Taxation is in the news just now in Britain, because the word is that Middle England is finally getting fed up with Gordon Brown and his relentless drizzle of sneaky tax increases and failure or refusal – it doesn’t really matter which, does it? – to keep a lid on public spending. Which is perhaps why, when I supped last night with Alex Singleton, we fell to talking about Tax Freedom Day. And I heard myself saying, the way you do, that there is another way to dramatise the scope and nature of the British tax burden, which is to ask: How many taxes does Britain now have?
Frankly I have almost no idea at all of what the answer to this question is, for Britain. But to ask it might achieve many benefits, I surmise. The Adam Smith Institute, curators of Tax Freedom Day, have themselves gone a long way towards dramatising this issue with their killer meme “stealth tax”. But that often refers to sneaky increases in obscure taxes which are already in place, rather than to the introduction of entire new taxes.
With taxation, size matters, but a big part of the burden of taxation is the sweat of sorting it all out, both on paper and in your own mind, or the cost of getting someone else to do that for you, and of the sheer confusion that complicated tax laws create in the minds of potential wealth creators. With taxation, there is not only the punishment of the simple and the known burden. There is also the vague dread of unknown horrors to come if one attempts to embark upon a different and more lucrative life. This is not a fact of modern life nearly as much spoken about as it might be, because it usually involves admitting that one is personally scared into non-productivity by one’s own failure to understand and deep desire not to have to understand the tax system. Yet it must be that if the government piles up enough complications, even if each complication on its own is not all that complicated, the combined effect is just as debilitating as a large percentage tax increase imposed in a clear and brutal but more understandable way.
I guess it’s likely that a popular answer to the question about how many taxes we labour under will be that it is impossible to say, every approximately, because it all depends what exactly you mean by a different tax. Well, such a discussion would further serve to illustrate what an immensely complicated matter taxation can be.
Besides which, in the event that any organisation does fix on a number, then even if the manner of how it was arrived at was controversial, it would still mean a lot if the number goes up, or down. Up would still mean more complicated and sneaky. Down would still mean more honest and simple, even if no less burdensome in total. The same applies to Tax Freedom Day. That too is a controversial calculation. But if the Adam Smith Institute says that Tax Freedom day has advanced by a week in the last seven years, or whatever, that still counts for something, even if you think that the advance should really have been announced as having taken place in a slightly different part of the calendar. Even if you can’t agree where you are, the way you are going is still worth talking about. Number of taxes would be like that, I think.
Again, just as with Tax Freedom Day, the How-Many-Taxes? question would be a standing challenge to politicians to improve matters by saying, for example, that they will immediately get rid of ten or twenty easy and stupid taxes, and then get stuck into another fifty or a hundred slightly less stupid and harder to remove ones, which could nevertheless be got rid of over a period of months or years.
How Many Taxes? would also, again just like Tax Freedom Day, invite an excellent discussion based on international comparisons. A nice by-product of such comparisons might be that countries which usually do rather badly in international league tables might do rather well in this one. Something tells me that the country with the fewest separate taxes is not going to be the USA, and who knows, it may even come bottom on this one.
I should add that the last thing I want to do is to replace all the other ways that people use to complain about the tax burden. Tax Freedom Day was a brilliant idea, as Michael Howard’s recent pronouncements concerning it prove. I’m trying to add to our rhetorical armoury, not chuck out any existing weapons.
Final point: it may well be that none of the comments on this will get anywhere close to answering my question. If that happens, no problem. My purpose is to plant the thought in a few minds, not necessarily to harvest the result straight away. Of course, if anyone has already thought about this question in detail, then I’m sure we’d all be delighted to hear about that, and about any answers that have been supplied.
Even just one is too damn many, but, given the use of the VAT which starts at the beginning of any economic activity right through to the bitter end, does one count each and every little layby where another bit is added on until the final retail transaction takes place…how would that be counted?!
Maybe it would be better to find out if there is even one single human activity that is NOT taxed, for surely that would be easier to count.
