From: HAROLD HOFFMAN
So were not becoming an orwellian society reduced to becoming peons....its the
fact that the
establishment can consider this type scheme...thats the concern
hh
http://britanniaradio.blogspot.com/2010/09/uk-proposes-all-paychecks-go-to-state.html#links
Monday, 20 September 2010
UK Proposes All Paychecks Go to the State First
http://www.cnbc.com/id/39265847
Published: Monday, 20 Sep 2010 | 7:57 AM ET
By: Robin Knight
CNBC Associate Web Producer
The UK's tax collection agency is putting forth a proposal that all employers
send employee paychecks to the government, after which the government would
deduct what it deems as the appropriate tax and pay the employees by bank
transfer.
Sharon Lorimer
________________________________
The proposal by Her Majesty's Revenue and Customs (HMRC) stresses the need for
employers to provide real-time information to the government so that it can
monitor all payments and make a better assessment of whether the correct tax is
being paid.
Currently employers withhold tax and pay the government, providing information
at the end of the year, a system know as Pay as You Earn (PAYE). There is no
option for those employees to refuse withholding and individually file a tax
return at the end of the year.
If the real-time information plan works, it further proposes that employers hand
over employee salaries to the government first.
"The next step could be to use (real-time) information as the basis for
centralizing the calculation and deduction of tax," HMRC said in a July
discussion paper.
HMRC described the plan as "radical" as it would be a huge change from the
current system that has been largely unchanged for 66 years.
Even though the centralized deductions proposal would provide much-needed
oversight, there are some major concerns, George Bull, head of Tax at Baker
Tilly, told CNBC.com.
"If HMRC has direct access to employees' bank accounts and makes a mistake,
people are going to feel very exposed and vulnerable," Bull said.
And the chance of widespread mistakes could be high, according to Bull. HMRC
does not have a good track record of handling large computer systems and has
suffered high-profile errors with data, he said.
RELATED LINKS
* Lessons from Land of Orwell
* Wacky Taxes You May Be Paying
* America's Fastest Growing Jobs
* World's Most Expensive Cities
The system would be massive in terms of data management, larger than a recent
attempt to centralize the National Health Service's data, which was later
scrapped, Bull said.
If there's a mistake and the HMRC collects too much money, the difficulty of
getting it back could be high with repayments of tax taking weeks or months, he
said.
"There has to be some very clear understanding of how quickly repayments were
made if there was a mistake," Bull said.
HMRC estimated the potential savings to employers from the introduction of the
concept would be about £500 million ($780 million).
But the cost of implementing the new system would be "phenomenal," Bull pointed
out.
"It's very clear that the system does need to be modernized… It's outdated, it's
outmoded," Emma Boon, campaigner manager at the Tax Payers' Alliance, told
CNBC.com.
Boon said that the Tax Payers' Alliance was in favor of simplifying tax
collection, but stressed that a new complex computer system would add
infrastructure and administration costs at a time when the government is trying
to reduce spending.
There is a further concern, according to Bull. The centralized storage of so
much data poises a security risk as the system may be open to cyber crime.
As well as security issues, there's a huge issue of transparency, according to
Boon.
Boon also questioned HMCR's ability to handle to the role effectively.
The Institute of Directors (IoD), a UK organization created to promote the
business agenda of directors and entreprenuers, said in a press release it had
major concerns about the proposal to allow employees' pay to be paid directly to
HMRC.
The IoD said the shift to a real-time, centralized system could be positive as
long as the burden on employers was not increased. But it added that the idea of
wages being processed by HMRC was "completely unacceptable."
"This document contains a lot of good ideas. But the idea that HMRC should be
trusted with the gross pay of employees is not one of them," Richard Baron, Head
of Taxation at the IoD, said in the release.
A spokesperson for Chancellor of the Exchequer George Osborne was not
immediately available for comment.
RELATED LINKS
* Lessons from Land of Orwell
* Wacky Taxes You May Be Paying
* America's Fastest Growing Jobs
* World's Most Expensive Cities
© 2010 CNBC.com
TOPICS:Politics & Government | Taxes | London | Britain | United
Kingdom | Economy (Global)
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