UKC

It occurred to me the other night that it seems a bit stupid to have Nurses paying tax.

THis doesn't however just apply to Nurses, but it's more a case of why do any public sector employees pay tax? It's just inefficient.

Given that to collect taxes, there is a cost (inland revenue etc.) then why not only apply this cost to people not being paid from the tax take?

Public sector employees should be paid whatever their current post tax take home pay is, but pay no tax or NI - it would save a decent amount of admin costs.

What do you think?

In reply to balmybaldwin:






I'm struggling to see how this simplifies anything?

The calculations reuired to work this out would surely be exactly the same as those currently being done?

In reply to timjones:

Very simple... you do the calculation once, and from then on there's no admin costs from the inland revenue.

I.e. you get £2000 a month now after tax, on the new scheme you would get £2000 but not pay tax on it.

If tax collection costs 1% of the tax collected (I expect the true cost is more) then this represents a significant saving.

In reply to timjones:

Not really. We still have someone in payroll who works out what you should be paid but you don't need a whole PAYE department at the inland revenue to service the public sector. You can also see the true cost to the country to the services supplied.

In reply to balmybaldwin:

I've thought about this before. But it makes comparisons between sectors much easier, as everyone talks about pre-tax salaries.
Also I assume it might complicate things for people with multiple income streams, e.g. two jobs? There must be some part-time nurses who have other jobs for example.

In reply to bigbobbyking:


It'd complicate things for anyone with two jobs, anyone who gets income from interest on savings or letting a house or whatever, anyone who moves between the public sector and the private sector or vice-versa, anyone who moves between the public sector and taxable benefits, anyone who gets any income-assessed benefits, anyone who needs to quote their pre-tax earning for any other reason... Basically it eliminates one fairly simple thing (collecting income tax off public sector workers the same way you do for everyone else) at the cost of introducing a whole stack of smaller but more complicated special cases.

In reply to balmybaldwin:

As somebody who actually generates wealth( by actually making things and selling them) to pay taxes to pay the nurses, then the same argument applies. So why tax me?

In reply to balmybaldwin:

What if you move up in the career and from one tax bracket into another ?

In reply to ByEek:

Why on earth is there a seperate IR department to service the public sector?

In reply to balmybaldwin:




So would this scheme go entirely unchecked or would there just be a different set of costs involved in monitoring it?

In reply to balmybaldwin:

Even public sector workers use salary sacrifice schemes, not necessarily equally. Pensions, B2W etc.

Some people have a mix of public and private sector income.

Most of the coat of collection isn't collection, it is assessment, which needs doing regardless.

In reply to timjones:


I suspect their isn't, which I guess is your point.

In reply to neilh:


It's not the same argument. As bad as the original one is.

In reply to The New NickB:


I honestly don't know but it wouldn't surprise me too much if there was ;(

In reply to balmybaldwin:



Doesn't make sense, as people have stated, the bureaucracy would still exist.

On the other hand, I think public sector employees should have the benefits - particularly the generous (even today) pensions explained in a way that lets them compare to a typical private sector equivalent. I have no quibble with the level of their remuneration, but I do hate it when they feel put out unduly.

In reply to balmybaldwin:

Can you imagine the outcry from the private sector if they perceived that public secor workers didn't pay tax. However logical it would be politically impossible.

Why do we tax people who receive a greater amount back in various forms of benefit?

In reply to timjones:


I honestly don't know but it wouldn't surprise me too much if there was ;(

If there was would that be a good thing or a bad thing? Perhaps handling public sector employees is more or less complex? What about somebody working both in and out of the public sector, so you couldn't use a simple crossplot of wage versus tax rate

I suspect public sector employees pay tax as the alternative is too messy!

Should council employees pay council tax? Or dead employess death duty?

In reply to balmybaldwin:
I think I'd rather have the IR over seeing the income tax I pay than the muppets in wages at the Trust I work for. They forgot to order wage slips last month so we were late in getting the details even if they did pay us.

