How did we end up with the tax system we have, and how can we make it better? In this episode, we are joined by Paul Johnson from the Institute for Fiscal Studies, one of the UK's leading economists, as we take a look back through the history of taxation. Mubin and Paul discuss everything from Jaffa Cakes to hair powder, as they try to unpick how we’ve ended up with the tax system we have today.

Full transcript

Mubin: Welcome to the Financial Fairness podcast with me, Mubin Haq. Today we’re talking about tax. 
From its origins in the conflicts of Europe, we’ll explore the often surreal history of taxation - from levies on bricks, beards and hair powder, to whether Jaffa Cakes are actually cakes or biscuits and what’s the difference between avoidance and evasion. 

Who better to take us through this whistle-stop tour of taxation than Paul Johnson from the Institute of Fiscal Studies. Paul is a leading commentator on the UK’s economy and many of us turn to him for his insights when the Chancellor announces the Budget.
 
Join us we unpick how we’ve ended up with the tax system we have today, and how we might make it fairer. 

So Paul, welcome. To start with, let’s go back in time. Nowadays about a third of our income is taxed, but I’m presuming that was not always the case.

Paul: If you go back, sort of before the 20th century, you have much, much smaller state and much less money being raised. And if you look at the 18th century, you've got, you know, only a tiny fraction of national income being taken in taxes and you wouldn't recognise the tax system back then. I mean, we have one or two things that might well be familiar like stamp duty, and taxes on, some forms of alcoholic beverages, but then you had taxes, all sorts of bizarre things like hair powder, and servants and horses and a whole range of specific taxes on ownership of specific kinds of goods or employment of services. A lot of people have heard of the window tax, which taxed you on the number of windows on your house, which inevitably, you can still see these windows that have been bricked in as people, you know, from hundreds of years ago were looking to avoid tax. 

We didn't get income tax, I think 1799 William Pitt introduced the first income tax to fund the Napoleonic Wars, then that became more permanent over the 1800s. But even by the time you get to 1900, you've still got far, far less tax than today and also obviously far less in the way of public services. We didn't have a National Health Service, we didn't have a state pension. We had only education at primary school level.

And then you get a bump up again after the First World War and another bump up after the Second World War. And actually, oddly enough, since the end of the Second World War, the tax burden hasn't changed that much. I mean, it's interesting, just a couple of weeks ago from when we're speaking, the Office of Budget Responsibility, said that the current Chancellor is looking to raise the tax burden to its highest level since Clement Attlee was Prime Minister. And it's actually quite surprising in some ways that we haven't raised taxes very much, or indeed at all since about 1950. And that's partly because we've grown richer, so certain fraction of tax will pay for more, but also because we've cut defense spending enormously. And we've used that bonus as it were to fund large parts of the welfare state. So now we've moved from sort of window tax, the horses tax, the hair powder tax to - in a sense, a smaller number of taxes, and three really big taxes, Income Tax, National Insurance, and VAT, which between them account for about two thirds of all of the taxes we pay.

Mubin: I want to come back on this hair powder tax. I mean what on earth is that? 

Paul: Well, I don't know much about it, to be fair, but it was a tax on hair powder for wigs. And I think that was considered to be a bit of a luxury, there was apparently a beard tax in the Elizabethan times. There was a there was a clocks and watches tax at one point as well, actually a lot of the public clocks, you see were raised then, because people stopped buying their own clocks and watches. But that didn't last very long, because all the clock makers went out of business. 

You've got great examples there of how taxes still do have unintended consequences. I mean, when the brick tax came in, they started making bigger bricks, they also started making houses out of wood which tended to burn down. So you see throughout history, this kind of game of cat and mouse between the lawmakers and those who are trying to find ways not to pay tax.

Mubin: Yeh, that's a brilliant example isn't it of building houses with wood which are then more prone to fire which then might burn down bits of a city and so you end up with a much greater problem than the taxes may have helped with

Paul: Exactly and, you know, you see the same sort of thing nowadays, as people change their affairs, so they don't have to pay so much inheritance tax or save their money in particular ways to save on tax or, you know, as we might come on to say that they're self-employed or company owners rather than employees, because you pay less tax that way. There are amazing examples of this still in the VAT system. So if you buy gingerbread man, with chocolate buttons, you pay VAT, but if he doesn't have chocolate buttons, you don't pay VAT. And there's huge court cases around whether Jaffa Cakes or cakes or biscuits because they're, they're treated differently. So there are huge numbers of examples of this. When you have different rates, particularly VAT on different goods, then you both create enormous rule books about exactly what's subject to VAT and exactly what isn't subject to VAT, but also inevitably behaviour change because, VAT is 20% of the price of something. So, of course you want to, you know be at that edge where you don't pay it.

