Why all government in the world abolish the income tax and survive on the VAT /Service Tax Or only Transaction Tax ?

[JustAnotherNomad]

All protests and all political parties are banned in UAE

Yes, thank god.

I can already feel my blood pressure rising when I have to read threads like this where people propose the best way to take other people's money to realize their ideological dreams.
It always starts like this. People don't understand that central planning has never worked and will never work.

Look into free private cities, there are a couple of initiatives. Try to find like-minded people, then you can start your own little experiment there. But please leave the rest of us alone.

 

[MiddleEuroAsia]

Well, of course you don't need massive amounts of taxes if 77% of the states income comes from oil exports (Economy of the United Arab Emirates - Wikipedia).

I'm sorry but I don't agree with you. Norway exports of oil is also very high, yet they still have one of the most stupidly high "progressive" taxes on earth, and the same goes for most Scandinavian countries. Not only that, showing any kind of wealth there is usually frowned upon, because how dare I show any resemblance of my hard earned money.

It is also a bit cynical mention these things as advantages. I don't doubt that they are advantageous for *you*, however I am not sure if most people that are working in the UAE would actually agree with you (Migrant workers in the Gulf Cooperation Council region - Wikipedia).

Yeah, it's a known fact that working conditions in the gulf is not the best, and a lot of people have every right to be mad, but things are starting to change and laws like kafala system are being abolished right now and imo, that's a step in the right direction, However I'm more critical of western countries that claims that they are the best of the best and muh land of the free.
In murica, you find over 400,000 people that are living as modem slaves in the land of the free, god bless America indeed.
https://www.theguardian.com/world/2018/jul/19/us-modern-slavery-report-global-slavery-index

Let's see about that. In the last 50 years sharia law countries have not really been known for technological or scientific advancements (to put it mildly)..

well, 50 years ago there was no UAE, it was nothing but undeveloped desert, however, everything changed after zayed found oil 1966, and yeah it's pretty impressive what they have achieved in 50 years only.

and generally "Sharia law" countries have not really been known for technological or scientific advancements because of the devastating effects of US colonialism and specially UK imperialism, they are still recovering from their effects to this day.

Also, it's really easy for the US, UK, Canada and Australia to flaunt their "technological" advancements after they steal and do a lot of shitty atrocities to the indigenous people, and guess what, their shitty treatment to the indigenous people still happens to this day, also the recent discoveries of the horrible s**t that the Canadian government and the catholic church did to the natives' children's, speaks volume about these "first world" countries.

https://www.bbc.com/news/world-us-canada-57592243
A lot of European countries too had some this s**t with Belgium being one of the shittiest ones (killing more than 10 million Congolese), I'm very glad that I was born in a European country that didn't have any of that s**t, but I never take that for granted.

but yeah enough history for today, I don't want to turn this thread into a history lesson lol

 

[MiddleEuroAsia]

In recent time there are so many controversy and discussion about the Personal Income tax. billionaire does not paid tax honestly this and that .
Sometime I thought "Why do not government abolish the income tax and just earn from service tax or vat tax "transaction Tax" ?"


As Example ,
Just abolish all kind of the tax , Just take small money from every Transaction .
As Stripe charges for every transaction .
Government Take small money from each any every banking transaction.
Government can generate enough money to run a country.
As amount is small I do not think that anybody have problem with that.
No tax heaven. No ever lasting mouse and cat fight .



What are your opinion about this ? Is it practical ? What are its pro and cons?

Is it viable or Am I day dreaming ?

No, just no. this is very counterproductive, like if I make a lot of money, I would usually want to spend some of this money, and now they will punish me for spending this money, which will led me to spend less and same will happen with other people, which in turn will make the demand for goods less, which in turn will make factories/companies produce less, which in turn will make companies let go of some of it's employees, which in turn will lead to high un employment rate, add to that that all of this would be extra devastating for countries that depends heavily on consumption like the US or the UK.

just take progressive taxes capped at 10% from both companies and individuals and leave people the f**k alone.

and I agree with @JustAnotherNomad, these high tax countries have spending/budgeting program, not taxing problem. like the US spending 700+ billion dollars for the military, when they have shitty healthcare (lol even some third world healthcare is better than the American one lol), and ridiculously expensive education with more than 40 million American have federal student debts.

With this kind of money, the US could be literally the perfect heaven on earth. but no mental gymnastics in the world could justify the US ridicules spending on the military other than the US loves to wave their dick and keep the military industrial complex relevant.