A couple of paragraphs from a USENET post I did a couple of years ago during the fuel protests may help throw a little light on the tax-chain. The figures are probably a little out of date, but I doubt if things have got better:
An average working gee (employed, living in rented accommodation, at rent inflated to cover the landlord’s income tax) works eight hours for £92.59. On top of that his employer pays 8% Employer’s NIC. So it costs his employer £100 for his eight hours. He has to turn out at least £100 worth of work so that his employer doesn’t lose out and he keeps his job. So effectively he’s earned £100 and been taxed 8% on it.
Now the employer whacks off 10% Employee’s NIC and 22% Income Tax off the nominal top-line of £92.59 (incidentally, the employer, acting as the state’s unpaid tax-collector, under penalty if he doesn’t get it right, eats the expense of this – a state theft of his time and resources). This leaves Joe Average with £62.96 in his pocket for his day’s work.
On his way home, Joe, who like me runs a big old diesel scrapper because it annoys the piss out of the purse-proud mother-in-law, and because he can’t afford anything better, stops to fill up. He tanks up 78.7 litres at £0.80, which, amazingly, comes out at precisely £62.96. VAT at 17.5% leaves £53.58, and then fuel-duty (I’m not sure exactly what the per- litre figure is) is around 240%. (Watch carefully here – you pay VAT on fuel-duty, tax on tax – neat, eh?) After the service station owner has done the unpaid tax-collector schtick again – more state theft of time and resources – he’s left with £15.76, the actual retail value of the fuel before Mr Brown got in on the act.
So for his 8-hour, £100 day, Joe has finished up with £15.76 worth of diesel (£1.97 an hour – minimum wage, kiss my arse). The Chancellor of the Exchequer has trousered £84.24 on the back of the deal, and he’ll blag another pound or two on VAT and tax on profits from Joe’s employer, the service-station owner and the oil company.
Now, I’m working at the margin, and not taking income tax allowances and banding into account. The figures may not be exactly right. Yackety-yack. Fact is, if you work and spend your earnings, the Big G takes you to the cleaners. At gunpoint, if necessary.
But Thon, what did the worker get for his money?
Say he crashed on the way home… He gets to use our filthy hospitals, of course his insurance will be charged for this so maybe I should retract that one.
OK then, say he loses his job and wants to claim unemployment reward, say he’s a sensible guy and has some savings, whoops he can’t claim any benefit becuase he’s got savings!
Well at least the council will look after him. Oops pipped at the post by the unmarried bird who got pregnant to jump the queue.
You can allways spot parasitism (socialism) because a state will inflict it on honest citizens with no way to opt out (except the ejector seat, emigrate)!
Great post Brian and some great comments too. I’ve had the idea of trying to work out how much is paid in taxes in an average day, much like Thon did, and it becomes a nightmare just trying to work it out. I don’t have the patience for it but I do find it very irksome.
Along with how many different taxes there are I’d like to see made very public how much of Joe Lunchbucket’s income goes in taxes. Perhaps a better way to look at it would be to show all the different ways the government makes money from say £100 of income earnt.
OK, let’s have a go at this:
Income tax
National Insurance
Employer’s National Insurance
Council tax
Value Added tax
Tobacco Duty
Fuel tax
Road Fund tax
Departure tax
Capital Gains tax
Death Duty
Advance Corporation tax
Congestion charges
Stamp duty
Corporation tax
Business rates
Television licence
There are all sorts of taxes on alcohol but I don’t know what they are called.
I imagine that there ought to be included in taxes all license fees from regulators and local and national government. And there are hundreds and hundreds of those, many obscure. Has anyone else here ever held a Black Powder License?
Meanwhile, are we really counting Income Tax, with all its schedules and cases under different rules, and NIC in all its different classes, as one tax?
I’ll add a few to Patrick’s list in the spirit of cooperation:–
Climate change levy;
Aggregates levy;
Insurance Premium Tax;
Landfill Tax;
Scottish variable rate income tax (not implemented);
Stamp Duty (share transactions)
Stamp Duty Land Tax;
Beer Duty;
Bingo Duty;
General Betting Duty;
Pool Betting Duty;
Lorry Road User Charge;
Petroleum Revenue Tax;
Import Duty
To throw one more into the ring, Airport Tax.
However, isn’t this a question that can be asked of the government perhaps via your local MP (or maybe HMSO)? If they can answer the question and tell you the number of taxes (and their names if you wish) then you have your metric; if they cannot answer the question then this in itself is worth knowing and blogging about.
