The Iom To Go For Automatic Exchange Of Tax Information

[Tugger]

Paying tax isn't a moral issue. If I strongly disagree with a war, and the tax I pay is going towards that war, isn't it moral for me to try to minimise the amount that is thrown at that war? Fucking grow up

[Snaipyr]

Paying tax isn't a moral issue. If I strongly disagree with a war, and the tax I pay is going towards that war, isn't it moral for me to try to minimise the amount that is thrown at that war? Fucking grow up

 

There was absolutely no need for the insult at the end of your post.

 

Of course paying tax is a moral issue. I can't be bothered explaining it to you though, apart from pointing out that you have no control over what your tax goes towards so you'd also be minimising the amount that goes into health care, education etc.

[Snaipyr]

When I get my tax return forms I'd like a list enclosed outlining everything that the government spends money on, and be able to tick the ones I agree to contribute towards. That would be true democracy!

 

No it wouldn't!. It would be true stupidity!

 

Why?!

[Evil Goblin]

What is immoral about tax avoidance i.e. not paying tax when the law does not require it?

 

 

I have no problem with you not volunteeering to pay VAT when purchasing say, childrens clothes, when the law does not require it. Not sure quite where you're going with this one.

Snaipyr said "Tax planning, tax avoidance, tax evasion - all much of a muchness in my view. " I was pointing out to him that evasion and avoidance/planning are two completely different things.

[Cambon]

I have no problem with you not volunteeering to pay VAT when purchasing say, childrens clothes, when the law does not require it. Not sure quite where you're going with this one.

 

Here is an example of legitimate tax avoidance - When a company pays a dividend, you pay income tax on that dividend. However, if you sell your shares a day or two before the XD date and buy them back a day or two after the XD date (after the dividend money has been taken out of the company), then it is seen as a capital gain, not income. IOM does not have capital gains tax at present, so no tax to pay.

 

The same applies in the UK, except they do have capital gains tax. But, in the UK there is a separate tax free allowance for capital gains tax than for income tax, and that allowance is much higher. Most people don't even know about it, let alone use it.

 

All totally legal, and moral!

 

Taxes that you can chose to pay or not to pay are usually not called taxes (apart from VAT), but are taxes really, like road tax, national insurance tax, tv tax, rates tax, etc.

[pongo]

The point of share ownership should be that people invest long term.

 

A company should not have to continually satisfy shareholders looking for the value of the shares to increase. That creates instability.

 

It should be about the dividends. Not about a rising stock price.

 

This continually trading of stocks is part of what is wrong with the share trading system.

 

It is not either moral or immoral however. It is just an ineffective way of organizing things. It is not going to change - we all do it or would given the chance / knowledge.

[Gladys]

When you complete your tax return, do you claim for deductibles against tax? If you do then you are using one of the more strightforward tax planning opportunities. Tax avoidance is organising your affairs so as to take advantage of the dispensations, whether explicit or not, in the tax legislation. Tax evasion is hiding yourself or part of your income or capital from the scrutiny of the relevant tax authority.

 

The morality issue applies to the difference between evasion and avoidnace, because the fomer is dishonest, whereas the latter is not - it may be clever, it may be considered unfair by those who do not have the wherewithall to a) justify tax planning or b) pay for it!

 

As tax legislation tries to close more and more avenues for tax planning, the effect is actually to open up more opportunities. Tax legislation is increasingly complex, to such an extent that the tax authorities and legislative draughtsmen have tied themsleves up in knots (April 08 on non-doms being a shining example).

 

The best way to limit tax avoidance, IMHO, would be to radically simplify the tax legislation to apply, say, a 10% annual tax on all worldwide income regardless of what that income may be, fullstop, no allowances, beyond reasonable gthresholds, for this or that and a capital gain is treated as income when it is realised. I bet that would generate huge amounts of income for the UK. But you have to ask why not take that approach and I suspect the answer is that whilst publicly decrying tax planning as the poor sibling of evasion, it is actually seen as a necessary ingredient in the overall mix that makes up the economy.

[The Voice of Reason]

When I get my tax return forms I'd like a list enclosed outlining everything that the government spends money on, and be able to tick the ones I agree to contribute towards. That would be true democracy!

 

No it wouldn't!. It would be true stupidity!

 

Why?!

 

If you really need an explanation say so. If you genuinely don't understand (as opposed to being deliberately stupid) I'll take the time to explain. Let me know

[Sebrof]

Paying tax isn't a moral issue. If I strongly disagree with a war, and the tax I pay is going towards that war, isn't it moral for me to try to minimise the amount that is thrown at that war? Fucking grow up

 

There was absolutely no need for the insult at the end of your post.