Mubin: Just going back to the taxation system you were describing and how we had these big changes. And you talked quite a lot about the impact of the First World War and the Second World War in terms of being big, big sort of shifts. Is it only when we get those big crises that we really see those seismic shifts? Or do we get other changes happening at other moments in time?

Paul: I mean, a lot of the history of tax is bound up with wars and crises. And as I said, the income tax was introduced to fund the Napoleonic Wars. The Purchase Tax, which was the precursor to current VAT was started in the Second World War, to help fund that. We do, of course, have other big changes. So the famous budget of Lloyd George, which introduced pensions and introduced higher taxes in order to pay for an expanded welfare state and was famously thrown out by the House of Lords. And then there was another election and so on. So it's often proved difficult to make those changes. 

There are changes to taxes all of the time, small changes, probably much too frequently. But if you look over the last 50 years, I mean, what we've got is still, you know, noticeably similar to what we had 50 years ago. Income tax is still there. Now the rates are different. If you look back 50 years, you had a top rate of income tax on earned income of 83%, and on unearned income of 98%. Now we've moved away from that, because that was clearly ineffective, but you've still basically got an income tax, you've still got national insurance contributions. Now national insurance contributions they’re now properly related to your earnings, but there are still weird historical elements of national insurance. It's still in practice as well as in principle, levied on your weekly earnings not like income tax on your annual earnings and you've got an upper earnings limit - beyond which the rate that you pay goes down, all of which is based on the history of it initially just being a flat rate payment under the Beverage scheme, which entitled you to a flat-rate benefits in retirement.

So it's very different now, but you can still see the marks of history there. And again, VAT is still actually remarkably similar to how it was in the early 70s, when it was introduced, but again at a higher rate. 

So you look over the last 50 years and our current system is noticeably similar. Three big taxes are still the same three big taxes, like corporation tax, and capital gains tax and inheritance tax, and all those sorts of things, but within them quite a lot - an awful lot - of changes over that period.

Mubin: You've given a really good overview of that tax system and clearly, it's the ‘big three’ which are doing most of a heavy lifting and touched a little bit on these other taxes, these minor taxes how much work do they do?

Paul: Well as I say, the ‘big three’ - National Insurance, Income Tax and VAT raise getting on for two thirds of the total. You have then got sort of three or four sort of what you might think it was middle sized taxes. So the next one down is Corporation Tax, then you've got taxes on petrol and diesel and Business Rates and Council Tax. So those four, raise between 25 and 50 billion each. So they're pretty substantial. 

Once you get below that you get into quite a lot of rather smaller taxes. Some of them are there, less because they raised lots of revenue in their own part, but to support the rest of the systems. So Capital Gains tax, for example, only raises a small number of billions. But if you didn't have a tax on capital gains, people would find ways of turning income into capital gains, and indeed still do to some extent, because it's levied at lower rate than income tax. 

You’ve got Inheritance Tax, which, again, isn't a huge revenue raiser, but there are obvious reasons in terms of equity, why you might want an inheritance tax. You've got stamp duty on house purchases, which raises something like 10 billion a year, which in my view, is a dreadful tax, and is one of the many reasons why our housing market is so messed up at the moment, but it's a pretty useful earner for the Treasury. And then you've got a sort of tale of the little taxes, insurance premium tax and taxes on beer. And actually, we add all the alcohol taxes together, they come to a reasonable amount, but the number of taxes is, is much higher than you think we think of a relatively small number. But you easily get into past 20 to maybe 30, or more different taxes when you add them all up.

Mubin: So, the opposite of tax is the reliefs and allowances that there are, and there’s a wide number of them. And in addition, we've got very different levels of taxation - for example, lower rates of taxation on savings and dividends in comparison to income from employment. Can you explain that complex picture and how fair it is? 

Paul: So I mean, there are lots and lots of tax allowances and reliefs, I mean, some of them you can think of as sort of integral parts of the tax system. So, we all have, at least everyone with income of less than £100,000 anyway, has a personal tax allowance of £12,500, you don't pay any tax on that. And that is a sort of, that's an important tax allowance. It's something that makes the whole system more progressive, you can put money into a pension tax free up front, though you get taxed at the end. And there's all sorts of absurdities, actually about the way that pensions are taxed, including allowing people to take tax free lump sums, and so on. 