 

[James2774]

Governments aren’t in the business of reducing taxes.
They are a corporation basically with the same interests as one. Any effort to reduce taxes is so my pandering for votes and not in earnest.

 

[avalanche]

I don't think that states should have the power to forbid this kind of consumption / behavior, but they should definitely discourage it by applying a massive luxury tax to offset at least part of the damage it causes.

For people like Abramovich luxury tax will just become part of the price. He makes more money than he can ever spend. If by paying tax it means that he can get luxury item - he will and it wont stop him.

 

[khinkali]

My Idea is to give (to government ) like say 1% on every transaction .

This kind of approach can have a chilling effect on the economy. People stop trading, buying, producing. This might be an environmental aim but it isn't the reality of Government policy, who need growth to be elected. That is why input VAT is refunded, so you only pay once and not at each part of the chain. I am confident they will go in a different direction...

Let's look at Abramovich's fleet.

Yes, envy is the future of taxation. The ProPublica article has spawned many articles, podcast episodes, etc. from mainstream press who are excited over revelations such as "a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes". Yet people who have any understanding of taxes know that income taxes are based on income, not wealth.

Politicians like Senator Elizabeth Warren in US, Rachel Reeves MP in UK and various envy-mongers in the EU will gain more popularity. Wealth taxes are coming.

Of course wealth taxes don't work well. Wealth taxes force elderly low income people out of their homes, destroy family businesses, lead to increased bureaucratic costs and difficult valuation of illiquid or volatile assets and cause capital (and tax base) to flow away. They were tried and repealed in Iceland, Denmark, Germany, Finland, Luxembourg and Sweden. France scaled theirs back to just real estate (like Spain's) after a serious hit to tax revenue. Switzerland is the outlier, but rates have been coming down and it's gradually been replaced by income tax.

Places like US and UK haven't had a wealth tax in living memory, so it will be a popular move to introduce it for a few years, leaving the negative effects for future politicians to try to undo. We can see from France's experience, it is easy to chase capital away but it is not so easy to encourage it back.

 

[backpacker]

Switzerland is the outlier, but rates have been coming down and it's gradually been replaced by income tax.

When - which canton - what village (Gemeinde) - by how much?

Swiss wealth tax is one of the main pillars of the taxation system of the Confederation. It exists for ages. Every time an initiative tried to abolish wealth taxation in the past it has been denied by popular vote. Last plebiscite was in the late 90's where a certain group of so-called "financial experts" (i.e. banks) came up with the idea to replace wealth taxation with CGT - it was again denied.
Do not just look at national figures or cantonal figures. Wealth tax is highly dependent on the village (Gemeinde) where you live. Differences are so signifiant that very often people move just 5 kilometre to the next village where they can immediately save 30% on their taxes.
Note: "Wealth" in this context is relative because in CH this tax starts at a very low level. Nevertheless, this tax only has a significant affect on very few people because the ordinary population keeps most of its savings in 3. and 4. pillar accounts (3. and 4 Säule) which are tax free. Moreover, Swiss wealth tax can be offset against interest taxation at source (Eidgenössische Verrechnungssteuer).

Nevertheless, it is Swiss wealth taxation which will give the European Union and its members a pretext to initiate a European wealth levy. Even though Swiss wealth taxation can hardly be compared with anything what is/was known from its European neighbours and their (former) approach towards this form taxation.

 

[khinkali]

@Bagpacker sorry I didn't mean repealed, I just mean the rates are low compared with the suggestions we see now by some politicians in other countries. https://transforma.ch/wp-content/uploads/2021-tax-rates-switzerland.pdf

people move just 5 kilometre to the next village where they can immediately save 30% on their taxes

I didn't know about the local village rates. One more data point for the Laffer curve that wealth tax advocates deny existence of.

 

[backpacker]

@khinkali
Thank you for linking the brochure. What is listed there is absolutely correct and it is one of the very few leaflets I have seen which takes into consideration the fact that both income- and wealth-tax differ from village to village. That is the reason why in your brochure they list cantons on the left and the applicable village/town for the calculated rate on the right. For instance, Nidwalden (=canton) is listed with applicable rate for Stans (village). Would they have used Hergiswil (another village in Nidwalden) the rate would be much different (lower compared to Stans).
The system looks confusing at first glance. However, it values diversity and takes into account the different needs and economic situation of each village. It is one of the reasons why the popular vote has until today prevented fundamental changes in the tax structure of the Confederation.

