TAX ACTION!
The Taxpayers Federation Newsletter

TAX ACTION! IS ABOUT YOU!

TAX RELIEF’s newsletter is about you, the taxpayer. We welcome contributions to this newsletter from members, readers and taxpayers who have an issue they want to publicise or a case-study they want to highlight. Our campaign is about transparency and accountability of the government and the Inland Revenue.The more we hear about opinions and experiences the more we can use our voice to improve the taxpayers' lot. Email us at info@taxrelief.org.uk or write to TAX RELIEF at Glencote, Eversley, Hants RG27 0QU .

INQUIRY LAUNCHED INTO INLAND REVENUE DATA AND COMPUTER MISUSE

The Inland Revenue says press reports about abuse of confidentiality are merely a “misunderstanding”. The Inland Revenue have admitted that last year there were 226 cases of data violation by Inland Revenue staff – of which two were found to have sold confidential tax data for personal gain. TAX RELIEF has launched an enquiry into this breach of confidentiality in the interests of protecting taxpayers’ rights but so far the response has been disappointing. Despite Sir Nicholas Montagu (Chairman of the Inland Revenue) assuring taxpayers that he takes computer misuse “extremely seriously”, the response to the inquiry was late, incomplete and inconsistent. TAX RELIEF intends to make public the enquiry findings, as well as the performance of the Inland Revenue in cooperating with the enquiry.

The Inland Revenue was asked to respond to the following questions:

Why can Inland Revenue staff access taxpayer’s records which are of no relevance to their work?
What assurances can be provided that no data abuse goes undetected?
Have all taxpayers involved have been notified of the abuse of their records?
What actions have been taken to recompense the taxpayers whose
records have been unlawfully accessed or indeed sold?
Which Inland Revenue offices have been involved in the data abuse?

It was also made clear to Sir Nicholas that one of TAX RELIEF’s foremost concerns was that in recording data violations, the Inland Revenue appears to make no distinction between staff passing on friendly emails and browsing tax records out of curiosity or malice (according to the Revenue’s own press office). However, in the Inland Revenue’s first response to the inquiry, of even greater concern were their failure to identify which tax offices were involved and their failure to confirm that taxpayers are notified when their records are abused. They have, nevertheless, admitted that in 2002 three staff were sacked and a further 202 were punished or admonished for computer misuse.

GOVERNMENT ASKED TO JOIN FORCES IN TAXPAYERS’ CHARTER

Tony Blair is being asked to cooperate fully in the construction of a charter to commit to sensible and acceptable levels of tax, and to ensure that these can be relied upon in the future. Taxpayers need to be able to plan for their future knowing precisely what their tax liabilities are likely to be in years to come. In this country we only have a small window in which to influence the future of taxation – and that’s at election time. Once that’s over, there is always the danger that any election promises on taxation may be broken. The Taxpayers Charter will ensure once and for all that this will never happen again.

A family is a lot like a business: you have income and you have expenditure. Ideally, the difference between the two should be a comfortable margin to allow for investment, pensions, renewals and – with a bit of luck - luxuries. When taxes are increased, the net earnings - or profits – decrease. Not rocket science exactly, but worth noting that no government ever says “earnings will be decreased” – they always say “tax will be increased”. And here’s the real issue: this money belongs to the taxpayer and he or she should have a right to limit the amount of tax payable and should have a guarantee that this limit will endure a long way into the future. A sensible person will sit down and try to budget for themselves and their family just as a business will have budgets and forecasts. However, these financial plans can be thrown out of the window if tax just spirals up and up. In the case of businesses it gets even more complicated when they try to raise prices and find that as a result they get fewer customers and the tax burden becomes even more oppressive and restrictive.

To demonstrate why the Taxpayers’ Charter has now become essential, here are some examples of the uncertainty which has faced the British public in the last seven or eight years:

“No plans to increase tax at all” (Tony Blair, Financial Times, 21.9.95)
“Our proposals do not involve raising taxes” (Tony Blair, Daily Express 2.8.96)
“We want people to pay lower taxes” (Tony Blair, LIFFE/CLC lecture 16.9.96)
“The programme of the Labour Party does not imply any tax increases at all” (Tony Blair, BBC Radio 4 8.1.97)
“The entire Tory case that there is an agenda of tax increases is simply untrue” (Tony Blair, BBC Radio 4, 3.4.97)

So lets look at what has actually happened with taxes since 1997:

