Rishi-Sunak-TBG

You get to meet some interesting people on holiday, each year for several years my better half and I would return to the same hotel during the same two weeks in June where we would meet up with other regular returning guests. One of them was a senior accountant with a very large firm, he once told me every time they had to produce a cheque to pay the VAT bill, his pacifist secretary would cringe as he signed the cheque and would say: "Here's payment for another Trident missile!"


For many smaller businesses dealing with H.M. Customs and Revenue is a bit like the bar owners and shopkeepers you see in the old American mobster movies when they are threatened by the gangsters: 'pay our protection racket or we'll smash up your place'. The taxman does much the same, pay the tax we demand exactly on time or we will destroy you with heavy fines.


The irony is if a person is accused of a crime by the police, including murder, they have considerable rights, including the right to be considered innocent until such time a court of law proves their guilt, as long as the police have put together substantial evidence (not circumstantial evidence) for the court to prosecute. The police also have to have good reason to search someone's property and have to provide a search warrant.

However, the taxman can, on the flimsiest and most circumstantial evidence, decide someone's guilt, march into that person's property without a warrant at any time of their choosing and seize computers, files and any other items they consider as evidence. The accused is immediately assumed to be guilty and from then on has to prove their innocence, unlike the courts who have to prove a person's guilt.


As the great majority of people pay tax by P.A.Y.E they do not live in fear of a visit from the taxman, whereas a small business owner, who may be struggling to survive due to the actions of Government, such as the Covid lockdowns, live in constant fear of paying the revenue due on time before being hit with hefty fines, which then adds to the small business owner's problems. That person may be given leeway for delaying payments to suppliers, but not the big brother taxman.


In a way taxation is the theft by governments of money people and businesses have earned through their endeavours. They are paid for their services and labour then the state comes along and just takes what it decides it wants - OR ELSE! Many business owners often complain that they are unpaid tax collectors.


Back in the days when I ran the small family business my late father started in 1946, we had to collect the P.A.Y.E from our employees and VAT from our customers, then send to H.M. Revenue & Customs on time, it was often a nightmare during the terrible early 1990's recession, created through the madness of the then government signing up to the EU's Exchange Rate Mechanism (ERM). By doing so the government created a financial catastrophe but gave no leeway to businesses trying to survive the fiscal disaster the politicians had created.


In fact they added to the problem by increasing VAT from the then rate of 15% to an even higher 17.5%. When I heard this news at the time my heart sank, it was yet another government created nail in our struggling coffin as our prices increased at a time when customers could not afford the bespoke high priced goods and services we provided. It was also the time when I awoke to how much power the EU had over us. I wrote to the Chancellor to complain about the increase in VAT at such a terrible time and suggested he reduced VAT substantially to give businesses such as ours a fighting chance during those dire recessionary times. The letter I had from his office stated that the EU would not allow us in the UK to reduce VAT below 15% - I was horrified that a minister in high office, in a government the British people had voted for, had to obey the diktats of a foreign power no one in the UK had voted for. From the moment I read that reply I was a committed anti-EU campaigner.


Regarding tax collection, obviously, in reality the state provides all sorts of services with the money it has taken, such as providing health services, education, road usage, defence and much more, but it does so with money we have given and have no say on how much goes where, even if we will never have need for many government services such as childless people having to pay for the education of the offspring of others or none drivers paying for the upkeep of the roads. Taxation is a broad sweep that encompasses all who have no control over what the government spends their hard earned cash on. Very often my tax contributions are spent on politically motivated things I object to, such as donations to Stonewall, but cannot do anything about it other than write letters of complaint to Ministers, whose minions, if they consent to reply, normally fob us of and more or less inform us not to be so silly and to go away, albeit not in those exact terms.


At a lecture I once attended where a Bank of England official gave a talk about their work and the effects of taxation and interest rates on our economy, he said that if a nation cannot control its interest rates the only way it can try to steer its economy is through taxation, which he then stated was a "blunt instrument'.


Over my years I have seen the effects of badly thought through taxation when implemented, it often has the effect of unintended consequences. In the 1960's I worked in a large Birmingham store which at the time employed 1,500 staff. Harold Wilson's then tax-mad Labour Government decided they did not want people working in retail and wanted people to work in manufacturing instead. In order to encourage this they introduced Selective Employment Tax (S.E.T.) which all employers had to pay, those in manufacturing had this money refunded but the retail sector did not, which added considerably to their wages bill.


Suddenly, the store I worked in started to introduce time checks on the staff entrance in the mornings, those who were late three times in the week were sacked, others were given their marching orders for the slightest thing as the store endeavoured to reduce its staffing costs due to the introduction of this ill considered tax. Some of my pals in the store fell victim and lost their jobs and had to sign on the dole. As they had always worked in retail that was where they looked for their next jobs. However, due to S.E.T. there were no jobs in retail and as they knew nothing of manufacturing they languished on the dole and the government then had the problem of not only job losses but increasing unemployment figures which did not look good. If only they had considered the unintended consequence of their mad taxation actions.


This too was the Labour Government whose Chancellor declared he would tax the rich until "their pips squeaked". They enforced a super tax which meant for every pound the rich earned the government taxed them at 98% allowing them, generously, to keep 2p out of every pound they earned for themselves! Was the result of super tax an increase in government tax revenues as they screwed the so-call rich out of their wealth? Of course not, the wealthy packed their bags, took their dosh and job creation opportunities with them and jetted off to low tax parts of the world who welcomed them, and their money, with open and very grateful arms. Those lower paid workers who were lucky enough to still have jobs were left to pick up the tax bill for all the mad Socialist plans the rich were originally were going to have their pips squeaked for.


As often reported since Boris's Government broke its promise not to raise tax and national insurance, increasing taxation often has the opposite effect to what was intended and reduces tax revenues rather than increasing them. As the famous and often quoted Laffer Curve points out, higher taxation often results in lower revenues. It is a matter, like Goldilocks porridge, being just right, not too high and not too low.


During my 22 years as a UKIP activist the policy I liked most of all, which was sadly later dropped, was that of having a flat tax. The policy at the time was for tax and N.I. to be merged and a tax rate set at 33% with the first £13,000 earned to be tax free. This way those on low incomes would pay less tax and the wealthy more. For someone on £20,000 p.a. they would pay just £2,310 in tax whereas, with all loopholes removed for a simpler flat tax, someone earning £100,000 would pay £28,710. In parts of the world where flat tax has been implemented more tax is collected while the economy boomed.


Recently in conversation I mentioned this flat tax proposal to someone who replied he would be better off under such a system. That in many ways would be good as it would then give him more disposable income to spend. When people spend they create jobs and wealth for others who in turn pay tax. Then the other benefit for the government is that they collect more in VAT. and Corporation tax - everyone wins.


If Rishi Sunak and the Government really wanted to collect more in tax revenues to help Social Care and the NHS, he should have cut taxes instead and watch the tax revenues roll in rather than picking the pockets from those earning who now have less to spend, which will slow down the economy and reduce taxes collected.