29th November 2014

Tendring Topics……..on line

'That’s the way the money goes…….'

        .  I was mildly surprised last week to get a communication from H.M. Revenue and Customs telling me, in some detail, how much money I had paid to the government in income tax during the last financial year and how that money had been spent. To make sure that I read it, the document announced in bold print This is for your information.  You do not need to contact us as this is not a demand for payment.   That was quite a relief.   

          It really was an admirable, easily readable and enlightening document and I understand that all income-tax payers will get one every future year.  On the one side was a summary of my taxable income during that year (state pension plus public service pension), how much of it was subject to income tax at the basic rate (20 percent), how much had been deducted from my total income and how much was left.

            On the other side was an estimate of how my contribution had been divided among fifteen sources of public spending.  The biggest was Welfare to which I had, so it seems contributed £513 and the very least (which must come as a surprise to Ukippers) was £24 for overseas aid and just £16 towards the UK’s contribution to the EU budget.  I don’t grudge a penny of it because I know that I’m extremely fortunate to have an income large enough to be liable for income tax.  By its very nature the payment of income tax, which is a relatively small percentage of total income, never has, nor ever could, result in homelessness or serious deprivation to anyone.

            But, of course, income tax is by no means the only way in which the government extracts money from our bank accounts, wallets and purses.  During the Thatcher years and continued by New Labour there was a shift from ‘direct taxation’ – income tax and death duties – to indirect taxation (they’re called ‘stealth taxes’ by political parties when in opposition!) such as VAT and customs duties.  They are regarded as ‘fairer’ by the wealthy because they do not depend on ability to pay.  The ‘rich man in his castle’ pays exactly the same amount of VAT on most goods or services and exactly the same customs duties on his petrol or bottle of Scotch as ‘the poor man at his gate’.  It will, of course, be a much larger percentage of the poor man’s income than that of the rich man – but that’s just his tough luck.

            Often we’re hardly aware that we’re paying 20 percent more on our bills for goods or services and that that 20 percent is going to the government in Value Added Tax (VAT).  When it’s a big bill though, we become aware of it.  A couple of years ago, for instance, I had to replace my existing central heating boiler with a new one.  Taking out the old boiler and fitting the new one cost £3,000.  Twenty percent of £3,000 is quite a lot of money and I bitterly resented having to pay the government for having carried out essential work on my home.  It would, of course, have been exactly the same had I paid for mending a leaking roof or repaired a car or a bike needed for work!  That extra 20 percent is just petty cash to the millionaire banker with his Rolls.  It’s a lot more than that to the workman with his car or bike

VAT is the most obvious indirect, or ‘stealth’ tax, but it is by no means the only one.  We contribute to the government’s coffers whenever  we fill up our car with petrol, buy a packet of cigarettes, some cigars or some tobacco, buy a glass, bottle or can of beer, cider, wine, whisky or any other alcoholic drink,  take a flight in an aircraft whether on holiday or for business, or are silly enough to buy a lottery ticket or a scratch card in the vain hope of winning the fortune that we know we’ll never acquire by hard work.  That’s how it is that someone who pays little or no income tax may in fact pay a bigger percentage of his or her meagre income back to the government than does a fat-cat higher-rate income tax payer.  I am not a teetotaller but I no longer drive a car and no longer fly away on holiday.  I don’t smoke and I have never bought, nor do I intend ever to buy, either a scratch card or a lottery ticket.  I don’t avoid indirect taxes altogether (that must be really difficult!) but I have reduced my payments to a bare minimum.  

Indirect taxation barely gets a mention in the Annual Tax Summary that I have received.  I am advised ‘For more information or for a list of indirect taxes such as VAT go to our web site; www.gov.uk/annual-tax-summary.  That yields little more information that the fact that VAT is currently 20 percent but that there is a lower rate for some items and other items, of food for instance, are VAT exempt.

