Britain: Under New Plan, Government Would Deduct Taxes Directly from Workers’ Gross Pay and Issue Pay Checks
September 15th, 2010Wow!
Do you think it will stop at just the income tax? Just wait. Property taxes. Unpaid speeding tickets. Fart taxes. Oh, baby. The sky’s the limit on this terrifying nonsense. That’s the beauty of a “centralised deductions system.” Her Majesty can authoritatively and effortlessly lift your wallet and send you on your way.
Via: Telegraph:
HM Revenue and Customs could take direct control of every worker’s monthly pay cheque under plans to overhaul the error-prone income tax system.
Instead of employers deducting income tax then paying gross salaries to employees, the gross monthly payment would go to an HMRC-run tax “calculator”, which would then pass the net salary to the worker.
The reform would mean the end of traditional monthly payslips, because employers would no longer be able to tell workers how much tax they had paid each month.
The tax authorities are consulting accountants, lawyers and businesses on the plans to reform the pay-as-you-earn (PAYE) system.
The potential shake-up has emerged after HMRC confirmed that inaccurate data means millions of people will be made to pay back underpaid tax, and millions more will get rebates.
PAYE is based on tax codes that estimate each taxpayer’s annual income, but accountants say the system is increasingly failing to reflect the reality of modern work, where people frequently change jobs and benefits.
In the two years from 2008-10, almost six million people paid the wrong amount of income tax, leaving some facing demands for repayment and others qualifying for rebates.
HMRC also has more than 18 million open cases relating to wrongly paid tax predating 2008.
Under the current PAYE system, employers calculate a worker’s tax liability and deduct the appropriate share before paying the rest to the employee.
Employees then give HMRC an annual summary of each worker’s pay and tax, which the tax authorities then assess to see if more or less tax is owed.
To make PAYE more accurate, Treasury ministers have suggested that employers should provide HMRC with monthly updates on workers’ salary payments and other financial details.
Such “real time information” could then be used as the basis of a new “centralised deductions” system that would give HMRC an unprecedented role in workers’ monthly salary payments.
Under the centralised deductions system, employers would pay workers’ monthly salary into a central calculator run by HMRC.
There, income tax deductions would be made automatically and the net salary then passed on to the worker by HMRC.
Instead of a payslip detailing pay and deductions, workers would only find out how much income tax they had paid by asking HMRC.
Research Credit: JF
It’s fine really, because while they busy themselves taking the valueless money, we willbe busy bartering the real things of any value. Sorry and all that, Mr Government.