In reply to balmybaldwin:

It wouldnt be that simple, as Council workers arent just paid for by the goverment, you have revenue and capital budgets, if its revenue then that is just costing the council money (ie coming out of the goverment funding), people who work to capital bring in funding to the council and arent funded by the same pot of money.

In reply to The New NickB:


I think that was the point!

In reply to Blue Straggler:


It doesn't seem to be.

In reply to balmybaldwin:






I don't see how that simplifies things, raising taxes and spending them are two separate things and thefore two separate systems are needed.
I don't really see how it would save admin costs, given that you would still have to calculate how much tax everybody has to pay before paying them so absolutely zero savings there. And anyway it's not that big a cost in the first place PAYE is mostly automated.

In reply to balmybaldwin:




The cost of collection tax in the UK is about 1% but I suspect most of the burden comes from collecting various taxes from companies, excise duties, people on self-assessment and so on.

For the majority of workers who pay tax using PAYE it's all automated and probably cost very little per head.
If you want to reduce the cost of collecting tax I suspect all is needed is more automation and more IT investment, not more rules and exceptions.

In reply to balmybaldwin:
A more incremental tax scheme would be better, like they have in Germany, I think.

Tax bands mean people can suddenly be quite worse off by earning just a little bit more.

To me that doesn't make a lot of sense.

In reply to Timmd:



At least when it comes to income tax bands I can't see a situation where you would become significantly worse off by earning just a little bit more.

In reply to RomTheBear:
There can be more of a jump between bands is my point, it's not as proportional to earnings.

In reply to RomTheBear:

As someone currently working on a system that implements the [exceedingly complex] US pension system, I would say that in order to reduce the cost of collecting tax, you need a simpler tax system, then more automation. There is a level of complexity where IT doesn't really solve anything other than to keep IT workers in employment.

In reply to ByEek:

>>There is a level of complexity where IT doesn't really solve anything other than to keep IT workers in employment.

So they shouldn't have to pay tax ????

In reply to Timmd:


Ha yes definitely, there is quite a jump between bands, but it doesn't make you worse off.

In reply to ByEek:

Well exactly it 's what I was saying, more automation but less weird rules and exception (which are also, incidentally, creating a lot of tax avoidance).

From past experience on this forum though it seems that as soon as you start talking about more automation and more automatic exchange of financial information between companies and the taxman, you get accused of wanting a big brother state.

In reply to balmybaldwin:
It might suit me as I'm in the public sector, but would be unhealthy and devisive if public sector workers could vote for income tax increases that didn't apply to them.

In reply to elsewhere:

I think the idea is they effectively pay tax but the money doesn't go from their pay to the treasury and back to their pay. An increase in tax for us would correspond to a net pay reduction for them.

In reply to RomTheBear:

So why do some families apparently find that they have less disposable income when moving into the a higher tax bracket, due to the jump?

Genuine question.

In reply to Timmd:


But they don't, really, as soon you start earning more than a certain threshold then you start paying tax at a higher rate on the amount above that threshold, but your net income doesn't decrease when you pass that threshold.

Then you have other some mean-tested benefits that you start losing above a certain income, in which case yes you might end up in a situation where earning just a bit more can cause a drop in income, but this is a different situation, it's simply that you stop qualifying for getting a certain benefit, which is fair enough.

In reply to balmybaldwin:

I've proposed the same in the past. It's got to save a bit in admin, just takes one time to work out what everyone's pay should be (simply what they got post tax before) then that's done, all pay scales etc are just dialed down to the right figure on from there it's just as before.

But aside form the admin I think it's more important to do it just to make a point. That point being that public sector workers do not generate taxes to fund the governments budget, they are not tax payers. They are people paid by the tax payers to provide a service we've decided we need/want.

That's not to say they aren't useful, or that overall tax take wouldn't be lower without them (uneducated kids, bad roads, to many sick people etc.) It's just to stop them getting to militant and thinking they pay in like everyone else.

In reply to Ron Rees Davies:


I didn't say that. If you try an model uber complex systems like the UK tax system in an IT infrastructure, you end up with a very expensive mess that doesn't quite work and requires you to employ lots of people to pick up the pieces when the system doesn't work as intended.

