Is our tax system fit for purpose?


'Is our tax system fit for purpose?' ask the headlines, following the revelation that hundreds of thousands of people have paid the wrong amount of tax through Pay As You Earn (PAYE) and that as a result, some unfortunate folk are getting tax demands of four or even five figures. Well, mistakes happen, but those who make them should suffer the consequences of them, though there is little chance of the Revenue volunteering for that.

No, the public will pay, which is dispiriting enough. But even more dispiriting, I can just see us being set up, in all of this, for another vast assault on our liberties. PAYE is out of date. Far fewer of us have a single employer, and more of us have a range of sources of income, with a mix of part-time jobs, self-employment, and full-time jobs. So the old PAYE coding system is on its last legs.

But what should replace it? I know what the Revenue would like. They have campaigned for years to get as many of us as possible onto PAYE so that the money comes to them through employers, without any fuss. They hate self-employed people because it doesn't, and because they're awkward to deal with. So what's their ideal now? Simple, have tax taken automatically out of people's bank accounts. Simple, straightforward, easy. Employers would love that too because it's much less paperwork. We all sign direct debits, or the Revenue take on direct debit powers, and we're away. A triumph of government efficiency. The only trouble is, that not even the most revolting dictatorship of the twentieth century ever imagined it could get away with that sort of illiberal power. But it wouldn't surprise me if it starts to be canvassed now. You heard it here first.