Tax system is in need of repair and reform (From York Press)

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Tax system is in need of repair and reform

9:32am Friday 3rd February 2012 in Columnists By Julian Sturdy

Julian Sturdy

This week, research from the Taxpayers’ Alliance found that the average British family will pay £656,000 in tax over their lifetime – a staggering amount of money.

As a firm supporter of a low-tax economy, I find wasteful, burdensome and excessive taxation infuriating.

However, regardless of political allegiances, it is widely accepted that the strongest liberal democracies are those which possess a fair and transparent tax system.

Unfortunately, as we have seen throughout the past few turbulent financial years, our tax system is very much in need of repair and reform.

On some fronts, the coalition Government has made progress. By 2015 roughly one million of the poorest taxpayers will have been lifted out of paying income tax altogether as we lift the personal allowance thresholds. Likewise, the Chancellor has backed up his words on fuel duty, ensuring that motorists are now saving at least 10p per litre.

There has also been talk of combining income tax and national insurance contributions to simplify our bogged-down tax system, and I am proud that this Government is overseeing the largest-ever increase in the child tax credit. Indeed, this coming April, it will increase by £225, with a further increase of 5.2 per cent pencilled in for 2013.

Despite these positive steps, there is much to do. A couple of weeks ago, hosting a Westminster Hall debate, I emphasised the perverse impact of empty property rates.

Introduced by the previous administration in 2007, the empty property rate scheme introduced a penalty on commercial properties which lay empty for more than just a few months. In recessionary times, this became a tax on failure. Affected commercial property owners not only lost revenue due to zero income from such properties, but were also hit by bills from the empty properties’ tax.

This tax is responsible for the demolition of perfectly good buildings and it is the main driver for the cancellation of speculative commercial construction.

The same regrettable analysis of the Government’s current policy on child benefit can also be made. It is unfair to suggest that a couple earning £40,000 each will have their child benefit income preserved, but that a household with a sole earner on £45,000 will have it removed. Such a perverse policy will rightly fail to receive much Parliamentary support unless it is drastically amended.

Closer to home, it is troubling to see that City of York Council is seemingly destined to raise council tax, despite central Government offering a one-year grant of up to 2.5 per cent to cover the cost of a freeze.

City of York Council argues that a freeze this year will lead to a double whammy in council tax increases next year. This is simply not the case. If anything, the Government’s grant would provide an extra 12-month period for the council to make sufficient efficiencies.

I do not believe hard working taxpayers begrudge the difficult spending decisions. What I believe really irks hard-working residents, however, is the depressing political disregard for public money that we have seen in recent years.

For too long, our tax system has punished those who play by the rules and work honestly, giving rise to the sorry impression that politicians simply see new taxes as a means to a quick buck.

Whether you believe in a high-tax-and spend economy or a low-tax economy, whether you would describe yourself as being left-wing or right-wing, or somewhere in between, we should all agree on one thing – our tax system should represent fairness across the board.

Comments(11)

newscritic says...
12:59pm Fri 3 Feb 12

Smoke and mirrors Mr Sturdy.

Having raised VAT to help reduce the deficit and a rise in NI contributions and in the cost of most utilities and commodities - please don't try to say the Tories are fair regarding taxation.

You have even taken money from those on benefits which were once universal.

Your government has reduced the winter fuel allowance and is now using CPI rather than RPI to raise state pensions and benefits.

You are forcing people to work longer for less pension and have stolen thousands from future pensioners by raising the retiremnet age at a time of soaring youth unemployment.

And all the while national debt is rising - the Tories have increased this by 30% in just two years.

Austerity is biting hard yet the Treasury took in a record £153 billion in income tax last year.

All this and UK growth in minus territory threatening a double dip recession.

Back to the drawing board Mr Sturdy - not good enough.