Jun. 11th, 2014

marsden_online: (Default)
If the banks mailed out an annual summary for transactional accounts, neatly presented in tabular and graphical format displaying annual, monthly and maybe even weekly outgoing a) counts b) average value c) proportion of point of sale (EFTPOS etc), cash withdrawals, online transactions and internet-banking transfers.

Or they could go a step further and make these reporting tools available in their internet-banking sites. Does anyone know of a bank or similar financial institution which already does this?
marsden_online: (write)
Back in my post on a Universal Base Income I briefly mentioned transactional tax. The more I think about it the more I like the idea of replacing large chunks of our current tax system with a comprehensive transactional tax or set of taxes.

Many of our current taxes can already be framed as transactional taxes with little effort. Our consumption tax GST is effectively a tax on certain transactions. So is income tax especially as it is currently implemented with PAYE. A transactional tax would also capture those capital gains (although would be considered hard on those taking capital losses).

Transactional taxes are usually considered to be a flat (to regressive) tax, but there's no reason one couldn't be implemented progressively based on the value of the transaction. Some people would doubtless find it worthwhile to "game" this - regardless of where the bands were set but they would also still be paying the lower tier (times n) regardless. It is likely that the bands could be set to minimise this.

Collecting transactional taxes in our electronic economy should prove little more difficult (technically) than accounting for that pesky withholding tax (also a transactional tax as it is deducted when interest is paid). Financial institutions will doubtless balk at being put in the position of tax collector but they are the ones who have the transaction records (and they also have the computing power) and the ability to deduct the taxes in the same way as they would deduct an account fee.

(With modern computing I'd expect the tax-accrued to an account to be able to be displayed with every balance request.)

Who pays the tax is another important question to answer: the person sending the money or the person receiving it. I toyed with the idea of halving the rate and having it apply equally to ingoing and outgoing transactions but viewed one the scale of income tax and the ease of PAYE it became obvious that this was not feasible. Having the recipient responsible for paying the tax in that case is a recipe for those with poor financial planning skills to end up with terrible outstanding tax bills and would be a step backwards. Additionally having to somehow tag every transaction into or out of an account as tax-paid / tax-incurring would be additional unwanted complications for every account holder. So it seems to me that such a tax must be implemented as the transaction is *outgoing*.

Some allowance would need to be made for the cash economy - I think this is simply handled by applying the tax to "cash" deposits (it would already apply to withdrawals) and not worrying too much about the intervening time except for transfers above a certain level which should be required to be declared.

Even a comprehensive transactional tax will need exceptions or claim-backs as with GST to prevent it all being loaded on to the consumer. And every-so-often waiving accrued amounts not worth collecting seems reasonable. Although given that a comprehensive transactional tax rate would be much lower than GST (we are hopefully talking fractions of a cent on the dollar) and overall everyone should have more to spend the accruing increases may not make sufficient difference to be worth it in many cases.

Why so low? We are, if you're a cynic, double dipping or taking many nibbles of the cherry.
- get paid? Taxed (paid by your employer).
- withdraw or deposit cash? Taxed (accrued to the account and deducted monthly / at a certain value by the bank - unless they are offering some sort of sweetener whereby they are paying t.tax on the account for you).
- purchase something with cash? Taxed (accrued to the merchant's account when they deposit the money).
- purchase something with EFTPOS, Credit Card or paying a bill by internet banking? Taxed (accrued to your account).
- paying off the credit card or otherwise moving funds between your accounts? Taxed (accrued to the originating account).
- sending money to a friend? Sorry, taxed to you.

I don't see an implementation of this sort of tax being sufficient to bankroll the country, not immediately anyway and Robin Hood tax effects notwithstanding, particularly if we're funding a progressive social welfare system. We would still need a (lower) income tax and we would still certainly want health-related excise taxes - tobacco, alcohol, carbon .... but it could simplify a few things and even if the effect on an individual were fiscally neutral I think the lower income and (preferably abolished) GST would be welcomed.

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