You can think of the fact that lots of things we buy don't have VAT levied on them as a tax relief, or allowance. There are all sorts of reliefs in inheritance tax -, if you own a farm, there's no inheritance tax on that which drives up the value of farms, it's completely barmy, in my view. And then as you suggest, there are also different ways of taxing different income. 

So self-employment income is taxed differently from employment income, particularly because of the way that National Insurance contributions work. Money that you earn through a company is taxed differently. Again, now, there are some good reasons for taxing money that you earn through a company differently, because you might well be investing in it. And we don't want to put people off investing. So, we don't want to be, as it were, taxing. So if I buy a machine - it's not often machines nowadays - but let's think about a machine. If I buy a machine, and that's out of income, it's already taxed, and then I pay tax on the profits that result from that machine, I'm going to suffer from some double taxation. So, you need reliefs, and we have some reliefs, we have extra relief for research and development, because we think research and development is a good thing for the economy. So, there are research and development tax reliefs. So, there are some reliefs that are actually really quite important for the good functioning of the economy and to prevent double taxation and to ensure that we have, you know, as productive in economy as we can. 

And then there are other reliefs which are you possibly designed to incentivise particular behaviour, which end up broadly just giving money to particular groups of people. So, one good example of that is relief on capital gains. If you own your own company, then you can benefit from this thing called business asset disposal relief, which the Treasury, I think brilliantly is called BAD - 'BAD' relief, because they don't particularly like it. And they reformed something called Entrepreneurs Relief, which sounds much better, but with the same thing, only more generous, but the effect of that is actually just to give very big tax breaks to very, very rich people. And there's very little evidence that it actually makes any difference to levels of investments. So, there are good reliefs, and there are bad reliefs, there are well designed ones and poorly designed ones. And there are allowances that release a fundamental part of the tax system and others that are really just bolt ons.


Mubin: As you touched on at the very beginning, the tax system also helps to redistribute money and that means taxing the wealthiest to help those on lower incomes. So, for example the top 1% of income tax-payers contribute around 1/3 of income tax receipts. Do you think the tax system does this effectively?

Paul: So the tax system as a whole is redistributive. But within that income tax does the vast majority of the redistribution, and as you say, is extraordinarily actually the top 1% pay about a third of income tax, actually, nearly a half of people don't pay income tax at all - that's partly because of some are students, some are pensioners, some are poor, some are married to people who are earning money. But because we have an individual tax system, they don't pay income tax. So, it's very, the income tax system is extremely top heavy in the sense of us being very dependent on those with very high incomes. 

Other bits of the tax system are much less redistributive - National Insurance is somewhat redistributive, but less so than Income Tax, then VAT, which is the other big, big one. If you look at VAT, at a point in time as a fraction of people's income, then it actually looks regressive in the sense that people with lower income spend a higher fraction of their income on VAT than rich people with higher incomes. If you look at as a fraction of people spending, then it looks fairly flat. If you look over a person's lifetime, it might actually look a bit progressive, because, you know, in the end, higher income people spend more of their money on the things that aren't food and children's clothes, and so on, which don't have VAT levied on them. So, you do need to be very careful about what you mean by progressivity within a tax. And it's the system as a whole that matters, not necessarily individual taxes. 

If you look at the tax and benefit system together, then you've got a system which is extremely progressive, clearly, because you're giving lots of money to people that are the poorest and you're taking lots of money from, from the richest. Now, we could make the tax system more progressive, we could lay more of it on to income tax, there are certainly things you could do to National Insurance to make it somewhat more progressive. And then obviously inheritance tax and stamp duty and so on are very progressive, but we wouldn't want some taxes to be progressive. I mean, you can't really think of VAT, necessarily as a progressive tax. Petrol is a little bit progressive, taxes on that. But that's not the point in the end. And as I said, taxation on tobacco is definitely regressive. But that's kind of the point in a sense, because you're trying to stop people doing particular things.

Mubin: Lets talk about taxes which are meant to change behaviour or be more progressive. For example, is it a good idea to have higher taxes on flying? 

