - surely this would be one way to help make this happen?


Anyone else - what do you think would be a good suggestion to help restore our lovely country to its former glory?

carolt

Come on, all you great minds out there...

Running_Horse

Abolish tax credits, child allowance, national insurance, personal allowances, child trust funds, student loans etc.

Replace with a simple income tax that covers everything, but without get outs and loopholes. Taper it if you like so that those on under £10,000 pay very little, and those on above £50,000 pay more. Even take a couple of per cent off for every child if that is important to society. Add on a few per cent for graduates to fund universities.

Increase benefits and abolish restrictions for those who have saved. But, after a couple of months reduce the payments by 5% per month.

Merge private and civil service pension schemes so we are all in the same boat, or as Dave might call it, the Big Society.

Increase alcohol duties on supermarkets and use the money for tax breaks for pubs.

Cleaver

Running_Horse wrote: »

Increase alcohol duties on supermarkets and use the money for tax breaks for pubs.

I was just saying the other day that you shouldn't raise taxes on BTL because you hate it as an industry.

But I love good English pubs and I think this is an absolutely wonderful idea. Help! I don't know what to think anymore!

purch

Yes, the simplied Tax System promised many moons ago by 'Fatty' Lawson would be something to aim for !!!

Pennywise

National insurance definitely has to go - nowadays you get state benefits whether or not you've got enough "stamps" so what's the point? It's also far too easy to avoid as it isn't levied on dividends or capital gains, or investment income. Increasing basic rate tax to 30% would mean that the workers wouldn't be any worse off. Pensioners already get nearly £10k personal allowance so a pensioner couple can already receive £20k p.a. without paying tax.

Personal allowances need to be transferrable between spouses so that there is no difference in tax paid between one spouse earning £50k p.a. and two spouses each earning £25k p.a.

Corporation tax should be harmonised at 25% for all companies, large or small. That makes us more competitive on a global scale. We can then bring back the 25% tax credit on company dividends and make it reclaimable for non-taxpayers (just like it always was before Gordon messed around with it). Also bring back advance corporation tax on those dividends. Small limited company taxation has been too generous for the past decade - what with lower CT rates, no nic on dividends, etc.

We need a single state benefit structure. A one-stop shop for all state benefits, all based on a single qualifying structure. Inputs being age, number of dependants, working history, disabilities, other income, savings, house value, etc., all going into a "super-equation" which comes out with a "figure" of benefit entitlement. It's madness that some benefits don't take into account savings, others don't take other income into account. We've far too many kinds of benefits, all with different qualifying criteria. It can, and must, be simplified.

A combination of all the above is needed to stop the "benefits trap" where people find it more worthwhile to sit at home rather than going out to work. The marginal tax rates and benefit thresholds must be changed so that it pays to work. That can't be done overnight, but it can be achieved over a 5-10 year period but it needs to start somewhere. I'd say a good starting point would be an immediate temporary freeze on all state benefits and then start to increase them again under new qualifying criteria only. Doing it that way would ensure no-one was worse off by suffering falls in benefits but that there'd be a greater incentive to work as the real value of benefits fell over time. Obviously the new benefits system should be made to identify those who can't work so that they would enjoy annual increases.

Above all else, simplify, simplify and simplify the tax and benefits systems.

adrian_bond

heres some rants / ideas!

Send the terminally workshy to do jobs that needs doing without extreme supervison; maybie clearing drains, digging ditches, data gathering, restoring damaged public property, public gardening...anything really. just to get them off their sofas and into doing anything would help to break the depressive cycle of doing nothing, and getting paid hansomly for it by the government.

if they refuse, then they get three months more money. then nothing for a year. if they starve. then nevermind...we tried. i refuse to believe that there is "no jobs at all or anything to do" for any of these people. makes me sick.

for drug addicts and low level criminals, then a seperate wing of the armed forced / unarmed forces / civilain services could be setup to help them go cold turkey whilst working it out of their system, and a garunteed two years employment doing public services either here or overseas whilst they are rehabilitiatd and treated mentally and physically.

remove the PC parade of do nothing jobs in the public sector. we need common cense, not new rules to teach the world to sing.

remove the crazy ethos of public departments getting a set budget every year, then at the end of the year, blowing the last few thousand or more on pointless exercises and training days so they dont get penalised for not spending everything. if they dont spend it all, then maybie insentivise them with a 5% bonus of whats left in the unspent budget. in the private sector, if this behaviour went on, then the manager responsible would be given thier marching orders instantly.

try to make whichever parts possible of the public sector money making. E.g. employment consultancies, childcare centers, public exercise programs etc. these can all be slightly modified to include a small charge that is very competitive but could help to raise some cash.