Income tax increased from 10% of household income in 1997 to 12.5% in 2000
Council tax increased from an average of £689 a year in 1998 to £976 in 2003
Petrol and Diesel Tax increased
Road Tax increased
Stamp Duty increased
Tobacco Tax increased
Insurance Premium Tax increased
National Insurance increased for middle income earners and self-employed
National Insurance imposed on employers providing benefits in kind
Pension Funds (taxed)
Charities (taxed)
Energy use by manufacturers taxed
People Working Overseas taxed
Married Couples Allowance abolished
MIRAS abolished
Capital Gains Tax Retirement Relief abolished
Tax Relief on Private Medical Insurance for over 65’s abolished
Corporation Tax payments brought forward
A million more people paying highest-rate tax now than in 1997
Tax burden on the poorest twenty per cent of households rose from 37% of gross income in 1997 to 40% in 1999

The government justified all this by saying:

“We have always been clear that the tax burden had to rise” (Gordon Brown, The Guardian 5.11.99)
“We made no promises in relation to the tax burden” (Gordon Brown, Daily Mail, 15.12.99)

There used to be an annual report published showing how direct and indirect tax would affect taxpayers but this has been discontinued and the explanation given has been:

“After careful consideration, this has been discontinued” (Gordon Brown, HM Treasury July 99)

In the interests of freedom of information, it is essential that this report is reinstated and TAX RELIEF will be urging the government to do this at the earliest opportunity. In summary, TAX RELIEF will be asking the current government and all future governments to abide by the Taxpayers’ Charter which will state among other things:

1. Acceptable and affordable levels of tax for private individuals and businesses
2. Fairer and simpler taxation and tax relief rules, forms and procedures
3. Increased incentives for savings, investments and pensions
4. Tax breaks where needed (for example: working parents paying for child care; foster carers; families with handicapped children or elderly dependant relatives)
5. Regularly published government figures on taxation

A consultation period of several months will take place while the Taxpayers’ Charter is discussed, formulated and finalised.

BRITISH ECONOMY PREDICTED TO CAPSIZE IF TAXES RISE AGAIN

Ernst and Young have predicted a slowdown in consumer spending but have cautioned the government that the economy might completely capsize if the slowdown is too drastic. This could cause Gordon Brown’s £20 billion borrowing to become inadequate to close the gap between income and expenditure in Britain. Worse still, Brown’s track record in hiking up taxes suggests he may try to close this gap with even further tax increases. The CBI has warned that the last thing British businesses need is a government loading them with higher taxes and regulations at a time when they aren’t making any profit. TAX RELIEF will be urging the government to spend more time with small, medium and large businesses so that they understand the mechanics of running a company and trying to make a profit when the tax burden gets too heavy.

WORLD TAXPAYERS CONFERENCE 2003

TAX RELIEF will be attending the 2003 World Taxpayers Conference in St. Petersburg in September. Prominent items on the conference agenda will be a presentation on Russia’s flat income tax system which is simple, fair and promotes prosperity. Hopefully, Britain will be able to learn from the positive experience of the country with the lowest tax in the world.

The event will be hosted by Bjorn Tarras-Wahlberg, President of the World Taxpayers Associations, and delegates will include taxpayers organisations from all over the world as well as economists, researchers and politicians.

INLAND REVENUE HIRING DIRECTOR OF INTERNAL AUDIT FOR £75K

The Inland Revenue, which takes in £2 billion a year, is widening its scope to include student loans, minimum wage, tax credits and – from April – child benefit. To upgrade their internal audit function with a staff of 120, the Revenue is hiring a new director to try to coordinate this vast, complex challenge. They are seeking someone who will provide assurance to the Chairman and the Serious Fraud Office and hope that this person will be ambitious yet approachable.
TAX RELIEF hopes that this key role will be filled by someone who is prepared to help make the Inland Revenue more transparent, accountable and user-friendly. At a rough guess, this department is already costing the taxpayers £5 million a year, so if he or she can cut down on the red tape then our money will be well spent!

TAXMAN’S SHARE PORTFOLIO – LET’S SHARE ITS SECRETS!

The Inland Revenue has done nothing to enlighten taxpayers about its share portfolio which includes some pretty bizarre holdings. Quite nicely spread, the collection includes Yugoslavian state bonds; Zimbabwe Special Local Registered Bonds, 1.4 million shares in Fairbriar plc; £500,000 worth of preference shares in Brent Walker and £5.5 million worth of shares in the gambling industry. TAX RELIEF will be asking for more details of this portfolio and will be making it clear to the Inland Revenue that its not their portfolio – it’s the taxpayers’. Watch for news on this in the next issue of TAX ACTION!