Paul: Yeah, so I mean, obviously, we have air passenger duty, which I can't remember exactly how that's recently been reformed, but I think it levies quite a lot of tax on long journeys. Now, if you're thinking about taxing flying, then you're particularly I think, looking at reducing emissions from flights. So, you may, you may actually want to, particularly disincentivise, short distance flying where you've got alternatives. So, you know, you mean people often comment that it's absurd, often that it's cheaper to fly from London to Edinburgh than it is to get a train. 

In terms of long-distance flying, you may want to disincentivise that altogether. Though, you know, the other part of that issue is that if you make that flying more and more expensive, then you just limit it to a richer and richer part of the part of the population. So again, there are always tradeoffs here and it's all very well for people with relatively high incomes to say - well, let's tax petrol, lets tax flying and so on. Actually, it doesn't much effect their behaviour, but it has a big effect on what people on lower incomes can do. So these are these are always quite difficult tradeoffs.

Mubin: Can I get on to tax loopholes. When we usually talk about tax people are always concerned about these and that particularly the very wealthy have got ways of avoiding paying tax. How much of that is a problem?

Paul: It's difficult to define ‘loophole’ even because clearly, you know, when we talk about loopholes, we're talking about generally, things that are legal. So, tax evasion is just not paying tax you really should pay. Tax avoidance or using loopholes is about finding parts of the tax code that allow you to reduce your tax payments. And there's a whole series of elements of that in all different sorts of tax. So as I mentioned, there are ways in inheritance tax of using loopholes, which are part of the system, whether it's through the type of things that you own, whether it be closely held businesses or agricultural land, whether it's through the clever use of Trusts, or whether it's simply by giving, if you're rich enough to give a lot of money away, well before you die, then there just isn't any tax on that. And as I say, if you're super rich, you probably can do that. But if most of your wealth is in the house you live in, you can't. So, I mean, that that that you that feels very much like something, an element of the system, which favours the extremely wealthy, and hits, the sort of moderately wealthy. 

It's very hard to know in terms of things like, you know, the use of overseas Trusts and keeping money offshore, how big an issue that is. For a small number of the very rich, they undoubtedly find ways around paying taxes in the UK. If you talk to lawyers about this, they tend to throw up their hands and say, - look, doesn't matter what you do, some people are so rich, they're always gonna find ways. around this. 


Mubin: The overall burden of taxation is the highest since the 1950s. Are you surprised that this is where we ended up under a Conservative government?

Paul: Well, in the end, no, I think we, we are facing all sorts of pressures on public spending and what happened over the 2010s of course, as we look back on that as a decade of austerity and, and indeed, it was in the sense that spending on public services fell in a way that it's pretty much never done before in history. I mean, we're spending less on the justice system, local government, and a whole range of other bits of public spending than we were back in the in the late 2000s. We're still not quite on, even spending on schools, we're barely spending as much per pupil, as we were a more than a decade ago. 

Now, this is kind of unprecedented - well, it is unprecedented, really. So, we've had that decade of a really tight squeeze, and therefore, lots of pressure to spend more. But in, particular, one of the areas where spending didn't go down was the National Health Service. The pressures on that are huge as our demand for health care is ever expanding, partly because as a population, we're ageing, partly because we've got more chronic diseases, partly because, you know, health interventions keep us alive longer. 

Pension spending is rising, because there are more older people, you've seen the pressures on social care. So, in my view, the tax burden is likely to go up further, because those pressures are not going to go away. And I mentioned earlier on that, one of the big tricks that we've managed to carry off in the last 60 years is that we've cut defense spending hugely. And essentially, we've used that bonus to fund pensions and health and so on. There's nowhere for defense spending to go. And indeed, you know, we're barely at the sort of NATO minimum of 2% of national income, the pressures following what's happening in Ukraine are going to start to be up. I struggle to see other bits, major bits of what we spend money on, where we can make big savings. I mean, you could decide to abolish the whole overseas aid budget – just to be be clear, I'm not saying we should, but you could do that. But that even that only gets you - what, £10/£15 billion, which is a relatively small beer here. 

We've sort of privatised as it were, a lot of spending on higher education. I can't see how you can cut local government anymore or the justice system anymore. We've been really tight on schools. I don't know where, I don't know where the big cuts come from on that side - I can see where the big pressures are. So no, I'm not surprised the tax burden’s rising and I'm afraid I think it's going to go up further.

Mubin: Despite the income tax cut that we've been promised in the next couple of years so we might see some other taxes rising?

