Letter: Tax assets, not activity

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The Independent Online
IT IS hardly surprising that a great deal of growth in the economy is now in the 'black' or unofficial sector ('The arithmetic of recovery is in the black', 25 September). VAT and income tax amount to nothing more than a system of fines for engaging in any legal form of economic activity, while, under the present benefits system, anyone working irregularly is harried mercilessly by the bureaucracy if they declare their earnings.

One of our major problems is that none of our politicians is yet prepared to acknowledge the implications of this development: if public revenue is to be protected and we are not to have an increasing proportion of the population making its livelihood on the wrong side of the law, then the law must be changed. There is, in principle, nothing immoral about the 'black economy'; the fault lies with a system of laws that has failed to keep up with society.

The changes required are a shift in the tax burden from the production and exchange of goods and services, to fixed assets such as land, which cannot be hidden and whose value can be readily ascertained, with the benefits system evolving towards a scheme such as 'citizen's income'.

These changes would whiten the black economy, and provide the Government with a stable and robust tax base suited to the new circumstances.

Henry Law


East Sussex