[Dexnell]

Act #1 of First Session of Parliament

This bill is now open for the first reading. Members shall proceed to ask question but reframe from debate. Keep the decorum needed.

This First hearing session will continue until ended by the speaker, afterwards a general time span or a couple days will be given before debate is started.

Submitted by: The members of the Conservative party of TSR

A Bill

Long Title: A bill towards creating a flat tax for citizens.

Short title: Flat Tax Act of 2005

Section I:Bill Actions

1. The tax rate on all personal income earned in the United Kingdom will be 22%.

2. The personal allowance, income that is not taxed, for all individuals will be increased from £4,745 to £12,000.

3. All other tax deductions will be eliminated.

4. The projected decrease in government revenues resulting from this bill for the year 2006 is £38 billion.


How this bill will benefit the British people:

1. The percentage of income paid in taxes by the poorest 40% of taxpayers will decrease from 9.5% of income to 0% of income.

2. Tax evasion will become more difficult and the incentives for committing it will be reduced.

3. The taxpayer will not need to consult an accountant or a lawyer in order to file their tax return, thereby increasing their personal spending power.

4. Eliminating tax deductions will benefit the poor who aren’t able to take advantage of them. For example, when the top tax rate was decreased from 83% to 40% in ’79, the percentage of taxes paid by the richest 10% increased from 35% in ’79 to 42% in ’90.

5. Special interest groups will not be able to use their influence to gain tax concessions.

6. Instead of neglecting efficiency in order to gain tax benefits, individuals and small businesses will be free to maximize their profits without market distortions. The individual taxpayer will choose how to best spend their money without coercion from the government.

7. Reducing the amount of tax brackets to one will increase the incentive to work at every level of income, thereby increasing the average national income and increasing the incentive for people to start their business and employ other people.

8. Wealthy individuals from other countries with higher tax rates will be tempted to move to the United Kingdom and eventually employ British workers in their private enterprises.

9. The Laffer curve generally shows that the lower the tax, the more tax revenue collected by the government. Thus a low tax as we suggest will lead to greater investment in our public services as we will possess greater means. Not only is there a greater incentive to locate here and for businesses to grow (thus yielding greater revenue) but it deters the wealthy from simply diverting their funds and not paying any taxes at all.

Eliminate the tax burden on the poor. Simplify the tax code. Make the British economy more efficient and more prosperous. Vote for this bill.

Explanatory Note

The imbalance between the intentions of policies and their outcomes is one of the chief worries of those in our profession. The group that is supposed to be helped by a bill is often the one most harmed. The group whose power a bill is supposed to curb is often able to get around the toughest provisions of that bill due to the very power the bill is meant to weaken. And so it is with our system of taxation.

While our progressive tax system intended to benefit the economically disadvantaged while lessening income inequality, the result has been the exact opposite. The lower class has been forced to pay a higher level of taxation while the upper class has managed to lower the amount of taxes they pay to a negligible level through tax loopholes that are inevitable in a tax system as complex as ours.

In order to bridge this gap between intention and outcome, the Conservative Party proposes the creation of a flat tax. The first £12,000 of everyone’s income will be exempt from taxation. This means that the perverse system of taxing those who we deem to be in poverty will end. So will the use of accountants and lawyers for the purpose of reducing tax bills by those with the means to do so.

The initial cost of this bill is large and there is no way to deny this. But this cost will decrease drastically with every passing year, as people of all income levels have a larger incentive to work more, and have more funds available to purchase goods and services, which will in turn create job for those providing those goods and services. The economic inefficiency that resulted from tax loopholes will be eliminated. After all, if spending money on the item that had a tax incentive was efficient, there would be no reason to have the incentive in the first place.

Those concerned with economic inequality should realize that all British people are part of a single economy, and that the best way to help them all is not to favor one group over another, but to allow each group the freedom to spend their earnings on what they want. The increase in spending power and the ensuing increase in the amount of jobs available will benefit anyone willing to contribute to the British economy.