Paul: Well, the interesting thing about that Income Tax cut, Rishi Sunak's promised that basic rate will go from 20% and 19% in 2024. Actually, the income tax burden will nevertheless rise, because the Chancellor has also said he's going to freeze the point at which you start to pay income tax and freeze the higher rate allowance and so on. So, over a four year period, that raises a lot more money than you lose from 1p off the basic rate. So, actually, the income tax burden is set to rise quite a lot despite that cutting one of the rates.

Mubin: It's like a magician's trick really isn't it we've got these stealth taxes coming back in

Paul: Well, particularly when you've got high inflation, freezing things like income tax allowances gets you a load of money in when you've got high inflation. And it just to explain why that is, if you freeze the point at which you start to pay income tax, and incomes are rising, then obviously a bigger fraction of your income is subject to tax. So, to keep the system neutral, you really ought to be raising all these thresholds and allowances in line with people's incomes. And if you freeze them completely, you get a lot more money in, and that's what's happening over the next few years.

Mubin: At the start, you also talked about the role of taxes in changing behaviour and we've there's been quite a lot of interest in some of these green levies on energy bills and you’ve already touched on petrol duties as well. Do you think we're going to see more moves in this direction in terms of trying to help reach for net zero goals?

Paul: I hope so. I mean the current situation in terms of the green levies is actually a little bit perverse in that the green levies on electricity bills are there effectively to fund the building of windmills and solar farms and other forms of renewable electricity. And electricity is now, nowhere near fully decarbonised. But it's quite significantly decarbonised, compared with where we were a decade ago. 

Now electricity is a lot greener than it was - gas is gas - and effectively, we have a much bigger levy on this green electricity than we do on this very un-green gas that we use for central heating and so on. So, where we are at the moment actually, is in a bit of a mess in terms of giving people the right signals and incentives through taxes on the price system is also worth saying, you know, with VAT at just 5% on domestic energy, compared with 20% on most other things, again, that is effectively subsidising consumption of things that create greenhouse gases. 

Now, a very, very difficult time to talk about raising taxes on energy. And I wouldn't suggest doing it at the moment. But we are a very, very long way from a system of taxation, which is really pushing us towards our net zero goals - that's effectively happening through a whole series of other things, regulations, the money from the electricity bills to decarbonize the sector and so on, it's not really happening through - certainly for domestic customers - through the price signal.

Mubin: There's been some calls particularly from conservative politicians to cut these green levies, particularly with sort of cost of living crisis hitting. Do you think we need to make some of these consumption taxes fairer? I mean, you've talked about you know, like we've got this subsidy in relation to VAT, but do we need to take account of this impact it's having on people on lower to middle incomes?

Paul: I think we do, but I think the way to do it is probably not through making energy cheaper. It's through increasing people's incomes in other ways, so that everyone's getting that appropriate signal. So put it another way. I mean, at the moment, we're effectively subsidising rich people with huge houses who spend a fortune on their, on heating and electricity, because we are charging VAT at such a low rate. Now, why are we doing that? Well, you know, a side effect of that almost is that people on low incomes who do spend a higher fraction of their income on fuel, are benefited. 

Now a better way in my view of doing this would be to increase benefits or cut other taxes in a way which compensates people on lower incomes, so they've got more money in their pocket, so that they're no worse off, if you then put a higher levy on the on the gas or electricity they use. 

Now, you can't do that in a way which makes everyone better off and indeed, some people would be worse off. But you can do it in a way which ensures that on average, people on lower incomes are no worse off or indeed better off. 

And then you have to ask yourself a really difficult question which is - which state of the world is a better one? The state of the world, we're in at the moment where you've got the tax burden as it is. And another one where the overall tax burden is exactly the same. On average, people on lower incomes may be a bit better off and on average, people on higher incomes are a bit worse off. But there are some people on lower incomes who are worse off than they are today. Now, it's very hard to move from here to there, because you don't ever want to make someone who's not really well off, worse off. But equally, it would have been very hard to move from there to here, because that would also have made some people worse off and you have to kind of, you know, we are we are stuck very much with a big status quo bias. It's very hard to make changes that leave people worse off, even if at the moment there are people who are worse off than in some sense they should be.

Mubin: Yeah, you're talking there about so we're sort of winners and losers and everyone focuses in on the losers of any new tax change that comes in, but are there any common themes as to which taxes have broader support and which are more poorly received - you've been working on this for a number of years, what's been your experience?

