Want the solution to taxation? Simple – Getting there, not so simple. This post outlines the solution, later posts will attempt at outlying how we might get to it.

‘Taxation’ needs to be defined into its separate types.

The first, I call simply a ‘tax’:

An economic instrument with the sole purpose of raising revenue.

The latter, a ‘levy’:

An economic instrument employed as a charge on good/service which is deemed detrimental – in order to reduce consumption, and hence production, of said good/service.

Examples:

‘Tax’: A ‘net income’ tax. Simply, a tax on each & every’s individual & organisation’s annual net income, at a flat rate (measured in pence per pound).

‘Levy’: A levy on cigarettes. Such levy is just as cigarettes do a great harm whilst offering no benefit – yet cannot simply be banned – hence the levy is employed to assist in eradicating this evil.

To ensure levies are levies, and not ‘stealth taxes’ a simple measure shall be put in place:

All revenue raised from levies shall be returned to the individual taxpayer, proportionately, as a rebate on their tax return. E.g:

If total personal net income tax receipts were 100 billion GBP, and total receipts from all levies was 10 billion GBP, then each taxpayer shall receive 10% of their tax bill back as a rebate.

There is another simple, (in principle – hence less so in practice), measure which is required:

There must be no unjust taxation, such as taxes on inheritance. Simple in principle, harder to hold back in political practice.

Perhaps most importantly, in-line with the return of levy receipts as a rebate, is establishing a taxation constituion. That is, not only ought levies to have strict criteria to be met to be approved (and for limited time periods, subject to review) – ‘tax’ should be constitutionally restricted.

It must be simple, fair, equally applied and economically ‘neutral’.

I propose one simple tax:

The Net Income Tax.

Simply, a tax on (positive) net income – measured annually, as follows:

(Total Assets at end of tax year)-(Total Assets at end of last tax year)= net income

The net income tax would be a fixed rate of pence in the pound, regardless of the sum of net income.

The net income tax would apply equally to individuals and organisations/corporations.

(Note that the levy receipts would be rebated only to individuals – thus benefiting the people of the country and not foreign shareholders).

‍