If we are to view a nation as equivalent to a large Insurance Company, with its citizens being its clients, then the citizen’s will have to pay the premiums. In this sense, National Insurance is not merely a form of taxation. It is what taxation is.

Over the past century, we have been increasingly misled to accept taxation as a method of social engineering. Successive governments, have offered the carrot of tax relief, or the stick of a specific tax, for various aspects of financial transactions. Society has become moulded by the dogmas of political parties. They squabble about the minutiae of the many different pieces of the taxation jigsaw. I doubt if anyone really comprehends the overall picture. Multiple anomalies bedevil almost every citizen in the Western World, with the result that almost everyone feels either unfairly taxed or overtaxed.

The job of political parties in government may indeed be to determine a tax rate, to decide how to organise its collection and the maintenance of appropriate records, and by whom. They may also legitimately decide to what ends the taxes should be deployed: what we, the citizens, are to be insured against.

I strongly believe, however, that the actual source of taxation revenue should not be a matter for political debate. It should be part of a nation’s constitution, written or unwritten. It should be a logically derived system. I would base it on an aptious principle previously expounded. All citizens should be regarded as of equal worth, but their value will fluctuate. In practice, their value at any particular time is best expressed by the amount of money society contrives to pay them for goods or services rendered.

Early Christians, primitive communists, expressed a similar concept: "From each according to their means, to each according to their needs". I do not interpret this to mean that the state takes all, like a monstrous commune, and re-distributes wealth in an egalitarian way. The needs of people differ. Except for common concerns like education, health, crime, defence, unemployment, or unforeseen disasters, I consider that people are better left to their own devices, earning what they can and spending as they wish. There is a ground swell today for fairness in the tax system, a fairness which has never existed. The only fair way is for the National Insurance premiums, i.e. the taxes, of all citizens to be proportionately the same, as measured by the money, or its equivalent, that they receive from others in society.

The simplest way of implementing such a tax scheme is to adapt the American idea of Gross Income Tax (GIT). The Republican Party toyed with a similar idea recently. They called it a Flat Rate tax. Neither ideas were ever adopted. The best way of describing the concept I am advocating is a "Tax on the Use of Money", one might call it UMT for short. The tax would be levied on all transactions when money, or its equivalent, changes ownership. The tax would be levied on, and accredited to, the recipient. There would be a single tax rate fixed for a tax period.

There would be no such thing as a tax-free monetary transaction. There would be no such thing as tax relief, nor tax thresholds. Above all, however, there would be no other form of taxation. There would be no profits tax, corporation tax, capital gains tax, higher rate tax, stamp duty, or other forms of duty, nor even Value Added Tax. This UMT would be a gross tax all embracing. The proponents of GIT in the USA estimate that its rate could be so low that it would be entirely acceptable on individual transactions, yet over the nation as a whole it would easily generate the revenue required.

As an over simplified example consider VAT. At present it is about 17% in the UK. The way it is administered, however, is that between the raw material supplier and the consumer, the tax is paid, but reclaimed, at every intermediate stage. Only the eventual consumer actually pays. This is a totally unproductive exercise, a massive bureaucratic effort for no return. If with UMT the tax level were say nearer 5%, for each transaction, and unreclaimable, the same amount of revenue could be raised at virtually no administrative cost at all. The figure of 5% is arbitrary to fit this particular example. The annual expenditure of the UK government is near £300 billion. The national treasury would have to set a rate to raise a comparable sum. Whatever the rate, it would affect everyone equally according to their prevailing value to society. It would be overt and fair.

Every person who received money would have equal responsibility to pay UMT. All would pay the same proportion; yes all. Those whose had no income would pay no tax; n% of nothing is still nothing. Those receiving some form of benefit, the unemployed for example, would pay tax on that benefit. More practically, so that they would not be any the worse off, they would be given credit for paying tax on a notionally higher sum.

For those in work, there would have to be a short transition period, a month or year say, during which their net "take home pay" would be frozen. Their real future gross salary would then be adjusted so that applying the new low rate of UMT their take-home pay would remain the same as previously for that period. Even this simple bureaucratic manoeuvre could do much to reduce the ill-feeling caused by the massive gross salaries apparently paid to the "fat cats" of business. With UMT, in order to maintain their net take home pay they need be paid much less.

Thus everyone in society would accumulate credit for paying tax, in direct proportion to how much society valued them at the time. This would form part of their permanent tax record, just like a simplified credit-card or bank statement. It could be used as a basis for other aspects of communal affairs such as local taxation or voting rights (see chapter nine).

The government’s tax period need not be, as at present, a whole year. With modern collection and accounting methods, it would be possible to predict over quite short periods how revenues are accruing. The rate of UMT could be adjusted regularly to feed into the computers which would dominate the collection. Such adjustments would be so small as to be virtually unnoticed, yet would keep the government’s borrowing requirement under much more dynamic control. It would also make major fluctuations in the government’s management of the country’s financial affairs more open to public scrutiny.

To administer this UMT would require many fewer staff at Inland Revenue Offices. There would be no need for PAYE codes, and rarely for detailed tax assessment. All that need be recorded is the amount you have earned and the amount of tax you have paid.

So long as they match the average UMT rate over a period to within an acceptable margin of error there would no need for human intervention. There would accordingly be need for fewer tax accountants all round. UMT would be almost self collecting in this age of plastic money, credit cards, standing orders, direct debit, and switch cards. For internal use, some businesses or offices have already replaced cash by Smart Cards. Even some school children are paying for school meals by Smart Card, the system for which records all their transactions automatically for future reference.

All that would be required world-wide would be a few lines of computer code be added to the programmes behind the devices through which plastic cards are currently swiped. Hey presto, n% goes to the national treasury of the recipient, and their records at their Inland Revenue Office are updated, just as already happens at Visa, and MasterCard Regional Headquarters today, wherever you happen to be in the world.

The more one considers the mechanics of such transactions, the more appealing I foresee the concept becoming to governments. If one develops the idea to its logical conclusion, governments themselves could effectively become credit-card companies. At present, MasterCard and Visa charge retailers a certain percentage of your purchases, for the privilege of extracting your money so easily . They are really "taxing" the use of your money, or its equivalent, by levying a percentage from the recipient. They are already using UMT, privately!

If the government were to issue suitable similar "credit" cards, they would merely levy the corresponding percentage as tax. Each month you could pay your account, or interest, if any, direct to the treasury, instead of to a MasterCard or Visa intermediary such as your bank. Under such a scheme, the need for independent credit-card companies would disappear. Alternatively, they could become outsourced tax collectors for the government, bidding for the privilege.

You may be pondering what tax loopholes may develop. They always seem to appear in other tax regimes. In theory, there would be none, at least not legal ones, because there would be only one tax. It would be applicable to all transactions where change of ownership of money, goods, property, or their equivalent, was involved. In practice, I have no doubt there would be those who could find some way to avoid declaring, or exposing, all their transactions. This would, as at present, be penalised by the stick of fines for gross abuse, were it discovered. There could be random audits, as now. The aptious society, however, would have a carrot to encourage people to pay all their due taxes. This will be revealed for your detraction, in the next chapter on Democracy.

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