31 October 2016

This Halloween, spare a thought for us terrified tax collectors

By Greig Baker

This Halloween, I will be sympathetic to adults cowering behind their desks, dreading one of the most haunting and daunting times of the year. As midnight approaches I do not, of course, think that grown men and women will be worrying about imaginary ghosts and ghouls – instead, they will be anxious about the very real spectre of submitting HMRC’s paper self-assessment tax returns.

These returns are for the self-employed, investors, company directors and others. It is one of the downsides entrepreneurs like me accept when we create a start-up. We persuade our spouses to re-mortgage the house. We give up the paid holidays, sick pay and worker’s rights that go with a normal job. Then we promise ourselves that our venture will not be one of the eight out of 10 businesses that fail in their first year. We even accept that, on top of the 16 hour days and lost weekends, the Government demands that we siphon off a good proportion of the revenues we have made – and that we have to act as our own tax collectors, too.

Filling in a self-assessment tax return is a great reminder that society rests on the wealth creators in the private sector. We pay for nurses, soldiers, police and politicians. Seeing the funds go out of the account is not much fun, but there is a sense of pride in chipping in. What is harder to stomach is the way so much of this money is wasted after it has found its way into the public purse, frittered away by mandarins and Ministers who don’t seem to know how hard it was to earn in the first place.

I work in Westminster and Whitehall every day and, perhaps strangely, it’s not the big ticket boondoggles that really stick in my craw. Rather, I am offended by the comparatively small incidents of everyday waste that are blithely signed off – free Tai Chi classes, rooms hired for meetings about meetings, or officials “using up the budget” to ensure they get the same amount or more next year.

There are impressive, good, sensible people in the Civil Service, but somehow those same people often show a cataleptic disregard for the labour that went into creating the public money they have at their disposal.

I would like to offer a solution.

Using a low-end estimate, our annual tax take per head is more than £8,000 every year. That sum is reached by excluding local taxes such as Council Tax, ignoring the future tax burden of the public sector debt, and dividing the rest of the money collected between every man woman and child in the UK. Using that £8,000 figure, I suggest that public spending should not only be measured in pounds and pence, but also in “tax years”, i.e. the amount of time it would take Mr Average to earn that money.

This would help us appreciate what a slog it is to create tax revenues and ensure that they are only spent on things we really value. For example, a nurse’s annual starting salary is £21,692. Under my measure, this is about three “tax years”. An MP can be employed for 12 months at a cost of £74,000 – or about nine tax years. Further up the scale, it takes 9,375 tax years to build a £75 million hospital, and a whopping 35,000 tax years to pay for the redundant airport on St Helena (to foot that bill, the artist responsible for the very first cave painting in human history would still need to be plugging away at their 9-5 today).

I don’t mean to be too flippant, or to do down public servants. However, I do think there should be a renewed appreciation of how hard taxpayers have to work to fund the Government. Maybe if we measured what we get out of the state in terms of the time we put into it, that effort would be easier to recognise. In turn, one Halloween maybe Civil Servants will be just as scared of wasting money as entrepreneurs are of collecting it.

Greig Baker is Chief Executive of GUIDE www.theguideconsultancy.co.uk