From The Budapest Times:
Fidesz [the ruling party] initiated an unprecedented effort last Tuesday to strip the Constitutional Court – the nation’s final authority on legislative questions – of a number of powers. Parliamentary caucus leader János Lázár submitted the Constitutional Court Amendment after the court struck down several laws as unconstitutional, including a 98 per cent tax on public-sector severance-pay packages worth more than HUF 2 million (EUR 7,275).
The point is that public employees' terms and conditions are a matter of private law. If their contract says they'll get a pension of £x or a redundancy payment of £y, then the government can't wriggle out of it very easily.
However, taxation is a matter of public law. The government can set tax rates as it likes. This is subject to something called 'judicial review' (a UK court acting as a 'constitutional court') but the burden of proof is quite high.
Which is the background to my suggestion number 2 back in October 2009:
2. We (still) have a schedular tax system in the UK, and different types of income are taxed at different rates. Although I favour a flat tax system that taxes all income of whatever type - corporate or personal - at a single rate with as few exemptions and tax breaks as possible (not only is that more economically efficient, at least it's honest) but for people like this I'm prepared to make an exception.
So I'll introduce a sixty per cent higher rate tax on any salary, pension or redundancy payment paid by the taxpayer above the amount of £35,000 per year, which will claw back most of the cost, as well as encouraging more to move to the private sector where the flat tax rate will be thirty per cent and hopefully falling.
That's probably a lot simpler than renegotiating loads of individual employment contracts and getting bogged down in private law disputes. The tax system is up to legislation and is not open to legal challenges (well, no doubt somebody will go for judicial review but they can f*** off).
Wednesday, 3 November 2010
Another good idea they pinched off my 'blog
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8 comments:
How about flat rate of 12%, as in Russia?
JH, obviously the flat rate of income tax will come down to 0% over the first Parliament, and LVT will go up accordingly.
As long as it includes the likes of people leaving the Beeb, local government, and all those banks we own - good.
D, yes of course.
If it looks like a taxpayer funded job, walks like a taxpayer funded job and quacks like a taxpayer funded job then it's a taxpayer funded job. Or possibly a duck.
A flat rate of 12% on any income over 15,000 would be more than sufficient to cover the costs of what a government SHOULD be doing !
M, correct.
But even better than that, the government could cover the cash cost of its core functions with a flat tax of about 2% per annum on the market value of land and buildings in the UK and zero% income tax.
So actual or notional rental income is taxed at 40% and actual labour and enterprise pays NO taxes to the government. But this is not the end of the story....
There remains the thorny issue of what to do with the hidden taxes that labour and enterprise pay to landowners, i.e. the return to land above and beyond its 'costs of production' or precisely £nil.
Where do you stop? What about those professional services firms that live off the govt - lawyers, advertisers, consultants, IT? What about the defence contractors?
There must be an end to it somewhere?
D, I tell you what, I shall appoint you as "Minister for sorting this out" in my Bloggers Cabinet and you can decide where the line is.
PS, remember that government spending on supposedly private sector is 40% of total government spending (or 20% of GDP), so it is a big and important topic!
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