Book Review: The Joy Of Tax, by Richard Murphy

THE JOY OF TAX,

How a fair tax system can create a better society

Richard Murphy, Corgi Books, 2015

Richard Murphy , a self-confessed tax expert, condemns the UK tax system as

outdated, inequitable and not fit for purpose while our barely accountable HMIT

Customs & Excise is understaffed, and led by big business bosses and large

accountancy firms who perpetuate inefficiency and inequality. Suspend disbelief and

imagine Richard Murphy is Chancellor delivering his maiden speech demolishing

current practices and introducing the revolutionary underpinnings of a fairer society.

*****

The ‘New Chancellor’ declares:

It is government’s duty in taxing to create conditions of equality and prosperity for all

by managed spending. Most people would willingly submit to a fair tax system.

Insistence that social investment is unaffordable on the altar of balancing the books is

untrue nonsense. Designing a fairer system first requires reappraisal of currently

accepted thinking.

The essential truth, recognised by the Bank of England, is that banks create money by

Lending, in debiting a loan account and crediting a current account and not, as

popularly peddled, vice versa. Government can, therefore create money the economy

requires since we own the Bank of England. Banks make money by lending, and

government creates cash by spending. Banks control loans through repayment, and

governments reclaim money by taxing. Government spending precedes taxation, so

spending is Not dependent on tax.

It is government’s job to create and manage money, avoiding inflation or deflation – a

responsibility too big for other hands than government. Just as banks risk lending to

make profit, governments must risk spending to initiate reclaimable taxes with

responsibility to decide how to recoup its spending.

HMIT Customs & Excise is relatively unaccountable, headed by representatives of vested interests - big accounts firms, solicitors and financial advisors whose aim is to minimize tax and corporation tax on profits, income, gifts, gains, speculation and corporation tax which results in a system hitting lower and average earners disproportionately. Consultation will be spread much wider to include all taxpayers interests. Vested interest will no longer shape tax laws and practices.

Accountability for Tax will be insured by a new Secretary of State for Taxation and a

Department of Taxation with full structure and staffing to ensure tax owed is collected

offshore or otherwise. Tax laws will be introduced or amended to reverse onus for Tax

Collection to prove tax liability, but place onus on company directors, solicitors,

accountants and advisors to prove if and why claimed tax concessions are valid, the

default position will deemed liability for full payment of tax.

Unless proved otherwise, attempts to avoid or evade in any way, including shifting gains outside the UK of UK assets any individual, company or trust on behalf of anyone or any body attempting avoidance will themselves be liable to pay and risk assets in question being seized. Since land will be treated as taxable, owners, not occupying tenants, will also forfeit land ownership to the state for non-payment of tax. This should

ensure building land or other land is used productively.

All Land will be taxed based on land rental value on a progressive scale, above a modest threshold, and unused, vacant or undeclared ownership taken by the state. Unearned income which, astonishingly, bears a lower rate than earned income at present, simplifying the system. Wealth tax on properties and let property portfolios over £1M, other than a main residence, family farms or businesses. will counter house price inflation.

As tax will be due on all income and wealth, stamp duty will be obsolete, so abolished. Tax relief on buy to let landlord mortgages which helped fuel increases in house prices,

will also be abolished.

Disputes will be judged according to the Intention of tax laws. An office for Tax

Responsibility will audit gaps, effectiveness, reviews and proposals for change with

powers to recommend laws, amendments and repeals. The Chancellor will have

overall responsibility including funding and staffing to ensure collection of taxes.

Full disclosure and accounts will oblige banks, businesses, companies and trusts to

name all owners and directors on public record.

New domicile and residence laws, with country by country reporting, will ensure that

income generated in the UK is paid in the UK with tax deducted at source from

interests, dividends, royalties, management charges, insurance premiums, hedging

expenses and profits when paid from the UK with reciprocity to other countries. A

General Anti-Abuse Principle will replace General Anti Avoidance.

Bank of England loans to government will take the burden off taxation to meet

infrastructure investment, including house building.

A New Investment Bank will provide loans for high standard, environmentally sound

homebuilding to Not-For-Profit landlords, organisations and associations.

Infrastructure investment will also create jobs around the UK.

REDISTRIBUTION of income with a Universal, Socially Just Personal Income

Allowance at one base rate, at 60% of median earnings will require all reliefs to be

phased out on savings (possibly excepting ISAs). NI will be phased out as regressive.

Instead, a new tax on finance above a fixed sum (removing those on lower incomes)

will be charged on bank transactions on personal and business accounts will

discourage excessive consumption fuelling global warming as a Carbon Usage Tax.

Companies controlled by five or less people will no longer count as one entity, but

each will now pay their share. Those distributing less that 50% of profits will pay

double corporation tax but get full allowance on capital spending. Large companies

will pay increased Corporation Tax to compensate for their toll on society and their

privileged limited liability cushioning risk.

A MINIMUM GUARANTEED INCOME after a minimum UK residency will be

phase in to include old, young, disabled will be phased in. Interim measures will

temporarily reintroduce child credits and welfare benefits until the universal payments

for all, working or not, are rolled out countrywide.

In the financial services, alongside a tax on cash moving around, in and out of bank

accounts, a new financial transaction tax will be brought in at differential rates for

shares and securities trading, foreign exchange, derivatives, and other futures.

Responding to high volume trading, variable rates will help even out market trading,

dampen trading, preventing excessive trading fluctuations, as well as gathering tax.

VAT will be retained as a Tax on Consumption but at a low level and compensated by

Bank Transaction Tax on Consumption.

Specific measures:

Air Transport Tax will be progressive according to use. Travel once a year will incur

no tax, thereafter rising progressively with frequency. Data registered on passports

will automatically charge tax collected on bookings.

Renewable Energy Tax will be abolished.

Summary:

Government duty is to manage the economy, but balancing books is a false logic.

Government borrowing will fund social housing, infrastructure and investments

creating jobs, generating tax revenue. A budget and taxation will be used to create

Fairness and Redistribution. Workers and those who cannot work will be treated with

respect as valued members of society. Businesses, communities and UK partners will

be treated as equals. By reducing taxation on work but instead taxing excess

consumption, and fostering all people’s potential, we set out to create a more equal

society.

“This budget is about a common future and building it together. That is what I call the

Joy of Tax.”