Wednesday, August 01, 2012

Taxing our patience

If Treasury Minister David Gauke has really never paid a tradesman in cash – as he seems to claim – he must be one of the few people in the country who hasn’t.

He believes it is “morally wrong” for ordinary people to pay cash to cleaners, plumbers, window-cleaners or gardeners.

He says: “It is illegal for the plumber but it is pretty implicit in these circumstances that there is a reason why there is a discount for cash. That is a large part of the hidden economy.”

The phrase “hidden economy” is the politically-correct way of referring to the cash-in-hand “black economy” which the Treasury claims costs the taxman £35 billion a year.

Naturally, Mr Gauke has come under attack for having a go at the likes of you and me when massive corporations and zillionaires pay next to nothing in tax.

What I find morally wrong, though, is the idea that there is something morally right about paying taxes.

There is nothing moral about tax and nothing moral about the public spending it pays for.

When the poll tax rioters wrecked Trafalgar Square in 1990, they were complaining that Mrs Thatcher’s alternative to local council rates was morally wrong. 

They took the view that the same charge on every adult wasn’t reasonable. The rich man in his castle and the poor man at his gate both had to pay the same poll tax. 

Eventually the Tories accepted the poll tax offended the country’s sense of fairness and replaced it with another failed attempt to curb council spending.

The point, though, is that in the case of the poll tax, the Government had to back down because enough people thought it was unacceptable. 

This helps to show there is nothing morally right about paying taxes and that taxes themselves can be morally wrong. 

Tax is not a question of morality though there is a requirement to pay whatever the law demands. No more and no less. 

If we have surplus funds and want to do good with it, we can always donate to charity. 

We wouldn’t waste it on the Government. We all know Governments squander billions. It would be immoral to assist them in a task they are perfectly capable of doing unaided. 

It has to be said that the Minister is not quite out of the woods as far as his own record of not paying cash to tradesmen is concerned. 

What he actually said was: "I've never said to a tradesman, 'If I pay you cash, can I get a discount?'”

Of course, Mr Gauke knows all about tax and morality. Before becoming an MP he worked for top City law firm Macfarlanes, who are very hot on “tax efficient” schemes. His wife Rachel, another lawyer, specialises in corporate tax.

It’s hard to imagine either of them, in their professional capacity, advising clients how to maximise their tax bills – especially as, through MPs’ expenses, Mr Gauke made the taxpayer foot his Stamp Duty bill of £10,248.32 when he bought a home in London.

When it comes to keeping people off the dole and the economy on the move, there is actually something to be said for the “hidden economy”. 

If a builder says a job will cost £100 cash or £120 including VAT, but the tax is optional as far as he’s concerned, how much would you choose to pay? 

The £100 keeps the builder in work. He will spend the money. That will help the economy. 

For many people, the extra £20 would be too much. We might not be able to afford to employ him at all. The builder doesn’t get the work, he doesn’t spend the money, he can’t help the economy. 

The immorality is that high taxes – and a devilishly complicated tax system – actually do more harm than good. 

Low taxes would make it much less tempting for otherwise decent, law-abiding folk to do the right thing. And they would encourage tradesmen to join the legitimate economy because they would have very little to lose. 

Low taxes would stop multi-national companies from exploiting the system and basing themselves in some offshore haven. 

Low taxes would persuade rich individuals to stop using complicated systems to avoid paying huge cheques to the taxman. 

There is every likelihood that simpler taxes at lower rates would create more prosperity and bring more, not less, money to the Treasury. 

It’s not as if British Governments spend our money wisely or well. They waste billons. 

If it’s not failed NHS computer systems, it’s helicopters that don’t fly. If it’s not new fire stations nobody wants, it’s Legal Aid for terrorists, back-to-work schemes which create no jobs for the unemployed or wars we shouldn’t be fighting. 

Politicians seem to think we taxpayers will always bail them out no matter whether they deliver value for money or not. 

It is sickening to be preached at by these people. They should get their own house in order. Where’s the morality in all the waste they are responsible for? 

When politicians bleat on about morality, the only thing they are taxing is our patience.

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