Increased tax for WFH

[echt]

Not an AIBU, but what is theses days?

Have a look at this proposal:

www.theguardian.com/business/2020/nov/11/staff-who-work-from-home-after-pandemic-should-pay-more-tax

I find the argument about WFH not contributing to the infrastructure interesting, as you could have a WFH employee who formerly cycled to work and brought packed lunch never contributed to the infrastructure as put forward here.

[quote Calmandmeasured1]**@EasterIssland

I think I've read in this thread few comments about how this will affect more women than men as wfh suits as best if we've family so we can do the childcare duties etc.
it's not something I agree with , maybe cuz of the market I'm (IT) where out of 20 colleagues it's just 3 women and we are all wfh.
I can't relate to wfh mainly affecting women either. My DH works in large IT company where, in the town he is based in, there are 2500 employees. Virtually all are wfh with only a very small amount (maybe 30) who have to work in the office. They didn't get a choice. It's compulsory. No discrimination there against women.[/quote]
yeah I work for consultancy (maybe same as your husband? ) and offices around the uk are opened for those that need it but only fr valid reasons... the rest of us are wfh. my husband works for a small IT company where I think they're 20 people and only 2 women, all wfh since march as well. not sure what will happen long term when covid is gone and office life is back...tbh not sure whether many people might want to do big commutes every day when they could be spending time on themselves, this might be childcare duties, or sports or watching tv or sleeping or whatever

Why should people contribute to infrastructure that they are not using

There is an argument to say people that don’t use trains or the tube should not have to subsidise them through general taxation. But then public transport would be really expensive for those people that do use it. Which could be really unfair for lower paid workers.

Extrapolate that out further, why should people pay tax towards the nhs when they haven’t used it (or have had to go private because of the waiting times)? Slippy slope unless you’re in favour of pay per use systems across the board. Maybe toll roads would ensure only drivers pay for road upkeep rather than everyone by the same principle?

It’s likely we will all be paying much more tax soon whether directly or indirectly to pay for this pandemic.

The thing is a lot of companies will be encouraging their staff to work from home - they won’t need to pay business rates etc so all this tax would end up doing is recovering lost tax from the employer to the employee. I’m not allowed to work in our offices even if I wanted to so don’t have a choice.

On infrastructure it does change over time. The Victorian railways were privately owned and if you needed one for a local mine then the private sector built it. Then later much more recently lots of local rail lines were stopped - the Beeching reforms I think it was - due to market forces - hardly anyone using local tiny stations. Just as in my day tube stations like Aldwych were closed due to lack of use. Whether we need HS2 is another topic again (we don't in my view)

@Ohthatsgreat

Why should people contribute to infrastructure that they are not using

There is an argument to say people that don’t use trains or the tube should not have to subsidise them through general taxation. But then public transport would be really expensive for those people that do use it. Which could be really unfair for lower paid workers.

Extrapolate that out further, why should people pay tax towards the nhs when they haven’t used it (or have had to go private because of the waiting times)? Slippy slope unless you’re in favour of pay per use systems across the board. Maybe toll roads would ensure only drivers pay for road upkeep rather than everyone by the same principle?

It’s likely we will all be paying much more tax soon whether directly or indirectly to pay for this pandemic.

I understand your point and am not saying that necessary shared services shouldn't be funded, however if there is a permanent shift to working from home more then the requirement for transport capacity will be reduced and therefore the answer is to reduce capacity not increase taxes to continue to pay for capacity that is surplus to requirements.

@Birdsong111

The thing is a lot of companies will be encouraging their staff to work from home - they won’t need to pay business rates etc so all this tax would end up doing is recovering lost tax from the employer to the employee. I’m not allowed to work in our offices even if I wanted to so don’t have a choice.

Absolutely. It is the companies that will make savings so it is companies that should pay.

Unfortunately all that will happen though, even if that is implemented, will be that companies will suppress salaries to the extent of the additional costs, just like they do with employer's NI. In the end it's always the employees who get screwed.

Good point about business rates. The more businesses that go to full workforce forces working from home (alongside high street being decimated) will effectively be lowering the income councils get as revenue from business rates will fall. So that will no doubt result in council tax increases and other forms of taxation to make up for lost revenue. Unless we are all happy for more cuts to parks, libraries, adult services etc?

£7 extra in tax daily / £35 weekly for someone on £35K is not an invisible sum, as stated in the article.

@Ohthatsgreat

Good point about business rates. The more businesses that go to full workforce forces working from home (alongside high street being decimated) will effectively be lowering the income councils get as revenue from business rates will fall. So that will no doubt result in council tax increases and other forms of taxation to make up for lost revenue. Unless we are all happy for more cuts to parks, libraries, adult services etc?

So business profit margins should go up and personal taxes should fund it, again?

Lots of PPs misunderstanding the points made about WFH being more common for women and people with disabilities. This was in the pre-COVID world (ie earlier this year). Yes lots of people currently WFH due to COVID and some have discovered they enjoy it more. So they will choose to continue to do it even when their offices re-open. Good for them. But that’s a choice many women and people with disabilities don’t have because WFH is the only way they can get work, even if that means lower pay, fewer hours, less secure jobs. Increasing taxes on those WFH will definitely disproportionately impact people with protected characteristics because they will be unable to vote with their feet to avoid paying.

they will be unable to vote with their feet to avoid paying.

