So a new way of thinking needs to be introduced. We need to consider taxing on spending rather than on earning. In addition, people will be encouraged to save more. The country will benefit and the world is our oyster for exporting our goods.
First of all, we need to get rid of VAT – a stupid tax that makes all companies in the supply chain pay it as the goods move from manufacturer, to distributor, to wholesaler, to shop.
We should introduce our old system of “purchase tax” which only the company selling to the public introduces. That will, at least, save extra costs which should ensure a cheaper product as they move down the supply chain.
We can do two things now to help destroy the black economy.
First of all, keep purchase tax at 20% and increase the individual’s tax free allowance to £50,000. In one instance, the Inland Revenue/VAT Office would be reduced in size by well over 80%. Non productive public servants could then move to the more productive private sector.
However, there will still be a financial deficiency so we have to think about a sliding scale tax system.
This will need a lot of careful thought.
First of all we need to have a zero rated purchase tax on gas and electricity, providing all tax payers live in a building which has solar panels fitted on their buildings roofs which generates electricity and returns unused electricity to the National Grid. Otherwise the 5% tax will remain. Financial assistance to be given to install the solar panels. Landlords to pay the 5% purchase tax on gas and electricity if they don't add solar panels to their roofs.
- Petrol and diesel tax. At present the combined tax from the duty and VAT on an average price of £1.16 litre of petrol is 69.7%. There should be only one tax, so do away with doubling up on people, and have a purchase tax of 70%. Raising it further will be unproductive as it will put up all food prices and goods which are transported by lorry.
- Motor Vehicle. If imported, the first £20,000 of a single item at 20% and thereafter at 40%. If made or fully assembled in Britain, the first £80,000 of a single item at 20% and thereafter at 30%. The tax that owners pay on CO2 emissions is a little complicated but should stay the same until we become all electric.
- Food. All food produced within the UK to remain zero ratedare. All imported food to be either zero rated or 5% depending on origin. For example, food from poor countries to remain zero rated and food from wealthy countries to be taxed at 5%.
- Clothes. Zero rated up to a certain amount – enough for people to be smart in their chosen jobs. For example, if you work in an office, items (eg suits) up to £200 zero rated. Otherwise full purchase tax.
- Luxury items. If imported, the first £200 of a single item at 20% and thereafter at 35%. If made in Britain, the first £400 of a single item at 20% and thereafter at 30%.
- Computers. If imported, the first £200 of a single item at 20% and thereafter at 35% If made or fully assembled in Britain, the first £600 of a single item at 20% and thereafter at 30%.
- Mobile Phones. If imported, the first £200 of a single item at 20% and thereafter at 40%. If made or fully assembled in Britain, the first £400 of a single item at 20% and thereafter at 30%.
One final point – and I am not able to cover this as I don’t know the answer. What to do if the immigrant workers just exist on the bare minimum here whilst sending all their money out of the country? What can we do?
If you'd like to chip in with your ideas, comment below, I will then reply.