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Keeping them out of touch

As I was saying before, the real poison of the MPs allowances system is not that they get ‘free money’. It is that it insulates them personally from the bulllying of officialdom that they would have the power, had they the motivation, to curtail. The Guardian reports:

A Labour source said: “The fees office green book which sets out the rules and advice on behalf of the parliamentary authorities states specifically that professional advice, for example from accountants or solicitors, is an allowable expense.

“In order that MPs comply fully with all the relevant requirements relating to tax, and to ensure they are properly meeting all their tax liabilities, many rightly seek professional assistance and advice where this relates specifically to their role as members of parliament.”


Under tax rules, most workers are not allowed to claim the cost of paying an accountant to help them to fill in a tax return as a legitimate business expense.

HMRC is deliberately discouraging ordinary people from getting professional help with a complicated and secretive tax system by disallowing personal accountancy as an expense.* That is calculated to keep a naive segment of the taxpaying public on the margin in subjection and overpaying. In my experience an accountant is not expensive. The psychological pain he protects you from is at least as important as the financial benefit of getting it right.

The sums they claim for it are trivial, but that MPs are encouraged to get that analgesia (100% free to them), whereas the ordinary voter is discouraged from it (paying out of their own pocket, with at best 40% counting against the tax they pay, if they fall into the category where accountancy is allowed as an expense, which they won’t find out unless they employ an accountant in the first place), is another corrupting influence.

* My idea of ‘tax justice’, unlike that of the various organisations that campaign for people to pay as much tax as possible and for more arbitrary power for the authorities, is one in which the system is transparent, there aren’t different sets of rules for different people, and the rules themselves are fair and set out in law.


BTW, on the subject of tax, readers might enjoy this letter in The Times.

10 comments to Keeping them out of touch

  • RRS

    I would like to see a discussion topic postedto along these lines:


    U.S & U.K. Side Bar for E.U.

  • Dale Amon

    Despite the historical origins of the Tea Party name in US anti-tax history, what could be more British than… Tea Parties?

    Isn’t about time there was a very proper English Tea Party in front of Parliament?

  • David Gillies

    “My idea of ‘tax justice’,…”

    The problem isn’t that the rules are not set out in law – they are. The problem is that no-one who is not a specialist can possibly grasp their extent. It is an elementary principle of jurisprudence that the law be comprehensible, so that the ordinary man, acting in good faith, can decide whether any action he takes is likely to be legal. Tax law ceased to satisfy this requirement many years ago, and the obsessive managerialism of Labour has greatly exacerbated the problem (aided, no doubt, by our unelected bureaucrats’ mania to gold-plate every pettifogging EU directive that comes down the pike). All the rules are in theory discoverable, but it is not in the rational self-interest of the average person to expend the time and effort necessary. This is an invidious situation which creates moral hazard.

    Taken individually, there is quite often a good case to made for any particular exemption or legislative curlicue, and their wholesale abolition would no doubt cause many people genuine pain. But it is the sheer oppressive agglomeration of them that makes it essential that the Gord(on)ian knot is cut. Imagine an income tax form that looked like the following:
    1: how much money did you make last year (show copies of pay slips, invoices etc)? Enter this figure in box A.

    2: subtract £10,000 from the figure in box A. Enter this figure in box B.

    3) multiply the figure in box B by 0.2. Enter this figure in box C.

    4) draw a cheque for the amount in box C and send it by registered post to HM Revenue and Customs, Account Office, etc.

    Well, I can dream, can’t I?

  • Alice

    Absolutely agree on the value to society of keeping taxation simple. For an example of just how complex the rules have become, look at the US Federal corporate tax rate schedule:

    Corporate Tax Rates
    Tax rate Taxable income
    15% First $50,000
    25% $50,001–$75,000
    34% $75,001–$100,000
    39% $100,001–$335,000
    34% $335,001–$10,000,000
    35% $10,000,001–$15,000,000
    38% $15,000,001–$18,333,333
    35% Over $18,333,333

    Just look at the 39% & 38% bubble rates — and wonder about the lobbying that created it. Who were the politicians punishing? Who was able to buy protection?