(ref. See most governmental IT projects)

In reply to RomTheBear:



That must be what I'd absorbed by osmosis then, that it's the loss of some benefits which can leave some people worse off. It makes taxes being more incremental seem like a good idea, I think.

In reply to Lord_ash2000:


?? How is that going to work ? you are still going to have to recalculate everything every time the taxable pay of your nurse changes because of overtime, increase, cuts, change in benefits or whatever.
I really don't see how it would save any admin cost.

In reply to GrahamD:

That sounds expensive to administer and likely to be misrepresented. Plus you're using the words "us" and "them" so it's devisive already

In reply to Lord_ash2000:
Of course public sector employees pay in like anybody else. They sell their skills on the job market and pay the same taxes for a given salary irrespective of who employs them.

It's interesting to see the us and them/they come out in this debate, as though public sector workers are some kind of inferior underclass.

Even nurses pay council tax, vat, ved, alcohol duty etc. Should perhaps civil servants get a discount on cigarettes as that would save admin too? Maybe the amount of fuel they buy could be linked into the payroll so that instead of paying 1.38 a litre, they could pay 1.36 and have the tax taken out of their salary? It could be done via a phone app.

This is a genius idea that only someone in the efficient, marvellous, flawless private sector could dream up.

In reply to balmybaldwin:

I think it probably throws up more problems than the admin saved.
Just off the top of my head. What happens if a nurse works half for Bupa (insert any private health care provider) and half for the NHS. Does she pay tax on half her salary? If so how would this work out with he tax free allowance?
I think it would just create different admin.
And isn't PAYE meant minimise admin? We could be like France etc where everyone has to submit a tax return with all the administration involved in processing them for the whole population.

In reply to elsewhere:

I didn't say it was a good idea !

Its an interesting thought experiment all the same.

In reply to balmybaldwin:

A better money saving move would be sorting out VAT.
Businesses spend millions if not billions of pounds dealing with vat, buy something and you pay vat, then you claim that vat back again, sell said something to another business and you charge vat and send it to the government who then give it back to the business who has bought it from you when they ask for it back.
This carries on until said product finally reaches someone who is not vat registered.
The same £2 on a £10 sale can be bounced back and forwards a dozen times with admin costs at every move.
A far better way would be to have vat exemption certificates (same as we have vat registration now) and when selling to a vat registered company you don't charge vat as long as they produce a valid certificate.
Once said item reaches the non vat registered end user the last person to sell it charges the vat and sends it to the treasury.

The only down side to this is the hundreds of thousands of people who would no longer be dealing with vat returns on both the public and private side of the fence might end up out of work.

In reply to balmybaldwin:


0/10

Can you quantify this saving?

Everyone's tax entitlement is different for a myriad of reasons....depending on their overall income, their recent overpayments or underpayments of tax depending on circumstances, to an extent by marital status and benefits.

I work with loads of nurses every day. There is no end to the variety my colleagues have of combinations of extra hours they work/extra income from savings/extra incomefrom other jobs/extra jobs they have.

Signed, your fellow UKC user with two public sector jobs who thinks he should pay tax just like everyone else.

In reply to Dax H:

Well yes that's the way it works in most EU countries I don't know why it's not like that in the UK. These kind of things should be harmonised at EU level anyway really, it's a mess.

In reply to Dax H:

I never understand the fuss over VAT.Its actually pretty easy to deal with from an accounting SME point of view.We just press a button on the computer and out comes the numbers.Even for exporting its easy.

So" hundreds of thousands of people who deal with it" is a figure plucked out of thin air.

In reply to neilh:

It's not the working out of the vat, as you said that is simple.
It's the constant stream of payments back and forth that is pointless and costs money to manage.

In reply to Dax H:



Does it though ? I mean this type of transaction is pretty easy to plan and pretty much free to execute.

In reply to Dax H:



How much does it cost in all honesty?

It's pretty much all done at the click of a button.

In reply to Dax H:

Ignorance is bliss.Takes us a couple of seconds, these days its all done electronically , even the payments to and from. You are way out of date.