[Bismarck]

Does anyone have questions about any aspect of this bill?

[Jamie]

.
Decrease in revenue of over £38bn. So boviously tories wnat to cut cut cut services as usual. Which one is taking the hit this time? Health (usual tory target for cuts). education? Or how about cutting all unemployment benefits so that we become entriely american. [quick question, has the TSR chancellor had any experience living in the UK? just want to check is all...]
Oooo, now thats a doozy.

-The taxpayer will not need to consult an accountant or a lawyer in order to file their tax return. Now judging by the adverts (on british tv thats is) - 'tax doesn't need to be taxing' etc you don't need an accountant or a lawyer to do tax returns. you simply fill in the relevant easily done bits (i know, have done onemyself) send it in, and they work it out for you. [the inland revenue]

I also note "people of all income levels have a larger incentive to work more". IS this in line with your personal theory that all poor people are such because they are 'lazy or stupid'?

[Bismarck]

(Original post by Jamie)
.
Decrease in revenue of over £38bn. So boviously tories wnat to cut cut cut services as usual. Which one is taking the hit this time? Health (usual tory target for cuts). education? Or how about cutting all unemployment benefits so that we become entriely american. [quick question, has the TSR chancellor had any experience living in the UK? just want to check is all...]
Oooo, now thats a doozy.

Using the expertise of non-governmental organizations specializing in tax reform, the Conservative party have found tens of billions worth of savings that can be achieved from reducing the size of the government bureaucracy. The exact details will be presented in another bill. We would appreciate, however, if each bill was considered on its own merits and not be turned into an ideological contest.

-The taxpayer will not need to consult an accountant or a lawyer in order to file their tax return. Now judging by the adverts (on british tv thats is) - 'tax doesn't need to be taxing' etc you don't need an accountant or a lawyer to do tax returns. you simply fill in the relevant easily done bits (i know, have done onemyself) send it in, and they work it out for you. [the inland revenue]

Therein lies the problem. While the disadvantaged don't have the resources to take advantage of various tax loopholes, the well off can afford to spend thousands on artificially reducing their tax bill.

I also note "people of all income levels have a larger incentive to work more". IS this in line with your personal theory that all poor people are such because they are 'lazy or stupid'?

When the government fosters a culture of dependency and structures economic incentives in a way that encourages reliance on government benefits, it is inevitable that some would make the rational decision of maximizing their benefit without paying any of the cost (i.e. spending their time working).

[bilb]

As conceded, the cost of implementing such a system would be astronomical due to ironically the inefficiencies in government, so I'll move on to a different point. How does the bill affect borderline households (income's of roughly 12 to 15k) and in general would they be better or worse off?

[Vienna]

(Original post by Jamie)
.
Decrease in revenue of over £38bn. So boviously tories wnat to cut cut cut services as usual.
Which one is taking the hit this time? Health (usual tory target for cuts). education? Or how about cutting all unemployment benefits so that we become entriely american. [quick question, has the TSR chancellor had any experience living in the UK? just want to check is all...]
Oooo, now thats a doozy.

No, I dont think it is obvious. Applying what we believe to be a more efficient tax code would mean the British taxpayer gets fair value for their money as our commitment to public spending demonstrates. Whatsmore, a significant reduction in the cost of departmental wastage, estimated at around £20 billion, would see substantial savings consistent with our belief, and traditionally that of the Lib Dems, in reduction of a government that has ballooned under Labour.

Considering that very few TSR MPs, yourself no doubt included, have no significant experience in paying income tax, suggesting that nationality would somehow hinder argument on the proposed bill seems rather irrelevant. It would also be a little inappropriate to raise questions pertaining to other parliamentarians and the Conservative party, in the first reading of a bill, given that you appeared to have no concerns with the specifics of the bill itself.