    Bottom line — the tax system should be for raising necessary revenues, not for social engineering or score-settling. But if the system was simple, there would be a whole lot of superfluous bureaucrats, lawyers, accountants & lobbyists. Those people might actually have to do something which generated wealth. And the Political Class would have fewer people paying tributes.

    Lamp-posts and ropes, people! Lamp-posts & ropes.

  • Paul Marks

    Dale – there has been a protest in front of Parliament.

    Admitedly not a teaparty, but a Guy Fawkes event.

    Guy Herbert is correct.

    For years M.P.s have come to see officials as not people who boss them about and steal their money – but as “those nice people at the fees office”. For it is quite true that the people at the Fees Office encouraged M.P.s to take as much expense money as possible – they made all sorts of “helpful suggestions”.

    And they gave rationalizations – “it is just pay in another form – it goes back to trying to get round those silly restrictions on M.Ps. pay rises that the rather mad Thatcher women imposed” and so on, and so on.

    So M.P.s come to see the state as their friend (the source of nice perks) not as a foe that it is their job hold back.

    As for accountancy advice.

    Guy Herbert is right again.

    Under the statutes a private person seeking advice is not a legitimate expense (as it is evil “tax avoidence” which modern government sees as not really different from illegal “tax evasion”), but M.P.s. were encouraged to get the best advice to reduce their tax bill.

    Not to “make sure they were paying tax” – as the vile B.B.C. Radio Four “Today Programme” suggested this morning (“why do you listen Paul” – to know the enemy).

    Again the tax code is so complex that no ordinary person can understand – but most politicians are not bothered by this (partly because the complexity does not harm them – see above).

    In the United States the days of the Reagan simplification of the tax code (back in the mid 1980’s) are long gone – and the tax code is now more complicated than ever. But this does not harm the statists – as even when Obama people are found to have “cheated on their taxes” (not paid the full amount) they just carry on in their jobs – as “they did not understand the tax system”.

    These people include the Tres Sec (head of the I.R.S.) and the Chairman of the Committee of the House of Representatives in charge of writing the tax code (“Charlie” Wrangle).

    Ordinary people would be in prison – but the elite do not even lose their jobs.

    And the mainstream media?

    They are too busy running vast puff features on “The Mystery of Michelle” Obama (not, of course, why this corrupt Chicago pol, who got a big pay off from the hospital that then Senator Obama got a iig earmark for, is not in prison) to report on these matters.

    “This [the success of Barck in some caucus votes] is the first time in my adult life that I have been proud of my country”. Said several times – so not a mistake, a serious statement of postion.

    A media that does not go after such a vile person, is harldy likely to go over expense claims – at least not of leftists.

    A reason to be proud of Britain – the Daily Telegraph went after M.P.s regardless of party.

    In the United States the mainstream media would either have ignored the story totally – or only gone after Republicans (clothing for Governor Palin denounced, 600 Dollar sneakers for Madam Obama not denouced – it really is that crude a level of bias).

  • Laird

    In the US, tax preparation service is a deductible expense, so at least we have that much going for us. Still, I agree with Alice (et al) that the system should be solely for revenue generation, not social engineering (i.e., as economically non-distortive as is humanly possible) and is far too complicated. That’s probably too much to expect, however; the temptations are undoubtedly too great for most mere mortals to resist. My (not-so-modest) suggestion is that all Congressmen be required to prepare their own tax returns without professional help of any kind. That would give them a direct, personal incentive to simplify and rationalize the system.

  • Roger Clague

    Them and us.

    Tax, we pay they get paid by us to avoid it.

    Security, we get investigated they must be protected.

  • PersonFromPorlock

    Interesting that the very first sentence in the linked letter to the Times is instantly recognizable as Terry Pratchett’s work.

  • Andrew

    Just goes to show that Sir Terry still has his marbles despite his illness. There’s hope.

  • guy herbert

    All the rules are in theory discoverable, but it is not in the rational self-interest of the average person to expend the time and effort necessary.

    In general yes, but sometimes such discovery will involve several years of litigation, which is to say no-one knows what they are. In any case that the rules are in theory discoverable does not mean that they are in theory or practice dischargeable.