“You’re right, Goldash. This LL will inform the taxman if I don’t declare all my income in my next tax return.”

He nodded. “You’ve been a very naughty girl, cheating on your sleeping partner, the taxman. That isn’t fair, is it? Taxmen and taxwomen are our sleeping partners:
they must have their shares of our income.”

“Do you declare all your income?”

“Yes, I do. I always make the taxwoman happy.”

“I hope that doesn’t make the taxman jealous.”

He laughed. “I think the taxman would enjoy watching us.”

“What do you know about taxation?”

“I passed my tax exam with distinction, and worked for a chartered tax adviser for about two years. I can teach you all about taxation. Would you like to be my tax student, my dear English teacher?”

“Yes, I am your tax student now. Can I have my first lesson please?”

“Young and old, we all pay taxes. For example, when a schoolboy or a schoolgirl buys a fizzy drink, they pay value added tax or sales tax, which is an indirect tax.
If they don’t buy anything like that, they don’t need to pay indirect tax. Let’s talk about your rental income tax, which is a direct tax, and compare it with the taxes of other taxpayers. Assume four different taxpayers have the same amount of income:

“Taxpayer A only has an employment income.
Taxpayer B only has a self-employment income.
Taxpayer C only has a rental income.
Taxpayer D has both a rental income and capital gains.

“Taxpayer A pays tax after the personal allowance, and National Insurance contributions after the National Insurance threshold.

“Taxpayer B pays tax after the personal allowance, and National Insurance contributions after the National Insurance threshold. The National Insurance contribution rate for self-employed taxpayers is lower than for employed taxpayers. So, a self-employed taxpayer pays less National Insurance contributions than an employed taxpayer.

“Taxpayer C pays tax after the personal allowance, and no National Insurance contributions.

“Taxpayer D pays tax on rental income after the personal allowance, tax on capital gains after the capital gains annual exemption, and no National Insurance contributions.

“The four taxpayers have the same amount of income and pay different amounts of tax. The National Insurance contribution is another direct tax. It’s a deduction from a taxpayer’s income, and the taxpayer has to pay National Insurance contributions by law.

“If we had a single tax allowance for every taxpayer, and simplified taxation; let’s say basic rate tax twenty per cent, and a ten per cent National Insurance contribution; all taxpayers would pay the same amount of tax, and our beloved government would collect more taxes.

“This simple explanation clearly shows that our government would be better off using a simplified taxation system. I think some people wouldn’t agree with me and would argue over what I say. Some people would agree and wouldn’t argue over what the figures say. When big corporations practise price discrimination, they make more profit. When our government practises income discrimination, the tax office collects less tax.”

“Now I have a better understanding how it works. Do you think we need a taxpayers’ revolution?” asked Susanna.

“I’m not sure about that. We definitely need proper tax reform. You can talk to your Member of Parliament about simplified taxation.”

“Yes, I will. It sounds like every taxpayer should get in touch with their MP about a justification in taxation.”

“In theory, the desire of every government is to collect taxes fairly and spend taxes wisely. In practice, the faces of many governments are turned in the right direction, but their legs are turned in the wrong direction. This is a trick used by many politicians, and many ordinary voters don’t notice it. I think every modern government needs a four-year rotation of politicians, and a simplification and justification in taxation. Donations from individuals and corporations to political parties should not be above the personal allowance.”

“Thank you for enlightening me. I never knew any of this.”

“My dear English teacher, of course you wouldn’t know about this. You are another ordinary voter in our wonderful society.”

“Would you please stop calling me ‘English teacher’? You have forgotten that I am your tax student now. You can teach me everything you know about tax and sex. There is always some secrecy in tax affairs and sex affairs

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