REFORMING THE TAX SYSTEM GLOBALLY
It’s fascinating to re-visit our views with the benefit of hindsight, particularly with the current speed of transformation in global markets and systems. The following are extracts from an analysis drafted in 2012, which covers a number of elements relevant to the Australian and global economies. These issues are under constant review, and the introduction of multiple digital currencies in recent years is one of the key considerations in reviewing my views and the direction of our business activities.
The primary purpose of the proposed Reid Robertson Tax Structure (RRTS) is to achieve what we should all be seeking to achieve in every facet of our business lives: optimum efficiency, the elimination of wastage.
This is not a reform which was available even five years ago, however modern technology has now offered the opportunity to embrace a simple, cohesive, efficient system for collecting taxes.
The RRTS is simply a automated debits tax, imposed on every transaction at the point of payment. It is a flat, non-discriminatory taxation regime, and replaces all other taxes and duties.
Under the RRTS, each government maintains its own control over the rate of taxation, and is able to levy taxes at a rate it deems appropriate from time to time. Some countries may continue to offer tax benefits and tax free status to various corporations or individuals, such as foreign investors.
The key elements which differentiate the old systems from the new are:
- subscribing governments no longer require tax returns from individuals or entities;
- there are no indirect taxes (VAT, GST, Stamp Duty etc.), only one single form of taxation;
- tax is automatically remitted to treasury electronically on all transactions at all levels of industry at the one rate, irrespective of the value or frequency of transactions;
- tax is distributed automatically under prescribed arrangements between levels of government and appropriate departments (identified in the annual budget);
- tax revenue sharing arrangements are reviewed annually by all forms of government; and
- the currency is not available in cash form, limiting tax avoidance to the barter market (refer The Barter Sector).
What has disappeared from the previous system:
- Annual personal tax returns;
- Annual entity tax returns;
- Monthly or quarterly VAT/GST returns and payments, refunds and adjustments;
- The need for much of the tax office – a better, more productive life for so many employees;
- The need to conduct census research on income and expenditure;
- Much of the incentive for non-productive traders to exploit the markets.
An investigation/audit division would need to be maintained within any taxation office, together with a skeleton staff for ensuring processing is being conducted correctly, although to a large extent this will be the responsibility of the banking sector.
Social security payments will be increased to provide for the additional taxation impost on consumption.
Loans between governments may be repaid automatically within the terms of the loan, lessening the risk of default.
June 2012 (as amended)
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