Wednesday 19 June 2013

Charge companies for public services

There is all this talk in the press about how little tax large companies pay in the UK.

Why do Governments use such a complicated, subjective and uncertain thing as taxation to collect money from companies? Companies always have more resources to avoid tax than Governments have to enforce the rules.

Wouldn't it be so much simpler to charge companies for the public services they consume - roads, sewage, railways, education, pollution, public administration etc?

There would be no scope for evasion and no opportunity to "move" income or profits to other countries. Governments could be confident of how much income they would receive. Companies consume public services regardless of how much profit they make. Indeed a loss-making company (just like a sick person) may consume more public services than it would if it was profitable.

Think of the savings. There would be no need for the army of Revenue officials who try to police compliance with the complex company tax rules. And more importantly there would be no need for the thousands of expensive tax consultants and lawyers that companies use to figure out how to get around the rules.

If Government wants to provide incentives for new or ailing businesses it could easily give grants or soft loans - which would also be much easier to administer.

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