I make that only 31 taxes – it feels as if there should be more.
How about Auction Sales tax (or is this just variant VAT)?
Would you necessarily trust the government’s answer? The definitional problem gives them plenty of wriggle room. The departments and agencies are plenty evasive, not least because they want to avoid any public announcements that you might be able to hold them to.
The best place to look for a comprehensive list of government income is the treasury Red Book. But you have to follow them all in series to catch all the taxes as they come. If it is not included in the treasury Planning Total, it it won’t be counted as government income, but that doesn’t mean it isn’t effectively a tax.
I take it that things such as Mr Brown’s tax-credits are also taxes, though they count as negative in the government’s account, because there is a cost of administration to the state and a burden of claim/compliance to the recipient.
There’s a third category we’ve missed so far: fees for compulsory services, such as those levied by the Meat Hygeine Service. And a fourth: transfers presided over by the state but off the books, such as Child Support payments. (PFI, though, is borrowing–i.e. future tax.)
Old Otto (von Bismark) came up with the idea of idea of “welfare” state to make every citizen dependant of the state. This is exactly the indirect policy of Neuerarbeitspartei. By making everyone dependant on state handouts and creating armies of Lapoor voting publik servants (such as Five-a-day co-ordinators, Walking to school directors, Inequality officers…) the system will perpetuate itself to eternity.
Welcome to the Matrix boys and girls.
And there’s no red pill…
The biggest forgotten tax is inflation caused by the “madman with the photocopier” (the royal mint) defrauding currency holders via printing “money” (it’s in quotes because you cannot print money, you can only defraud existing money holders).
It’s by far their biggest secret revenue earner.
BTW M0 was 8.5% this year. Thats a 8.5% tax on holding your own money, the state is your enemy.
Would you necessarily trust the government’s answer?
Aha, the flaw in my thinking is there for all to see. No, I would not.
Pace Rob Read, that M0 is growing fast doesn’t mean the money supply is outpacing growth: cash is a tiny proportion of money in Britain. The rate of growth in M0 might however be a measure of the growth of the black economy, and a sign that tax–pressure is getting to people.
On the inflation front, it seems the Chancellor has, taking advantage of the index change, today relaxed his target while claiming to tighten it. (Surprise, surprise: New Labour lies!)
Front 4UK – Interesting that the name of Cherie Blair’s chambers is the sinister sounding Matrix.
Ye gods I wouldn’t want to try to tally up how many taxes there are in the US; I imagine it varies much more state to state and county by county here than it does in the UK.
AZ has a dreaded business equipment/machinery tax, a “very small” percentage of the amortized value of ANY capital equipment (i.e. anything THAT COULD HAVE a depreciation schedule, whether financed or insured or not). It’s “allowed” at the state level to the counties, but it’s a county tax that not all of them have (and it varies). You can bet your ass that Maricopa County (Phoenix) and Pima County (Tucson) asses them. Just one more hidden “gotcha!” for new business owners at the end of the year. Wrangling over the assessed value (and what should be assessed!) is, as Samizdatistas can imagine, a source of much real and imagined corruption.
If, as I expect you do, you support the ill-thought-out idea of Tax Freedom Day then I expect you welcome today’s news on borrowing. By my calculations Tax Freedom Day is 3 days earlier this year, and 2 days earlier next year, than we thought in April.
Gordon Brown rocks!
Matthew,
Borrowing is not ‘free’ money. It has to be repaid with interest – by the taxpayer. What Mr Brown has done is to defer the tax increase to to some point in the future.
Matthew has rocks (in his head).
I’m sorry, David. I’m with Matthew. When I spend 5,000 quid, on the ol’ credit card, and as a result my personal spending growth goes up, in the year, by 2%, just as I promised my wife it would, it means…ooher! 😉
It means next year I’m crocheted! 🙂
Rob Read – hear hear!! I wouldn’t call the increase in money supply as “tax” (and M4 is the broad money supply indicator btw, up 6.6%pa, Nov), but debasing your currency by reckless printing of money will lead into erosion of one’s purchasing power as wages are “sticky” (ie. raise slower than the rate of inflation.). All in all , BAD thing.