Sunday, 18 November 2007

Income Tax, Oversight and Government Accountability

Taxation is a bit like a multi-channel TV package crossed with a protection racket.

You get a load of rubbish that you wouldn't want for free - let alone actually have to pay for - forced upon you, along with a few things that you might actually want, some of the time – and if you don’t cough up the boys will be round...

Of course with the TV you are not actually forced to subscribe (except for the BBC TV Tax of course)

Most people don't know where their taxes are going, what they are being spent on, or why. If they did they probably wouldn’t approve of some of it - and until people can engage more with where their contribution goes they will be reluctant to endorse, or even support the expenditure. Voting just does not do it.

If it were actually the Government's money that would be no problem. But its' only the Government’s money in the sense that the proceeds of any robbery become the thief’s. Taxation is not voluntary.

So here’s an idea. What if only a 3rd of tax gathered actually went to the Government to do with as it would - But the rest the individual contributing it could, if they wanted to, decide where it went and on what, depending on their priorities.

It would still have go on something, but they could decide what. That would surely be much more democratic, help to engage the public in politics and make them feel more empowered.

It would harness the so-called wisdom of crowds and reduce available Government spending where it was not generally wanted and increase it where it was felt to be more needed. That way it is unlikely anything worthwhile would suffer, as people’s views would probably tend to balance out generally. Maybe the poor old armed forces might do better out of it for instance

Pensions, as an example. One would want to make sure it was kept up, for the benefit of elderly relatives and friends. Also you never know you might need it yourself, what with the former Chancellor making raids destroying the value of pension funds, best be on the safe side there.

Ditto for most of the important stuff. Those who actually make the effort to do it are likely to operate on the principles of enlightened self-interest to some extent.

You would have to watch that the Government didn’t try to loose details of some of the worst unpopular wastes of money in some innocuous budget. So you would need to drill down into the categories in some detail.

This could be done by post (forms from the library or post office, completed ones to a freepost address) or via the internet.

As they say Tax doesn’t have to be taxing…

9 comments:

Crushed by Ingsoc said...

I must admit, I'd often thought that.

Frankly, I object to the amounts of money I pay towards... certain things.

Phil A said...

Crushed, To be honest I object to the total amounts we have to pay, especially the stealth taxes, but that is another story.

I do think that if people actually had a hand in where some of it was spent, presumably by picking from a portfolio, then they might resent it less and it might even get spent more sensibly.

Roger Thornhill said...

Phil,

The first thing that leaps out at me is who decides what "options" can be allocated money? That in itself becomes a political issue. The government will then be bombarded with endless special interest groups who will demand their "charidee" is on the list and you can then see lobbying for caps for things like Hospices, Elderly Care, Cats and the Armed Forces. Getting on the list will be a moneyspinner for any particular cause and so this opens the door to corruption (the door is already open, mind, as the lobbying by people like the NSPCC).

People will also ask for a "none of the above" option.

An alternative I have toyed with requires no State involvement at all. Political parties or any other organisation (FoE etc) can set up their own "Charity Unit Trusts" where they manage the distribution of funds for the causes their clan might prefer, and so the punter can give to those causes without the hassle of having to find out and vet each case.

Each group can set their policy for contributions - the Labour Party could, for example, say that each Party member MUST contribute funds to match the taxation level they would have had under a Labour Government and the Party will distribute to all the bleedin heart cases and wastrel QANGOs they wish to.

I do not envisage P. Toynbee signing up to that one. And there is the rub - it exposes peoples' true feelings and exposes hypocracy.

MJW said...

The problem is that public expenditure is supposed to be carried out for the "common good", that is the benefit of the majority. Unfortunately the "common good" ends up being stretched to mean things that are actually niche interests, this is done through arguments that say a niche interest solves a niche problem that makes society as a whole better blah blah blah... Example: whilst the NHS is a common good because the majority benefit, a lot of quangos are not because they focus on niches etc.

So I suggest that public spending must demonstrate a prima facie argument that it is directly in the common good, not that the common good comes as a side effect or as a knock on.

Phil A said...

Roger, Some excellent points, thanks. Re the ‘Options’. I had in mind - everything. If there is a category there would be a base percentage of your total taxation that would go to it, the Government’s ‘suggestion’ if you like and you could modify that as you wished.

It’s not as if people wouldn’t still be paying it, just those engaged with the process (you) would have some choice as to where 2/3 of it went.

The special interest groups would have to lobby, or convince the taxpayer, more than the government. Maybe TV adds?

MJW, I agree. This idea is specifically designed to ensure that significant amounts of tax are allocated to what the public actually think are for the common good, as opposed to what the political elite think it would be a good idea to waste tax money on. The other third gives the Government some wiggle room.

This way the public could channel tax to as an example the NHS that would have gone to a regional government quango.

Roger Thornhill said...

Phil,

Sorry for late reply.

If the options mean anything, then I will set up the Roger Thornhill Charitable Trust and so divert my money back to it and use it as a neat little vehicle.

Then you get the Charities Commission involved...but it is already! Even now, the State is trying to use the Charities Commission to control what is a Charity. Link this existing bad behaviour by that organisation with the views of Milibland to "engage the third sector" and it is already a problem. You will find that those who can lobby or are big and powerful enough to make setting up some trust or organisation profitable will benefit and joe public middle class tax-funding stoodge will get creamed yet again.

The more you add special cases and regulate often the messier things get and the more certain groups can pull the levers of government.

Phil A said...

Roger, I wonder if we are talking at cross purposes here.

The idea - As things stand we are being taxed by the government. The government spends the tax. On all sorts of stuff.

What I was suggesting was that:

1. All the stuff the government spends stuff on is listed.
2. The Government can still spend the tax, as they like for 1/3 of it.
3. The other two thirds the Government can still spend as it likes - if no preference is expressed
4. But, if the citizen wants, he can re jig the proportions of two thirds of his tax, between the recipients on the list how he likes. No adding extra categories, only between what it is already being spent on.

So unless you make a large donation to New Lab, or persuade Defra, or some other Government department to fund the Roger Thornhill Charitable Trust, like they do other ‘charities’ and pressure groups then no dice. No special cases.

I would even propose that all the things that various ‘boards’ that dish out/forward on taxpayers money should have everything they pay out to easily available for taxpayers.

Roger Thornhill said...

I got you, now, Phil.

I would think this would just end up with the Government funding its pet projects fully (even though it would only be 1/3 the stated aim - i.e. they would triple the budget on certain things) and then people would be forced to fund all the stuff they actually do want.

I can't fault you for suggesting this, for it is much like something I came up with, but switched to the "Charity Unit Trusts" as I felt the opportunity for corruption and rigging was still there and it still risks really key stuff like body armour being just as at risk of reduced funding as Lesbian Outreach Coordinators.

Phil A said...

Roger, Re: ” the Government funding its pet projects fully”

I must confess a similar thought had occurred to me. There are some difficulties for the government though that I had though might keep them reasonably honest:

1. The Government would need to get a handle on what the public were and were not supporting.

2. It would be difficult for them to justify, if the public swing against it were strong enough and would be excellent ammo for their critics & the opposition. A sort of ongoing referendum on government spending.

Maybe a rule limiting the total amount the government could put into something to some percentage of the total the public had allocated, say 200%?