[Lord Waddell]

This bill bebifits the poorest in society as well. The poorest 40% of the population will pay 0% of their income under this scheme as compared to 9.5% under the current system that we have for income taxation. Clearly the lost revenue will come out of cutting down bureacracy at Westminister, afterall all parties in their election manifestos promised efficiency savings and cutting red tape, with no loss in the quality of public services. I have reason to believe that the NHS and the education services could perform much better with the money that we have at present after cuts in paperwork and red tape, however that is a discussion for another time.

[bikerx23]

(Original post by bilb)
How does the bill affect borderline households (income's of roughly 12 to 15k) and in general would they be better or worse off?

The cost to those people would be non-existant, as the current "low rate" of tax for Great Britain (for the last 5 years) has been 22%.
Therefore, this bill benefits the poorest 40% of the population, without costing the remaining population further (bar those high earners who would have previously been able to pay reduced taxes due to loopholes, as stated).
Rates of Income Tax: 1990-91 to 2004-05

[Dexnell]

I will allow another day on this bill, as to all all parties to participate.

[Jamie]

OF course i had concerns with the bill. Who couldn't have concerns with a vbill that proposes a cut in government income of £28bn!!!

And i think nationality of 'expert consultants' is VERY relevant. If an 'expert' from france were to look at the issue then in their 'expert' opinion they may advise raising certain taxes. Why? Because they - unlike americans, value public services.

It is utter utter deception to try and claim concretely that this tax change will lead to a loss of government revenue of 'just' £28bn per year, which (as ever in the world of puppy dogs tails which my friends in labour and conservatives live in) will be covered simply by "efficiency savings and cutting red tape". Even as the article from whence this idea was no doubt lifted (in the torygraph sometime back) conceeded that the revenue difference will grow year by year.

It also points out the difficulties, and time requred to integrate an entirely new tax system. This is a logistic knightmare for a country which has a real issue when it comes to logistics. Is there a country that can be used as an example where their tax system went from one such as our own to this flat rate system? One of a fair size would be a good comparison - not jersey...

[Jamie]

(Original post by Bismarck)
Using the expertise of non-governmental organizations specializing in tax reform, the Conservative party have found tens of billions worth of savings that can be achieved from reducing the size of the government bureaucracy. The exact details will be presented in another bill. We would appreciate, however, if each bill was considered on its own merits and not be turned into an ideological contest.



Therein lies the problem. While the disadvantaged don't have the resources to take advantage of various tax loopholes, the well off can afford to spend thousands on artificially reducing their tax bill.



When the government fosters a culture of dependency and structures economic incentives in a way that encourages reliance on government benefits, it is inevitable that some would make the rational decision of maximizing their benefit without paying any of the cost (i.e. spending their time working).

This bill can not possibly be reasoned out without ideological arguements. THe idea sounds beautiful - simply the tax system, help increase the poorest income by 12% post-tax, and richest 0.5% post-tax. But the reason it can achieve this is it would reduce public revenue £38bn if it were implemented in 2006. This is an entirely foolhardy idea. it would take many years to implement, so we can assume that in the interim we would have a transistion - with ever decreasing taxes, and ever decreasing public purse.

You have made an error by presenting this bill first. Now starting off a bill to reduce westminister wastage (as was being heralded in the election) would have been much wiser. Because it is essential you prove 100% that AT LEAST £38bn worth of inefficiency savings can be made before this bill is ever accepted. Otherwise it is simply a 'promise' on a long history of broken promises to not cut public spending.

Again back to the ideology "When the government fosters a culture of dependency and structures economic incentives in a way that encourages reliance on government benefits". The american system is well known, but we have a fantastic system here which helps those thatneed help. Inevitably there are benefit cheats, and those who do little to improve theit situation - and these people need to be tackled by other methods, but this is quite a minority.
THe unemployment rate of britain is a shade of that across europe, as is the rate of people claiming unemployment benefit. To bring in a system like this to attempt to get people working (or giving it as anoter reason) is unnecessary.