Exactly. If there was an employer where I could have a sleep in the day on bad days, can be within 15 mins of school if my dd needs to go to A&E (a frequent occurrence for her), where I wouldn't need to work in an open plan office, I can have dimmed lighting and I can curl up in a blanket then let me know. I just could not work anywhere near the hours I do if I had to go into an office every day.

DeutschBank are freaking out because they have so much exposure to commercial real estate that the expansion in WFH will massively devalue. They will probably be going to the government for another bailout shortly.
A WFH tax is obviously completely unworkable & will never happen. Broad income tax rises however are I think inevitable.

Ohthatsgreat

Good point about business rates. The more businesses that go to full workforce forces working from home (alongside high street being decimated) will effectively be lowering the income councils get as revenue from business rates will fall. So that will no doubt result in council tax increases and other forms of taxation to make up for lost revenue. Unless we are all happy for more cuts to parks, libraries, adult services etc?"

But why won't the same amount of businesses be able to operate? People still want to go to cafes, go to shops etc, they will just do that more locally, which is great for retail and hospitality staff who won't have to pay a fortune to travel in to a city they can't afford to live in, they can work locally too, and with their reduced cost of commuting or high rent they will have more disposable income to also spend locally.

The business rates model of funding brought in as a way for central government to reduce funding of local government was flawed in 2010 let alone now. The Internet was making that model redundant then. Lockdown has exposed it's frailty.
Tax needs to be paid at the point of sale rather than the head office but no Western govt will do that.

@PastMyBestBeforeDate

The business rates model of funding brought in as a way for central government to reduce funding of local government was flawed in 2010 let alone now. The Internet was making that model redundant then. Lockdown has exposed it's frailty. Tax needs to be paid at the point of sale rather than the head office but no Western govt will do that.

Exactly. Then those who have money to spend will pay towards the gap. Are the super rich going to pay anymore? Are the likes of Amazon, Starbucks etc going to be made to pay their taxes? If not why not? It’s always the ordinary person that seems to get hammered.

Past ,tax is paid at point of sale - we have massively high value added tax at 20%. It is very high.

But why won't the same amount of businesses be able to operate? People still want to go to cafes, go to shops etc, they will just do that more locally, which is great for retail and hospitality staff who won't have to pay a fortune to travel in to a city they can't afford to live in, they can work locally too, and with their reduced cost of commuting or high rent they will have more disposable income to also spend locally

Ok but you are thinking about cafes and shops. What’s about vast swaths of office based businesses that start letting their entire workforce’s work from home and no longer have a physical office? Then I assume they won’t be paying business rates. Ok it’s a flawed model as discussed above, but the question still stands about how councils plug the gap if they receive substantially less revenue. It’s going to require reform.
I don’t want to see individuals taxed more either. But it’s interesting people say tax Starbucks more as though that solves everything, they are an employer just like other businesses. Hitting firms with bigger tax bills has an impact on their ability to expand, provide pay rises and bonuses to their staff, reward investors etc.
Maybe we should all agree to less government if we don’t want to pay the services it provides?

@Xenia

Past ,tax is paid at point of sale - we have massively high value added tax at 20%. It is very high.

This is a tax on consumers not businesses though. Only very small businesses pay it. Large businesses reclaim it on inventory/ parts in and stock out and it is only genuinely crystallised once a product is sold to a consumer.

The point made on the thread is that generally all costs have been falling substantially to employees for years, with businesses/ capital owners paying less and less. An increase in VAT would only exacerbate this. I think the comment referred to a sales tax on companies rather than consumers, i.e. taxing revenue where it is generated, rather than taxing profits.

This comes with its own problems for low margin and smaller businesses, but given how complex the tax code is already, that is not an insurmountable problem. It just suits many wealthy people to pretend that it is.

Xenia I don't mean VAT. I mean taxing the companies on where their sales are.

I've saved absolutely nothing by working from home as both DH and I always walked to work, took packed lunches, and made the occasional hot drink at work, but never bought food or drink. If anything I've spent more money on heating/electricity/furniture etc since working from home, and actually put more into the local economy by ordering stuff from local businesses (bakery, fruit and veg, ice cream etc) as am at home for the deliveries. I definitely prefer it but couldn't afford a tax like that!

I get the VAT point but turnover taxes in place of corporation tax or income tax can be very difficult. Eg one company might sell loads of products, pile them high sell them cheap, and map £1 profit on every sale of a £1000 item. Another company might make £300 profit on the sale. Also would you apply it to services? I charge for my services but what I charge is not my profit. I could have bought a small house with the insurance premia I have been forced by law to pay over the years for my profession never mind many other costs.

On where to tax a company that can be a difficult issue. unless we want to go to a closed borders UK with exchange controls, no rights to bring much money in and out, no rights for foreigners to buy properties which some places have and the UK used to have to some extent. Also if we make the UK an unpopular place to be a seller then people will not invest here. Ireland did so well in part because it made itself one of the best low tax havens of the EU (and because of being English speaking). We failed in a sense in that respect because we did not follow Ireland into its lower corporate tax regime and now we probably suffer for that and have less money for the less well off in the UK.