Archive | Tax Havens RSS feed for this section

An Organised System of Unethical Taxation, Poverty and Inequality

30 Jun

[Published 01 July, 2017] 


If we wish to live in so-called ‘progressive societies’ – where we all have some form of access to health provision, welfare, public services, and good infrastructure – I doubt that anyone would disagree that most, if not all of us, should pay some form tax.

In the most basic terms, our governments have always needed to raise cash to pay for such services, whether it be to service past or current war efforts, build hospitals, new railways, or provide social housing.

The problems with paying tax is that the tax systems are arbitrary and unnecessary, meaning the amount of tax we pay varies; being unfairly distributed and enabling avoidance, due to lax rules and procedures in collecting it.

By arbitrary, I mean that our governments often impose tax just because they can, rather than out of any particular necessity, like on certain important purchases that we make.

For example, should we pay tax on medicines needed to keep us healthy, that our governments already tax? Should we pay tax on heating and lighting, or the water we drink, wash, or bath in?

Pharmaceuticals are taxed on their research, development, and manufacture – and then government collects more tax from the consumer purchasing them!

Taxing us after paying the purchase price for medicines, that we all need for our good health? And surely access to water is a universal right, is it not?

It works the same way with almost other forms of tax, like when we have general tax, which is deducted at source from our wages. For example, a percentage of general taxation goes toward paying for the construction of new roads. The government then collects more tax from us when some roads are converted to toll roads.

Take owning a car as another example; to get you to and from work etc. We are taxed for purchasing and owning the vehicle, on the fuel it consumes (on duty, then VAT!), on repairs, keeping it on the road, and insuring it!

In many countries, it is actually the poorest in society who pay disproportionately higher taxes than those on middle incomes and considerably more than the wealthiest. 

For example, if you smoke or drink alcohol – and no, this is not an inference that poorer people smoke or drink more – the tax levied on the purchase of these items is as high as 80%!

Consider the impact of this when you are on minimum wage; struggling to pay bills, travel costs or using a vehicle, heating and lighting, weekly food shop, and health and other insurances.

The more fortunate – who are able to pay into pensions and savings schemes for old age and emergencies; to purchase property, insurance, and investments – don’t get much of a better deal either!

For those able to save into a pension, additional tax is paid on the annuity and when income is drawn. In the case of women reliant on a spouses pensions, when the spouse dies, in the UK, women only receive a 60% entitlement but still pay tax on the pension, plus everything else.

When purchasing a property, there are a variety of fees and taxes levied even before we get to move in. Then we pay annual taxes on services to the property and for government and public authority services provided within the local community in which the property is located.

Alongside national and local taxes, there are also several forms of interest and tax on annual insurance and mortgage payments. When we come to sell the property, the tax paid on selling a property is determined on whether it has increased in value but is often capped regardless of household income, property size, or value.

In short, if you own a six bedroomed property, worth three million, with an annual household income of seven hundred thousand, you will pay no more tax on the property – either for national and local taxes, or on its sale – than say,owning and selling a four bedroomed property, worth four hundred thousand with an income of two hundred thousand!

The last global crash occurred due to the artificial inflation of housing prices, repackaged bad debts, and unaffordable mortgages, sold and created by banks, insurers, and speculators – all of which was enabled with our governments’ full knowledge and consent.

In countries where it has been provided, social housing stocks continue to be sold off to the private sector, who rent them out, or sell them on at inflated prices. For example, if a social housing property was sold ten years ago for one hundred and twenty thousand, today its value is likely to have been inflated to three hundred and fifty thousand.

If you are a private investor – from China or Russia, let’s say – you can purchase an off plan new build property for one hundred and fifty thousand and sell it on at double that when its constructed, or sit on it for several years until it increases in value even more.

Further more, a private investor can purchase such a property through an intermediary, such as a shell or holding company that is registered offshore, thus paying minimal tax, whereas an ordinary purchaser will pay the maximum amount of tax to be paid.

Our governments enable, permit, and even encourage private enterprise, banks, and investors to profit when the economy is buoyant and avoid paying tax, forcing middle and low income people to pick up the tab.

All the while, social housing stocks are decreasing and not being replaced, whilst private sector rents are increasing, and the purchase price of property is on the rise again.

Through Her Majesty’s Revenue and Customs, the UK government currently employs more than three thousand staff – on minimum wage – chasing fraudulent welfare and benefits payments, but fewer than four hundred staff on chasing those who avoid tax.

Do you see the problem?

Whether in the UK or in any other country, the tax system is organised theft and was created and is maintain in order to prey on the poorest, whilst favouring the wealthiest and actually works to create and prop up poverty and inequality.

In case you did not get the memo, the wealthiest only pay the tax they choose to and our governments allow them to do this.

Time to change the system, people!

Author: Jason Schumann

%d bloggers like this: