Derick Mackenzie's Blog

TAX: THE RUSSIANS SHOW US THE WAY

Like me, you may have been wondering why the government are so determined to have a different (higher) rate of tax for the rich (and not terribly low for the rest of us either) if it's not just gesture politics. I'm sure any accountant worthy of the title would agree. The above picture is an example of someone rich and famous (Gerard Depardieu) upping sticks and moving from France which has high taxes to Russia which has lower taxes. The story points out that Russia has a flat tax rate of 13% across the board. Genius? No, just basic common sense.
It seems obvious to me, that this situation of having higher and lower bands of income tax is not only pointless, but a recipe for discontent and argument, which it has proved to be.
It's simple business logic. Why are the biggest, most successful companies those that keep their prices low? Because it attracts custom. In the same way, if taxes are lower people will be more willing to pay them which means less tax avoidance. It also encourages local and attracts foreign business. The supermarkets know this very well because they must operate in the unforgiving atmosphere of the real world. Unlike our pampered politicians who, comparatively speaking, occupy cloud-cuckoo land.
POLITICIANS, LOOK AND LEARN, LOOK AND LEARN.