095-025 How to simplify the tax code

by Antony Last

A commission should be established with a mandate to come up with a restructuring plan for the tax system. This could be applicable to any particular country or state.

Such a commission could carry out the following:

  1. Calculation of the cost to run the tax-paid institutions of government and government itself, essentially a budget. (Initially the status quo could be maintained and, after the entire restructuring exercise, the addition, amalgamation, re-structuring or even elimination of governmental segments/units could be considered so as to optimise revenue and personnel use, and to improve service delivery.)
  2. Revenue analysis to compute the real revenues received through various tax types, e.g. how much from income tax, corporate tax, GST, VAT, CGT, etc.
  3. Correlation of cost of administration per tax type unit of revenue to ascertain the relative cost of collection (COC). This is really an indicator of the comparable profitability of the different tax types.
  4. Optimal elimination of the high COC tax types and balancing of the required budget with an adjustment of the remaining volumes of tax type revenues by appropriate means which might include tax base widening, tax level reduction/increase, tax type applicability, etc.
  5. Submission of the new tax plan to the powers that be, whether that be congress, parliament or some other appointed authority, for consideration debate, amendment (if necessary) and approval.
  6. Upon approval, the commission or another duly authorised group should be tasked with the re-writing of the tax code/law for that jurisdiction.

Such a production should be guided by the following salient principles:

  1. An electronic database of all tax legislation of the applicable jurisdiction should be set up.
  2. The legislation of the tax types set for elimination should be moved to a folder marked “Eliminating Tax Type” (ETT).
  3. The remaining tax type legislation (RTT) should be systematically and thoroughly searched for all references to the tax types set for elimination.
  4. Each reference to a specific ETT should be referenced in a list per RTT, and all such references should be individually read and understood in context by the editor responsible for revision of the RTT considering the impact of the removal of each on the RTT as a whole; then each section of the RTT in which the reference to the ETT is made must be re-written so as to no longer bear reference to or be influenced by the ETT.
  5. Then the RTT’s must be read for reference to each other and unnecessary cross-references and duplications removed.
  6. Finally each RTT must be thoroughly read, understood, analysed, summarised and re-written for simplicity and to implement the approved adjustments.

The result: A simpler tax code/law, more effective tax collection, a fairer, more affordable system, cost-effective, stimulating to economic growth, employment and business development, and delivering of services to a broader base of the people.

This is true happiness and optimal human utility.

[A. Last CPD: 7 May 2016, 1.67h (1h40m)]