Tax

Tax

A good tax system should be simple, fair, comprehensive, cheap to run, unavoidable and easy to comply with. Our current system is complex, inequitable, avoidable and involves a good number of accountants and lawyers employed to ensure or avoid compliance. Can I suggest we tax all income as its received into a bank account. So every deposit would automatically have (say)10% deducted by the bank and paid to the government. That's every deposit regardless – no exceptions. This would be the only tax unless the govt wished to disincentivise some behaviour (sugary drinks, alcohol, tobacco, plastic bags) which they might do with an additional tax. Cash would have (say) 20% deducted on withdrawal and a further 20% deducted on deposit so the disincentive to use cash would apply to both buyer and seller. The banks would administer this as a cost of doing business – and its probably a lot easier than the administration they currently have to do. The only failing I can see is that this system is not exportable, ie we can't get others to pay it. It may also reduce the number of people conducting business as intermediaries – but I don't think that's such a bad thing.


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