[bikerx23]

As stated, the decrease in the public purse is to be matched by a decrease in unnecesary red tape and beaurocracy, therefore this will not effect public services.
Talking off topic, the £35Bn investment the government made to the NHS just prior to the last election did the highly essential job of providing 997'000 new beaurocrats for the said service - this has infact had no overall effect on the NHS' ability to treat patients. (sorry for straying off topic)

[Vienna]

(Original post by Jamie)
OF course i had concerns with the bill. Who couldn't have concerns with a vbill that proposes a cut in government income of £28bn!!!

And i think nationality of 'expert consultants' is VERY relevant. If an 'expert' from france were to look at the issue then in their 'expert' opinion they may advise raising certain taxes. Why? Because they - unlike americans, value public services.

You've made repeated comments and slurs on a fellow TSR MP and the Conservative party. The nationality of a TSR MP is irrelevant to them making a valid ideological argument.

It also points out the difficulties, and time requred to integrate an entirely new tax system. This is a logistic knightmare for a country which has a real issue when it comes to logistics. Is there a country that can be used as an example where their tax system went from one such as our own to this flat rate system? One of a fair size would be a good comparison - not jersey...

I dont see any specific concerns in relation to the bill or the responses that have been offered. The first reading of any bill is meant to establish its parameters and intent, not to mock it and those who propose it.

[Jamie]

(Original post by Vienna)
You've made repeated comments and slurs on a fellow TSR MP and the Conservative party. The nationality of a TSR MP is irrelevant to them making a valid ideological argument.



I dont see any specific concerns in relation to the bill or the responses that have been offered. The first reading of any bill is meant to establish its parameters and intent, not to mock it and those who propose it.

Does Mr Bismark find his nationality a slur!?!
And i thought he said that "each bill was considered on its own merits and not be turned into an ideological contest" - now that sounds to me like a 'please judge my bill on the bills itself, not my ideology'.
You then basically say that this bill IS an ideological argument. Do make up your minds please.

Now personally i think it is, because i am dubious of this 'shave umpteen billions in waste' idea, and so believe that the loss in revenue from this bill will result in poorer services. School and hosiptal closures, increasing class sizes, poorer policing...

I have given multiple concerns relating to the bill at 12.12, and 12.25. You simply are chosing to ignore them, and are instead trying to vilify me.

[Vienna]

(Original post by Jamie)
This bill can not possibly be reasoned out without ideological arguements. THe idea sounds beautiful - simply the tax system, help increase the poorest income by 12% post-tax, and richest 0.5% post-tax. But the reason it can achieve this is it would reduce public revenue £38bn if it were implemented in 2006. This is an entirely foolhardy idea. it would take many years to implement, so we can assume that in the interim we would have a transistion - with ever decreasing taxes, and ever decreasing public purse.

You have made an error by presenting this bill first. Now starting off a bill to reduce westminister wastage (as was being heralded in the election) would have been much wiser. Because it is essential you prove 100% that AT LEAST £38bn worth of inefficiency savings can be made before this bill is ever accepted. Otherwise it is simply a 'promise' on a long history of broken promises to not cut public spending.

Again back to the ideology "When the government fosters a culture of dependency and structures economic incentives in a way that encourages reliance on government benefits". The american system is well known, but we have a fantastic system here which helps those thatneed help. Inevitably there are benefit cheats, and those who do little to improve theit situation - and these people need to be tackled by other methods, but this is quite a minority.
THe unemployment rate of britain is a shade of that across europe, as is the rate of people claiming unemployment benefit. To bring in a system like this to attempt to get people working (or giving it as anoter reason) is unnecessary.

