h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Ok, I know. We should pay our bit. But this year the following has happened.

The government gives my employer money to provide a service. They employ me and give me the money. So far so good.

The payroll office then takes money to give back the government. They take the he wrong amount to give back to the government, (too little money given back to the government).

I have filled in a tax return so the government can work out how much they want back.

They have calculated it incorrectly, and sent me some extra money, in the form of a cheque which I haven't received. (A few £100, which would be nice).

I have rung them up to check their calculations, and they have admitted that they are wrong, and asked to me to write to them telling them they are incorrect. They will then issue a bill for several £1000 which I will then have to write to them and come to an arrangement to pay.

Now I'm all in favour of the government taking taxes off people. But Why don't they just pay me a bit less in the first place?

Obviously, it creates jobs - they have to pay someone to sort it out...

Could it be something to do with the way that different branches of government interact (e.g. local/national)? I'd be interested to know too.

"Now I'm all in favour of the government taking taxes off people. But Why don't they just pay me a bit less in the first place?" [Z]

This is because people who are looking for jobs are not thinking about the taxes they'll pay. They just want a job that pays them what they think they need. Since earnings from the private-sector jobs will be taxed, the earnings from any other kinds of jobs should be taxed as well, to make it easier for people to compare across the whole employment spectrum.

Then there's the underground economy, in which people get paid under the table and don't report the income.

Ok, but they could solve that by advertising the jobs with an equivalent salary if it was pre tac, the way part time jobs are advertised.

So salary £20,000 pa take home equivalent to £36 000 in the private sector.

It does seem very odd. Maybe it's so groups who could claim back benefit aren't out that money in the first place?

You're making too much sense again, Z. In the case that you described in your first post, it was the *government* that apparently got monkey wrenches in their abacuses or whatever they use. They Miscalculated in your favor, and then waited for your telephone call explaining that they had erred. You have been admirably honest throughout the whole ordeal. So, do you really expect the government to sensibly take your advice about including pre-tax equivalents in their ads?

Because the amount of tax individuals pay varies.

Indeed. For example you are taxed on your overall income and the rate varies with income. If you had a £25k public sector job in addition to a £100k independent income, it would be anomalous if your pay were not taxed at the appropriate rate..

When I've frelanced for the Canadian government, they refuse to pay GST (similar to your VAT) on the grounds thay they would just be paying themselves. However, they are pushing for a harmonised sales tax (HST) which would include provincial sales tax. Until they sort it all out we have to invoice with both taxes and eventually get some kind of rebate.

I've been thinking this over, and I still think I could design a better system...

As far as I know the tax we pay in the UK is entirely related to what we earn, there aren't tax breaks for being married or having children... So two people earning £20 000 will both pay the same amount of tax.

Or do you get a higher personal allowance if you have children? I'm not sure, if you do my scheme falls back into the envelope I designed it on.

Well lets assume that you don't.

The majority of public sector employees are fairly low paid and only work for the public sector. They could work for net pay only, and their P60 would have a figure with 'gross pay equivalent'. That isn't money they actually get and have to give back, it's a reference amount used in a calculation if they get another job on top. It could be worked out easily with the aid of a computer.

So the public sector job would be the job that gave a pay packet 'gross' with a chitty explaining what it would be equivalent to if it was a private sector job. This would include your personal allowance, the 25% on the first £40 000 and the 40% on anything above £40 000.

If you had another job on top of your public sector job then you would get a tax code which would represent how much they should take..

If you earnt over £40 000 for your public sector job, then anything you earnt on top would be taxed at 40% (simple).

If you earnt between your personal allowance and £40 000 then you would need be on a tax code which said to your empolyer ' this person's private sector equivelent is £20,000 tax the first £20 000 at 20%, and then 40% above that, and so on.

But that's not different from the current system, where a lot of people have individual tax codes. Mines about to change to let me repay the underpayment, so I"ll get less personal allowance.

If someone had two private sector jobs and a public sector one, or income that wasn't PAYE, they'd have to fill in a tax return, but they probably would anyway.

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Yes there are - http://www.hmrc.gov.uk/incometax/married-allow.htm

I think the problem with your scheme is that is still based on individual earnings- so rather than saying this organisations pays around 20% of it's money in tax tax we'll just give them 20% less and employees will pay no tax you wish to retain a system that has the features of the present tax system.

This means that all the info about what you earn (which may vary from week to week) is needed for tax. It is very similar to the PAYE system.

It also ignores tax credits which are in effect a tax break for those with children.

The reason you have to do a tax return is because of complexities in your tax situation. If you only had one source of income it would be simple.

I don't see the advantage.

We have also had a broad political agenda of marketisation in the UK which means that the lines between public and private have become very blurred so deciding which organisations should may tax is complex.

You've also got the problem of who's actually paying the person...

When you pay tax, it goes into a central pot and the government doles it out as it sees fit...

Wages however come out of individual budgets, so if employees were exempt tax then central government would still have to work out how much tax they should have been paying and remove that from the funding for that department... So what's the point... And if someone goes from government employment into the private sector, all the calculations would still have to be done to make sure they paid the right amount of tax for the rest of the year...

"the tax we pay in the UK is entirely related to what we earn, there aren't tax breaks for being married or having children... So two people earning £20 000 will both pay the same amount of tax"

Depends.

Person A "earns" £20,000, but they spent some of it on equipment to allow them to do their job, on which they can reclaim the VAT. They only "earned" about three quarters of it from their public sector job - the rest was what they earned tending bar in the evenings as a top up. For the first half of the year the bar they worked in was in local council social club, so they counted as a public sector employee, but that closed due to cuts and they went to work at a normal pub in the private sector. They inherited quite a lot of money so they had to pay some tax on that, plus the stamp duty when they bought a new house with their inheritance. The rest of it went in a savings account, and the interest is taxed, except the bit in an ISA which isn't. Person A is married with children so they get tax credits, and they have private healthcare and a company financed vehicle, neither of which are "income" in the traditional sense, but both of which are taxable benefits which affects how much of a deduction they get.

Person B, meanwhile, has a salary of £20,000 from their one and only job. No savings. No wife or kids or recently deceased relatives. They pay VAT on everything, use the NHS and their own car.

If everyone was like Person B, your system would be great. Sadly, it seems the majority of people are more like Person A, which makes me swanibost. (http://www.sanjeev.net/meaning-of-liff/liff-starting-with-s-07.html)

No Swanibost on that link, I'm afraid - it goes to the main page. And when I google Swanibost, I get lots of information about...Swanibost. (Which I already knew was on Lewis. )

Liff told me a 'Baldock' is a cut down tree which has started to shoot twigs. I used to work in Baldock. But...surely the tree is normally known as a 'pollard'?

That is properly weird. I googled "Swanibost Liff", clicked the top hit, and Copy/pasted the URL.

Try it.

That's because the link includes a parenthesis, take it out, and you're fine.