 

[JackAlabama]

When - which canton - what village (Gemeinde) - by how much?

Swiss wealth tax is one of the main pillars of the taxation system of the Confederation. It exists for ages. Every time an initiative tried to abolish wealth taxation in the past it has been denied by popular vote. Last plebiscite was in the late 90's where a certain group of so-called "financial experts" (i.e. banks) came up with the idea to replace wealth taxation with CGT - it was again denied.
Do not just look at national figures or cantonal figures. Wealth tax is highly dependent on the village (Gemeinde) where you live. Differences are so signifiant that very often people move just 5 kilometre to the next village where they can immediately save 30% on their taxes.
Note: "Wealth" in this context is relative because in CH this tax starts at a very low level. Nevertheless, this tax only has a significant affect on very few people because the ordinary population keeps most of its savings in 3. and 4. pillar accounts (3. and 4 Säule) which are tax free. Moreover, Swiss wealth tax can be offset against interest taxation at source (Eidgenössische Verrechnungssteuer).

Nevertheless, it is Swiss wealth taxation which will give the European Union and its members a pretext to initiate a European wealth levy. Even though Swiss wealth taxation can hardly be compared with anything what is/was known from its European neighbours and their (former) approach towards this form taxation.

sorry to be overly picky but its 2. and 3. pillar instead of 4., whereas the 1. is the system from Germany, Italy and such.
(2. and 3. are mostly to be great for banks who can push their expensive products and profit from gov mandated savings and it is highly questionable if you are better of paying the taxes and doing the wealth management of these pillars on your own).
Youre spot on with most of the population being happy to outsource their money management into these pillars.

@khinkali
Thank you for linking the brochure. What is listed there is absolutely correct and it is one of the very few leaflets I have seen which takes into consideration the fact that both income- and wealth-tax differ from village to village. That is the reason why in your brochure they list cantons on the left and the applicable village/town for the calculated rate on the right. For instance, Nidwalden (=canton) is listed with applicable rate for Stans (village). Would they have used Hergiswil (another village in Nidwalden) the rate would be much different (lower compared to Stans).
The system looks confusing at first glance. However, it values diversity and takes into account the different needs and economic situation of each village. It is one of the reasons why the popular vote has until today prevented fundamental changes in the tax structure of the Confederation.

yep, the thing which sucks the most in that regard is that you have to basically strip naked and list all your assets making it potentially very easy for any future administration to come and collect what they want when the going gets though.
However, that being said, it is maybe is one of the only places in the world, where you actually could do so without having to fear of for your life if you have more than your average Joe.
The kings sphere is if you can get a lump sum tax deal, whereas you just pay a yearly sum you have agreed to without having to declare every gold tooth and grandmas silver coins.

 

[backpacker]

sorry to be overly picky but its 2. and 3. pillar instead of 4.,

My bad. You are absolutely correct: 1. pillar = AHV/IV, 2. pillar = BVG/UVG, 3. pillar = 3a (tied) / 3b ("free" ). It is because of 3a and 3b why I am always confusing the pillars.
It has been ages since I last to had bother with 2. pillar and 3. pillar (took it all out and never looked back again ).

The kings sphere is if you can get a lump sum tax deal

..... which makes sense when you are very RICH (UHNWI), a foreign actor or foreign sportsperson. If you are just a HNWI it is usually too expensive.
Add to it that it is no longer available in all cantons + it is anyway only available to foreign citizens who do not work in Switzerland + the population does not exactly like the idea of lump sum tax deals for foreigners (hence it may get abolished in ever more cantons) I am not sure if one should build his plans on such a system.

 

[JackAlabama]

My bad. You are absolutely correct: 1. pillar = AHV/IV, 2. pillar = BVG/UVG, 3. pillar = 3a (tied) / 3b ("free" ). It is because of 3a and 3b why I am always confusing the pillars.
It has been ages since I last to had bother with 2. pillar and 3. pillar (took it all out and never looked back again ).

..... which makes sense when you are very RICH (UHNWI), a foreign actor or foreign sportsperson. If you are just a HNWI it is usually too expensive.
Add to it that it is no longer available in all cantons + it is anyway only available to foreign citizens who do not work in Switzerland + the population does not exactly like the idea of lump sum tax deals for foreigners (hence it may get abolished in ever more cantons) I am not sure if one should build his plans on such a system.

yah good call of cashing it. I would assume even MSCI world etf will have a better return than what they offer you in these accounts

Yep, the lump sum is steep and at minimum a 100k bill if I recall correctly (Glarus, but who wants to live there . Also not that sure, have not checked recently.

