I noticed yet another Facebook post the other day, complaining that the major online retailers (Amazon in this case) are not paying enough tax and this made it difficult for high street retailers to compete. In this instance, it was business rates that, were mentioned.
So how are business rates calculated? It is easy; they are based on the rateable value of the property (assessed by a Government valuation) multiplied by a rate set annually by the Government. In other words it is pretty much entirely in the hands of the Government.
This got me thinking. Our taxation system is very antiquated and arguably not 'fit for purpose' in the world we now live in. In recent years there have been some pretty significant changes in society and how (any with who) we spend money but what has happened to the taxation system is the application of a few 'sticking plasters' to try to adapt. I'm not convinced that it is faring particularly well.
Even ignoring the pandemic, which has probably prompted further permanent changes in the way we live our lives, there have been big changes in the old traditional tax revenue streams over the last couple of decades. These would include
Employment. It feels like many more people are on limited hours contracts, mainly on minimum wage. A very significant number of these will pay National Insurance but not hit the Income Tax thresholds.
High Street decline. Many purchases are now on-line, these often go via the likes of Amazon and are frequently made via companies who declare their revenues in 'countries of tax convenience'.
Tobacco. Sales have declined massively.
Alcohol. Many of those who have 'come of age' since the turn of the millennium don't drink, at least not with the same regularity as previous generations.
There is another really big change on the way with the increasing number of electric cars, within a decade revenue from the fuel duty will have largely become a note in history.
I realise that there is talk of a 'per mile' charge for electric cars and my own view is that it sounds like a fairer solution. But, is it not time for a fundamental ground-up review of how this country funds itself.
We are trying to run a 21st century economy with a historic 20th century taxation system and I am not convinced that it is benefitting the economy. We need a system that is specifically designed to encourage growth and stability within the world which we live in today, what we have is just history and Elastoplast.
Comments