So what is your ideological argument. One could be forgiven for so rudely dismissing a bill so early on, were there to be a genuine ideological flaw highlighted. However, while my colleagues are seeking to explain their proposition and offer a real debate on its merits, the house must listen to criticism based on that fundamental yardstick of all policy failures, its proximity to American belief in small government, not to mention the outrageous irrelevance of European unemployment rates. To talk of ideological argument, could you clarify how a detest for small government and less welfare dependence is consistent with the Liberal Democrat's most recent manifesto? Incidentally, I also look forward to hearing your unwavering support for European integration despite highlighting the comparable failure of the European social model.

[bikerx23]

The two points you have made - initially not believing the cuts to meet the loss in revenue can be made, and the time scale over which the bill will be introduced are fair.
Using verified studies, we know that we will be able to reduce the waste of beaurocracy by the £38Bn required to balance the books...I believe in the same report it states that the extreme end of the spectrum could remove a total of £81Bn of waste, so this is certainly a fair and conservative value for the amount of wastage we can remove from the system.
Your second point, concerning the time required to implement this system is fair - we are not saying this can be done overnight, but it certainly can be done.

[Vienna]

(Original post by Jamie)
Does Mr Bismark find his nationality a slur!?!
And i thought he said that "each bill was considered on its own merits and not be turned into an ideological contest" - now that sounds to me like a 'please judge my bill on the bills itself, not my ideology'.
You then basically say that this bill IS an ideological argument. Do make up your minds please.

Now personally i think it is, because i am dubious of this 'shave umpteen billions in waste' idea, and so believe that the loss in revenue from this bill will result in poorer services. School and hosiptal closures, increasing class sizes, poorer policing...

I have given multiple concerns relating to the bill at 12.12, and 12.25. You simply are chosing to ignore them, and are instead trying to vilify me.

I think my friend was quite clear, and echoed the sentiments of the Speaker and the Conservative party, in referring you to the purpose of a first reading. That being, to establish its specific content, merit and intent. In insulting two main political parties, raising the relevance of an MP's nationality and rudely dismissing the basis of my friends proposal, I would request that criticism of a bill still in its infancy, be delayed until such a time that it is appropriate.

[ChemistBoy]

Mr Speaker,

So we are having member's bills first are we? How unusual.

Point 9. The laffer curve is bell-shaped, I would like proof that the proposed tax cuts wouldn't take us to the left-hand side of the curve. Not only does this bill suggest massive tax cuts for the rich, but it also removes a large proportion of the population from taxation all together.

Of course it would also be nice if the right honourable gentleman for the conservatives allowed the government to put it's tax proposals for debate first. After all it is we who are charged with the responsibility for Her Majesty's Treasury.

Mr Speaker,

I would also like to remind members that as we are sitting in the TSR British parliament that we are all to be considered subjects of the realm, regardless of country of origin.

[bikerx23]

So we are having member's bills first are we? How unusual.

I believe it was because we just wanted to get started as quickly as possible.

Of course it would also be nice if the right honourable gentleman for the conservatives allowed the government to put it's tax proposals for debate first.

You have been given ample opportunity to prepare any bills you wished to introduce during the period since the election. It is shocking that your attitude is so cavalier as to not have organised yourselves with respect to this matter.

I would also like to remind members that as we are sitting in the TSR British parliament that we are all to be considered subjects of the realm, regardless of country of origin.

Seconded.

[ChemistBoy]

(Original post by bikerx23)
You have been given ample opportunity to prepare any bills you wished to introduce during the period since the election. It is shocking that your attitude is so cavalier as to not have organised yourselves with respect to this matter.

With all due respect Mr Speaker,

We do have a bill ready. Unlike the Right Honourable Gentleman, the government must seek accord on proposed bills - the recent hietus over the position of speaker and the extended time taken to arrange a suitable length of parliament (by all members) have presented significant obstacles in preparing bills.

However it must be born in mind, both by yourself, Mr Speaker and by the Right Honourable Gentleman and his party, that it is the government and no-one else that controls the timetable for bills in this house.

It is highly improper for a private member to have a bill read without going through the ballot system and without doing so at the proper time (decided by government).