Paul: Well, I mean, as different governments have shown, people seem happier to have National Insurance increase than they do to have Income Tax increase, despite the fact that Income Tax is an infinitely better tax than National Insurance - it's more progressive, it's more efficient. But I think people still have this thing in their mind that National Insurance is paying for something specific in a way that income taxes isn't - and now it isn't, I mean, National Insurance is just another tax, it bears no relation to anything else at all. But there is a narrative based on the history of where National Insurance came from, that is different from other forms of taxes. 

We do know that some taxes are particularly unpopular, and inheritance tax is very unpopular, despite the fact that actually only a very small fraction of people end up paying it. And it's obviously a very sort of regressive tax. Council Tax seems to be pretty unpopular, I think that's related directly to this fact thatt comes out of your, your bank account.  

So, I think the long and the short of it is, that people's views on popular and unpopular taxes are not very closely aligned with what economist’s think are good and bad taxes and I think that's clearly a problem for reform.

Mubin: Yeah, I think you've touched on a few things there which is where does it come from? So does it come from source or does it come from your bank account? And what is it paying for - this sort of hypothecation? I'm not sure how many people have got a great view of their council so it may be that you know, they don't see what the council's doing in terms of being justified for that council tax whereas people got more of a warm glow around hospitals and NHS.

Paul: Well, I think that's probably right. And it's a very unfortunate thing about people's use of councils. A huge fraction of what councils spend their money on is social care, both adult and children's social care. Of course, most of us most of the time, just don't see that. And something like half their entire business is social care, which I think people think is a good thing, but they probably don't associate it with the council. And on the whole, they don't see it. So what they do see as their bins being collected, and might well be asking themselves why that cost a couple of grand a year? Well, it doesn't. It's the fact that most of this money is going for something else, you actually just don't see.

Mubin: Yeah, there's a real challenge there, and a real challenge about changing taxation and of course those of us who've been around for a little bit longer will remember the Poll Tax and just the disaster that that was. Do you think that still is an issue for the legacy of a Poll Tax and you know, the government just been burnt too often from introducing new taxes?

Paul: Well, possibly, I mean, of course, you know, it’s a particularly odd thing to do to sort of move from the old rate system, which a bit like council tax was based on the value of your property and also rather like council tax, was proving impossible to update. And indeed, Council Tax is itself a sort of amalgamation between the old rate system and the Poll Tax. 

The old rate system was essentially only incident on the homeowner or the, the head of the household in some sense. So, the idea - something that Mrs. Thatcher was quite concerned about - was there were lots of people who didn't pay it, didn't see a cost rates and therefore, would go and vote for counsellors who would vote for very high spending and very high taxes. And her response to this was a Poll Tax, everyone pays the same irrespective of their income or wealth or the house they were living in, which obviously was a big giveaway to the rich and a big takeaway from the poor and was predictably, extraordinarily unpopular, predictably and predicted, and didn't last very long at all. 

Now, council tax has elements of both because we still have a ‘one person’ discount in Council Tax, which was never there, and the old rate system, and the old rate system at least was supposed to - as your house got more valuable, more valuable, more valuable, you paid more and more and more - but council tax is capped. And it goes up in a regressive fashion in the sense that the council tax you pay in a more expensive house, is lower as a fraction of the value of the house than if you're in a less expensive house - so you've got lots of elements in there. 

But I think, you know, the broader point is that tax reform you know, politicians are cautious to put it mildly about significant tax reform as and when it may create significant numbers of losers and most tax reforms unless you’ve got lots of money to throw at the problem will create significant numbers of losers and that is often just a very good way of losing votes.

Mubin: And if you were able to bring in one big tax change which is not hair powder or a beard tax what would it be Paul?

Paul: Well if I was changing what I've got at the moment, I would be reducing stamp duty on buying homes; I would be making council tax at least proportional to the value of the property; I'd be getting rid of some of the loopholes in capital gains tax and inheritance tax; I would be moving national insurance to look much more like income tax and I'd be doing more to make different forms of income taxed in similar way. So, there's a lot of changes of that nature. I'm afraid I don't have a whole big new tax up my sleeve which could solve all of our, solve all of our problems. 

Mubin: Well Paul, thanks very much for your insights, it's always good to speak to you. 

Paul: Lovely, thank you very much. 

Mubin: Thanks to all of you for listening and we'll be back again soon looking at another big issue, which affects our financial security and living standards.