A Tax question that I will get shot down dead for asking!

socks_uk

This is certainly not a 'Tax Cutting' question but I want to ask it anyway...

I just wondered on other people's opinion on the 'tax free allowance'. I'm just wondering why we have it? I see nothing wrong with the first step in tax paying to be maybe 3%. (and now steps back before being stoned!)

Maybe it is the logistics around tax paying for small companies or the cost of adding all these extra tax payers into the system. I myself have a take home wage of just under £1000 a month so not a low paid worker and certainly not a high paid worker.

I personally think that everyone over 18 should pay tax of some percentage. For example, a small tax payment on a part-time wage of £100 a month would still generate money to go towards the country's debt problem (3% of £100 would be £3). Would it cost more than £3 in manpower to figure it out or is it the same costs as the person is still issued with wage slips etc. anyway?

I'll be interested in all replies.

(I'll stay in hiding for a little while after posing this question! lol)

CLAPTON

1000 a month is a low paid worker
many people on that wage will get tax credits and other state benefits
many people think it rather mad to take tax from some-one and then give them money back

socks_uk

Well Mr Tax man takes his cut off me each month and I take home £983. I'm not on minimum wage so didn't consider myself being a low paid worker.

I personally don't agree with Tax Credits, but that's because I had to pay back an overpayment which I had proof I had told them about a change in circumstances (I have the phone call transcripts on CD which I requested from HMRC) - but that's for another thread another time.

Mikeyorks

socks_uk wrote: »

I personally don't agree with Tax Credits

It was an example ............. of the futility of taxing people who (as another example) are only on State Pension. A pointless exercise if the State is handing out with one hand and then cluttering up the SA system with millions of pensioners having to pay your 3% lower rate but filing a Return as a by product?

So some of the bureaucracy is removed by setting a de-minimis level for all .......... ergo the Personal Allowance.

socks_uk

Thanks for the comment... It's strange how my mind works and how little I actually know about things. I wouldn't have thought of even putting a pension income in the 'wages pigeon hole'. You can see why I don't have a job that requires me to come up with ideas.

I just thought that any person over 18 that is capable of going out to work could contribute from 3% by paying tax. I can't be the only person that wonders why things happen or don't happen.

I'm still interested in the comments, good or bad!

chrismac1

socks, if you seek logic and commonsense in the UK tax and benefits system then you are doomed to disappointment..........I think your question is a valid one. Why make things complex? Why invent tax credits at all? Why have all the silly rules we have on VAT, business entertaining, "false" self-employment and so on?

Answers on a (very big) postcard please............

donquine

socks_uk wrote: »

I just wondered on other people's opinion on the 'tax free allowance'. I'm just wondering why we have it? I see nothing wrong with the first step in tax paying to be maybe 3%. (and now steps back before being stoned!)

The standard PA is only about £6k - people whose earnings are covered by that are living hand to mouth and 3% would mean a lot to them. As an example, students generally earn less than £6k and most are not eligible for any benefits because they're students. If they take on too many hours, their marks drop and their degree loses value - which makes the whole struggle quite pointless.

opinions4u

In a perfect world, where the government has not inherited a debt-ridden heap of dung, I would like to see:

1) Significantly fewer benefits / tax credits etc.

2) Doubling of personal allowances.

(If the combination of 1 and 2 doesn't get seen as incentivising work nothing ever will ...)

3) Scrapping bigger allowances for the elderly (together with the ridiculous tapering away in the current system).

4) Removing any assumption that higher rate taxpayer = rich and should be milked for everything.

5) Removing the differentiation of national insurance and income tax. Tax is tax !!!!!!!

In answer to the OP, no, I don't think lower earners should pay a paltry low rate of tax. I think they should be out of tax altogether (but not reliant on state benefits). I think the tax system needs simplifying and would ultimately look to scrap the 40% and 50% tax bands too, as these are an extraordinary disincentive to hard work.

kickwhamstunner

opinions4u wrote: »

In a perfect world ...

1) Significantly fewer benefits / tax credits etc.

I say Gideon, how was the Bullingdon?

opinions4u

kickwhamstunner wrote: »

I say Gideon, how was the Bullingdon?

I didn't go to university.

You also quote out of context, as higher tax thresholds incentivise work. It's amazing what a human being can achieve with fair incentives.

But don't you think it's ridiculous that a 76 year old with £500k in the bank will get winter fuel allowance, free tv licence and free coach/bus travel?

Don't you find it odd that the state sponsors marital/relationship splits by increasing payouts to those involved? I wonder how much more it costs in later years with the impact on the kids.

And yes, I find it strange that child benefit for single parents is higher.

I'd also make an announcement that no new claims for any housing benefit payments related to a new born child will be accepted from 1st August 2011. So when you catch, you know it's your responsbility, not the state's.

I'm sure some will challenge what I've posted, but I suspect more will be able to list a number of other ridiculous examples of space sponsored failure.

chrismac1

I vote opinions4u for the next Chancellor!