One small piece of information on the Annual Tax Summary that particularly interested me is that the amount that I paid in income tax during the year was just 10 percent of my taxable income, so that for every £1 of taxable income I paid 10p in income tax.   That’s a tenth (or as they used to say ‘a tithe’) of my income – and that’s the proportion of everyone’s income that the medieval church expected to receive from from its members.  It is interesting to reflect on the fact that the medieval church then undertook many of the responsibilities that we now consider are those of the government – education, helping the poor, the provision of hospital services for instance – as well as, so it was believed, holding the keys of Heaven and Hell.

I reckon that today, if everyone (including Richard Branson, Lord Sugar and the like) paid a tenth of their income to the government as I do, George Osborne would find that ‘deficit’ that causes him so many headaches, disappearing without the need to penalise the poor and the disabled.  I believe very strongly that all adults, rich and poor alike, should pay the same proportion of their income to the government as a universal tax (or annual subscription for citizenship of the United Kingdom).  Furthermore that tax should be levied on gross income, before the taxpayer has a chance to channel it into offshore accounts or charitable trusts or some other tax avoidance dodge.

It should also be levied on all state benefits and allowances.  Currently the state retirement pension is taxable but other state benefits like children’s allowances, winter fuel allowances for pensioners, the cost of free tv licences, an estimate of the cost of free prescriptions, attendance allowances, job seekers allowances and so on are all tax free.  Under the present system, if these benefits became taxable those who pay no income tax would continue to get all those services free and unchanged, while those who do pay income tax would pay just a little bit more – but certainly not enough to cause serious deprivation.  I personally would have to pay extra tax amounting to one tenth of my winter fuel allowance, my free prescriptions, my tv licence and the attendance allowance I get for my very limited mobility.  None of that would distress me if I could be assured that top bankers and their equivalent in other fields of activity were paying the same proportion of their gross incomes as I was.

Ideally, I’d like to see every British adult – the wealthiest and the very poorest – paying this universal tax of the same proportion of their income.   This would mean that the minimum wage, job seekers allowance and other subsistence allowances would need to be increased so that recipients could pay their proportion without their being rendered either homeless or hungry.

Then that shameful gap between the wealthiest and poorest in the land would be seriously reduced, we would be a true ‘commonwealth’ and we could truly claim, to quote George Osborne,  to be all in this together.  Yes, I know I have said all this before – and I’ll no doubt say it again because it is so important for Britain’s future, if Britain is to have a worth-while future.

'What's in a name?  That which we call 'a rose' by any other name would smell as sweet'

      So asked the love-lorn Juliet in one of Shakespeare's best-known tragedies.  Her family, the Capulets, thoroughly detested that of Romeo, the Montagues.  I am quite sure that neither family, dislike each other as they did, ever thought for a moment of sneering at them as 'Plebs'

I am astonished at the importance that has attached itself to the word 'pleb' in the long-running 'Plebgate saga'.  My trade is words.  The only real skill I have ever possessed is that of stringing words together to create a readable narrative. I thought too that, thanks to seven years as a gunner in the Royal Artillery including three as a POW in Italy and Germany, I was familiar with every word of abuse in the English language, and quite a few in Italian, German and Russian. I feel almost ashamed to admit that until I learned of the heated exchange between the government's then chief whip and the policeman on duty at the gates in Downing Street, I had never heard the word Pleb used by anyone.  It is presumably short for Plebeian the name given to the underclass in Ancient Rome; not much of an insult really.  After all, it was those Roman plebs who did all the hard work and the fighting that made Rome great.

Perhaps I'm just showing my age by suggesting that I would have expected one of the Eton-and-Oxbridge 'upper class' to display his anger and contempt for someone he regarded as of the ignorant lower classes by referring to or addressing him as 'an oafish Oick!'    Now had I been that affronted copper, that is a phrase that might have found me searching my mental vocabulary for an appropriately insulting response!

But 'pleb'?   Mr Mitchel really used much more offensive words than that during his fit of bad temper, but it's his use of 'pleb' that has cost him his job, lost him his libel action and is - according to press reports - going to cost him millions of pounds in legal fees!  In the 21st century there can be more 'in a name' than 16th century Juliet Capulet could ever have imagined possible.

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