Not 100% sure about that but Swiss may qualify if they have stayed abroad for 10 years before applying to lump sum regime.

 

[backpacker]

I would assume even MSCI world etf will have a better return than what they offer you in these accounts

"Return on invest" is certainly not great.
However, the bigger problem is that you are at the mercy of the legislator. Restrictions today are much tighter than they were during my time and it is no longer an easy task to cash out before retirement age.

Glarus

Do you really have to pay taxes when willing to live there ....

Not 100% sure about that but Swiss may qualify if they have stayed abroad for 10 years before applying to lump sum regime.

I do not know about that. And I have no intention to try it.
I am accustomed to a life in cheap and shaky countries without too much bureaucracy. And I want to keep it that way. A simple lifestyle means freedom

 

[Alonzo]

When - which canton - what village (Gemeinde) - by how much?

Swiss wealth tax is one of the main pillars of the taxation system of the Confederation. It exists for ages. Every time an initiative tried to abolish wealth taxation in the past it has been denied by popular vote. Last plebiscite was in the late 90's where a certain group of so-called "financial experts" (i.e. banks) came up with the idea to replace wealth taxation with CGT - it was again denied.
Do not just look at national figures or cantonal figures. Wealth tax is highly dependent on the village (Gemeinde) where you live. Differences are so signifiant that very often people move just 5 kilometre to the next village where they can immediately save 30% on their taxes.
Note: "Wealth" in this context is relative because in CH this tax starts at a very low level. Nevertheless, this tax only has a significant affect on very few people because the ordinary population keeps most of its savings in 3. and 4. pillar accounts (3. and 4 Säule) which are tax free. Moreover, Swiss wealth tax can be offset against interest taxation at source (Eidgenössische Verrechnungssteuer).

Nevertheless, it is Swiss wealth taxation which will give the European Union and its members a pretext to initiate a European wealth levy. Even though Swiss wealth taxation can hardly be compared with anything what is/was known from its European neighbours and their (former) approach towards this form taxation.

Well said.

Also, the combination of low income tax + low wealth tax is working very well in many cantons (especially in the middle of CH).

For example, Billionaire Jorge Paul Lemann is a Swiss citizen and can not benefit from the lump sum regime but according to the media, he lives in Rapperswil-Jona (the lowest area or commune in St-Gallen tax-wise). If he still earns a big amount of money as income, his total effective tax rate (against his net taxable income) can go as low as 28%.
And don't forget that this effective rate is Income Tax + Wealth Tax!

However, the tax rates in the western side of Switzerland are harsh. Geneva, Vaud and Bern for example are not nice at all. But luckily there is the lump sum tax regime in these cantons. Without this regime, pretty much no wealthy individuals would want to live there.

..... which makes sense when you are very RICH (UHNWI), a foreign actor or foreign sportsperson. If you are just a HNWI it is usually too expensive.
Add to it that it is no longer available in all cantons + it is anyway only available to foreign citizens who do not work in Switzerland + the population does not exactly like the idea of lump sum tax deals for foreigners (hence it may get abolished in ever more cantons) I am not sure if one should build his plans on such a system.

If you have like 100 million CHF or more it's worth it. Otherwise, if you don't make substantial amount of income outside Switzerland then forget it.
What I find weird is that Swiss Romandy is very leftist but yet they didn't abolish the lump sum regime... Maybe when the next referendum comes out they will likely abolish it.

Yep, the lump sum is steep and at minimum a 100k bill if I recall correctly (Glarus, but who wants to live there . Also not that sure, have not checked recently.

If you own a very expensive villa in Vaud for example, expect your final tax bill to be close to 7 figures.

 

[M4S]

I would prefer to just be left alone. I don't need anyone to plan for me how the perfect "system" could be and how it would be for my own good if my bank takes away money that hits my account. No, thank you, just leave me alone, please.

Also governments don't have an income problem, they have an expense problem. Politicians will always increase spending, either because they hope it will increase their chances of being reelected or because they are so narcissistic that they think they know better than everybody else how people should live their lives. That's why they always run out of other people's money eventually.

Look at a country like the UAE: 5% VAT, some government "fees" and that's it. Look at how this country has evolved. No political "activists", no BLM, no feminazis, no elections. I really hope it will stay this way.

Exactly correct, most countries do not have a revenue problem just a spending problem. That spending problem is mostly made up of waste or corrupt spending, pure and simple.