further investigation into the robin hood tax, and its feasiblity of integration into the finacial sector.

setup of a new series of state owned banks and building societies that help the general public, are garunteed by the state and are competivie, no frills banking. they would make money for everyone, and could be used to plug different holes in the economy as they appear. these could help to keep banking very competitive and would benefit everyone except the existing fatcat banks who think its okay to pay 0.1% interest on an account, and then charge 18% borrowing on the same account, plus a £35 overdraft charge!

im sure there are huge holes in each of these suggestions, but im willing to be ridiculed and picked apart if something good comes out of any of these posts as i know for a fact that several MP`s read this website regularly, plus scores of advisors and civil servants who could get these ideas into the running in their respective quangos!

good luck everyone

adrian

zygurat789

Pennywise wrote: »

National insurance definitely has to go - nowadays you get state benefits whether or not you've got enough "stamps" so what's the point? It's also far too easy to avoid as it isn't levied on dividends or capital gains, or investment income. Increasing basic rate tax to 30% would mean that the workers wouldn't be any worse off. Pensioners already get nearly £10k personal allowance so a pensioner couple can already receive £20k p.a. without paying tax.

Personal allowances need to be transferrable between spouses so that there is no difference in tax paid between one spouse earning £50k p.a. and two spouses each earning £25k p.a.

Corporation tax should be harmonised at 25% for all companies, large or small. That makes us more competitive on a global scale. We can then bring back the 25% tax credit on company dividends and make it reclaimable for non-taxpayers (just like it always was before Gordon messed around with it). Also bring back advance corporation tax on those dividends. Small limited company taxation has been too generous for the past decade - what with lower CT rates, no nic on dividends, etc.

We need a single state benefit structure. A one-stop shop for all state benefits, all based on a single qualifying structure. Inputs being age, number of dependants, working history, disabilities, other income, savings, house value, etc., all going into a "super-equation" which comes out with a "figure" of benefit entitlement. It's madness that some benefits don't take into account savings, others don't take other income into account. We've far too many kinds of benefits, all with different qualifying criteria. It can, and must, be simplified.

A combination of all the above is needed to stop the "benefits trap" where people find it more worthwhile to sit at home rather than going out to work. The marginal tax rates and benefit thresholds must be changed so that it pays to work. That can't be done overnight, but it can be achieved over a 5-10 year period but it needs to start somewhere. I'd say a good starting point would be an immediate temporary freeze on all state benefits and then start to increase them again under new qualifying criteria only. Doing it that way would ensure no-one was worse off by suffering falls in benefits but that there'd be a greater incentive to work as the real value of benefits fell over time. Obviously the new benefits system should be made to identify those who can't work so that they would enjoy annual increases.

Above all else, simplify, simplify and simplify the tax and benefits systems.

I think accountants shoukld run the country.

mr_fishbulb

Charge people for missing NHS appointments - doctor, dentist, hospital.

jamesd

Pennywise wrote: »

National insurance definitely has to go - nowadays you get state benefits whether or not you've got enough "stamps" so what's the point?

You don't get many of the NI benefits regardless. No earnings-related JSA if you weren't paying NI. No additional state pension without the NI payments being made for it. No basic state pension if you're not paying that bit of NI. If you're relatively poor you'll get means tested benefits but not if you've been prudent and not unfortunate and do have some resources of your own.

Some simplification I'd like to see:

1. Eliminate the tax breaks for transferring assets between spouses; charge CGT on transfers between them just like any other disposal, whether it's to the children or a stranger.
2. Eliminate the tax breaks on personal residences, CGT potentially for the gain regardless of whether it's your main home or not.
3. Decrease the tax allowances of couples to reflect the lower living costs of shared accommodation and other reduced costs of being a couple.
4. Use more means tested benefits to transfer some of the savings these measures bring to the poorest people, so ordinary people don't get tax breaks they don't need because they already earn enough.
5. Introduce a lifetime allowance for CGT, including that from house sales. So it doesn't matter when or how you make gains, you're granted an allowance that only ends when you've had enough of a tax break. Maybe set the CGT lifetime allowance at a million Pounds of tax free gains, enough for most people even living in London. But not enough for those who are truly rich to escape CGT forever.
6. Above the lifetime allowance tax capital gains as income.
7. Introduce a lifetime allowance for savings interest, similar to the one for capital gains and the lifetime allowance that is already present for pension contributions.

Lifetime allowances have the big merit of delivering most of the benefit to those who are young and/or poorer.

carolt

Thanks for lots of interesting ideas - I don't agree with all of them, by any means, but it's interesting to see what we can come up with...

Anyone else got any more plans they've had simmering away inside/grievances they'd like to see righted and have come up with an ideal way?