 

Sadly, there was. Tugger is cursed with a defect called geneticus puerilicus (often found in chavs) which dictates that almost every post he makes has to include a four-letter word.

 

It's desperately sad, but the poor mite really can't help it.

 

 

S

[Sebrof]

The best way to limit tax avoidance, IMHO, would be to radically simplify the tax legislation to apply, say, a 10% annual tax on all worldwide income regardless of what that income may be, fullstop, no allowances, beyond reasonable gthresholds, for this or that and a capital gain is treated as income when it is realised.

 

Hear, hear. But will it happen?

 

S

[The Voice of Reason]

The best way to limit tax avoidance, IMHO, would be to radically simplify the tax legislation to apply, say, a 10% annual tax on all worldwide income regardless of what that income may be, fullstop, no allowances, beyond reasonable gthresholds, for this or that and a capital gain is treated as income when it is realised.

 

Hear, hear. But will it happen?

 

S

 

 

Gladys, you're normally sensible in your posts but can you please quantify this 10% tax on worldwide income?. How much will this bring in? Will this be sufficient to fund government expenditure re hospitals ,education etc?? Myself I would prefer 5% or less but this is totally meaningless.without a detailed budget.

 

V (in deference to Sebrof who feels the need to add his initial as a footnote to his/her posts - no need your ID is displayed at the top of your post)

[Gladys]

The figure was illustrative only and I chose 10% as that would be seen as quite low in the UK (I am only postulating for those countries who are agin the low tax environments offshore). The figures are irrelevant; the point being that the way many countries structure their tax laws makes tax planning a sport as the rules are so complex that they open opportunities to avoid tax. Simplify it and set it at a rate which is bearable for anyone and was at such a level that the high net worths would see it as the cheaper option then putting in place complicated, costly and often untried tax planning arrangements; it would likely increase the tax revenues, reduce the scope for 'artful dodging', eradicate much of the tax planning industry and make tax collection cheaper.

 

It won't happen because tax is in itself such an industry and it would be seen as an abandonment by that government of its side of the tax bargain. But it is a concept that has interesting ramifications; not one that would benefit the IOM, but one worth a look at for those countries who want to stop their tax payers mitigating their tax bills instead of creating more and more complication.

[The Voice of Reason]

The figure was illustrative only and I chose 10% as that would be seen as quite low in the UK (I am only postulating for those countries who are agin the low tax environments offshore). The figures are irrelevant; the point being that the way many countries structure their tax laws makes tax planning a sport as the rules are so complex that they open opportunities to avoid tax. Simplify it and set it at a rate which is bearable for anyone and was at such a level that the high net worths would see it as the cheaper option then putting in place complicated, costly and often untried tax planning arrangements; it would likely increase the tax revenues, reduce the scope for 'artful dodging', eradicate much of the tax planning industry and make tax collection cheaper.

 

It won't happen because tax is in itself such an industry and it would be seen as an abandonment by that government of its side of the tax bargain. But it is a concept that has interesting ramifications; not one that would benefit the IOM, but one worth a look at for those countries who want to stop their tax payers mitigating their tax bills instead of creating more and more complication.

 

Gladys you say it (10% or whatever) would be at a rate bearable for everyone - well maybe but you would still get people trying to avoid/evade whatever rate is set.

 

But what you seem to be saying is reduce the tax burden so people have no incentive to "artfully dodge" it.

You seem to ignore the fact that an amount of tax is needed to pay for social services etc. (10% may not be enough it may be bearable but not raise sufficient revenue) It is not just some form of punitive levy.

 

By it's nature and for political/economic reasons you cannot have one flat rate of tax (and with respect it is naive to think so). There has to be some form of progressive taxation for the sake of fairnes

 

What rate of tax I (and others think they should pay )may not result in sufficient rrevenue being raised.

 

I'm afraid you are being naive

[Gladys]

Possibly I am being naive, but that was the very basis of indirect taxation until exceptions were introduced, rather than the amount of levy being reduced, bringing an almost mind blowing complexity which, of itself, gives rise to opportunites to plan around it.

 

Of course countries have to generate tax revenue to cover their social obligations, I am not disputing that. All that I am suggesting is that a simplification of tax regimes and a equalisation of individual tax burdens may result in increased revenues without the costs of investigation, assessment, collection etc.

 

I may be naive, but it is something worth exploring, surely?

[triskelion]

I think the biggest issue with your proposal Gladys is that it would essentially eliminate one of the two real policy tools available to Governments: Laws and taxation.

 

There are genuine benefits to a flexible tax system, such as personal allowances or incentives to save in order to help bridge the national pension deficit like through ISAs, and of course those bonds that the Island does quite nicely out of.