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Clearing the deficit: an alternative view of economics, by Michael Warwick

Feb 08, 2013
Students of history will note that all thriving economies have at their heart a taxation and benefits system which is impossible to escape, fair and very cheap to administer. Contrast this strategy with Europe and the UK where we spend  billions a year on pen pushers trying to collect Income Tax, VAT, Council Tax, Corporation tax, Rates, etc. all of which can be reduced or avoided by another army of accountants and lawyers. The recent evidence of the heated bile heaped on politicians and millionaires due to the 45% tax rate ignores the fact that most of them actually pay less than 10% tax including those screaming the loudest.

My friends and I have focussed the little grey cells and combined the many dubious talents of the regulars of the Dog and Ferret to crack this problem by eliminating all these taxes and replacing them all with a simple tax on all commercial transactions. These tax rates will vary by type of goods or services which can easily be modelled on last year’s sales to generate the right level of tax take for each country.

Governments can vary tax rates to achieve specific objectives. So products deemed good for society such as the old vino and malt whisky can have a lower tax than those deemed bad such as hamburgers, crisps and tickets to football matches. The abandoned Council Tax can accurately be replaced by the tax on water and energy usage without having to spend millions valuing homes or millions chasing non-payment. Local shops could now flourish and compete with supermarkets as neither would have to pay Council Tax or rates.

The nightmare of the 200 billion black hole benefits system would also be scrapped saving, billions in benefit and billions chasing illegal immigrants and fraudsters. This is by reverting to the founder Lord Beverage’s founding principle of people paying in before getting benefits on a self-funding insurance-based model. Those of working age that do not pay in do not get as much benefit. Instead, at Job Centres only UK national unemployed people under retirement age will get issued with a benefit card and pin giving them a monthly financial level of food, fuel, clothing, heating and housing with a tiny quantity of cash - not enough to pay for drugs or booze - that can only be drawn if they enrol in work including charity work or training. Those incapable of work or training will have the same basic system triggered by doctors and social services.

Illegal immigration would of course stop like a shot unless they pay in a years’ worth of contributions before making any claims. Similarly families who have previously elected to have a lifestyle of unemployment over many generations would suddenly start to smell the coffee. We have seen a similar system in the South of France which apparently works a treat.

Pensions would, over time, be properly funded under one government scheme whereby folk outside the public sector can transfer funds held by insurance companies to the government scheme to pay out a guaranteed rate for each pound of contribution instead of this potty gamble on annuity rates and fund values where the only winner is the insurance company. This government-backed insurance-based operation will allow anyone to pay in more than the minimum premium to get increased benefits all of which of course will be tax free.

Existing public sector employees will be credited with the equivalent monies to the fund to achieve the same pensions as entitled today. The result will be a flood of private savings which were previously decimated by Brown and Co.

The NHS would become a not for profit organisation providing free basic services and loads of optional chargeable extras including selling illegal drugs to drive the drug barons out of business and save us billions trying to catch them. Treatment for overseas visitors, private rooms, Jamie Oliver quality food, legal  assisted dying, old people’s homes, etc. could all be added to the chargeable list to turn a large, expensive, vital but overstretched institution into a thriving worldwide medical business.

Councils will revert to the policies of the 1940s when my Grandpappy was Mayor of St Albans. Minutes of meetings show that only a handful of professionals were paid on a set scale, the Mayor and all councillors only received expenses. None of this £200 grand a year lark for the CEO while firing the bog cleaner when things get tough.

The simple elegance of this system means that all tax is derived from commercial transactions. Wise ones will deduce that the costs of everything will go up. Not so; at a country level we save billions a year due to tax collection costs. With net incomes on average 30% bigger we have ample scope to build a fair system which cannot be manipulated. Millionaires hiding in Monaco and other boring tax havens will flock back to the flesh pots of old Blighty together with their companies to further boost the economy with no personal tax or corporation tax to pay. At last the much trumpeted working man in the street will realise that it is his money after all and not the government’s.

Our wise readers with sharp eyes will have noted that the day after announcing the abandonment of corporation tax, the stock market will rise to levels unseen for the many decades. Here our master plan reveals its true racing credentials. Readers will of course buy share options to make a much needed few quid the day after the announcement. The government however in collusion with the banks will however make trillions by slowly buying share options months before the grand announcement to avoid alerting the market. In one bound the UK will be free of debt, all Bank debt will be paid off, and the great British people can at last get off their knees or arses as the case may be.

We commend our proposals to the House in the certain knowledge that our policies will lead to the sunny uplands we so desperately seek and never seem to reach. We are also certain that the Sir Humphries of the world will find a million reasons to preserve the status quo and fight to the death to retain all means possible to frighten and coerce our peoples.

Michael Warwick
Michael Warwick is a retired captain of industry blessed with a quick wit, a goodly supply of common sense and not an ounce of political correctness. 

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