The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.
The proposed scheme is the final step in a proposal to provide the government more real time information on employee earnings.
CNBC quotes George Bull, head of Tax at Baker Tilly:
“If HMRC has direct access to employees’ bank accounts and makes a mistake, people are going to feel very exposed and vulnerable,” Bull said.
And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said.
The New American has more information on the accuracy of HMRC:
The government, naturally, couches this “radical” option in comforting language, saying that it would save employers and taxpayers considerable effort and money and assuring taxpayers that “the system would adhere to the high standards of taxpayer confidentiality that characterize the existing system.”
Those “high standards” are, as anyone familiar with the workings of government might expect, a joke. For example, in 2007 HMRC lost two compact discs containing “personal and banking [information] of 25 million people,” as ITPro reported at the time — a breach serious enough to force the resignation of the then-head of HMRC. Earlier this year the agency sent out as many as 50,000 tax-credit notices containing private information about persons other than the intended recipients of the notices, according to the Register.
Those mistakes are not limited to outright data breaches. What if HMRC simply slips up when calculating someone’s taxes? “If there’s a mistake and the HMRC collects too much money, the difficulty of getting it back could be high with repayments of tax taking weeks or months, [Bull] said,” according to CNBC. Indeed, the Guardian reports that HMRC “has admitted overcharging 4.3 million people … in the past two years,” and it has “18.2m unreconciled cases, potentially affecting 15 million people, dating back to 2004/05.” That doesn’t even account for the additional 10 years’ worth of potential overpayments that HMRC is refusing even to consider refunding.
The chance for error aside, what is truly frightening about the proposal is that every employee would become utterly dependent on the government for handing out whatever pay is left after the government takes what it considers its share.
If we don’t defeat Democrats in November and kick Obama out of the White House in 2012, it is entirely possible that we will hear similar ideas coming from our own federal government.