Let's tax the Zuckerberg way

HMRC letter (Image: The Independent)

The tax system in the UK is a funny old business. Those who have to pay it (I'm focusing on Income Tax / PAYE here) know the drill. An employee receives a certain amount of money in the bank every month, and what is accumulated through the year is deducted from one's salary and into the government's hands where they'll then distribute to their different departments like health, defence and education. It sounds straightforward when it's explained this way, but of course how much we pay depends on what we earn.

This is where things get complicated. If you're an employee, you know where you're at - your wage is set, and every month the pay you get is practically the same 12 times a calendar year. And this tax you don't need to submit to HMRC annually as it's already done for you by your employer. Yet, the employer has a different tax system to worry about which I don't want to delve so much into. You sometimes need to be an economic genius to learn exactly what to pay, when, and where it all goes.

Regardless, it is a legal requirement to pay a certain percentage of tax if you receive £10,600 or more per annum. And yet we, the public, have a double standards attitude towards it. On one hand, we feel passionate about where this money goes and if it goes to invest projects or policies we're not pleased about like airstrikes in Syria or HS2, we make that publicly clear. At the same time, we pride ourselves with the knowledge that we are contributing significantly to the National Health Service and police.

That said, we do hate paying it - the Income Tax, plus Inheritance Tax, plus Road Tax, plus Bedroom Tax, plus Tampon Tax - you cannot help but get enticed with debates about these throughout one's lifetime. Some hate it so much they risk being in big trouble with the law by not paying all, or any of it at all. This frustrates those who pay it passionately yet reluctantly, but more so, some display their disgust over some major corporations based abroad but settle in the UK and their Corporate Tax contribution is somewhat disproportionate to employers who pay it in full.

In recent years, we have seen the likes of Starbucks Coffee, Amazon and Google under the negative spotlight with the loud minority threatening to boycott and 'bring them down' although in reality, they'll be sipping a warm latte, purchase any e-Books they can get their hands on and search for the latest viral online phenomenon respectively. These moments are often shared on the firm that is the focus of my post here - Facebook.

The social networking site is huge and is generating billions of dollars' worth of profit, recruiting thousands worldwide and is doing reasonably well in Wall Street, despite an underwhelming start in the stock market world. But despite over a billion (apparently) users logging on the site across the globe every day, Brits aren't pleased they pay less UK tax than the boy pop group, One Direction.

Mark Zuckerberg with wife Priscilla and daughter Max (Image: Time)

The subject of Facebook and tax has been talked about consistently for the past 2-3 years but has been put to debate again very recently as their founder and owner, Mark Zuckerberg, has become a father for the first time. And because of his delight, he announced that 99% of his Facebook shares, believed to be in the region of £30 billion, is going to good causes from this day forth. As he is worth so much money and is, among other significant accolades by Forbes, the richest American entrepreneur under 40 in 2015, this news reflects his massive generosity and while he's yet to decide the charities or initiatives to benefit, some are still reeling about the fact Facebook give little to the British government as required by law.

Downing Street have assured people that they are clamping down on organisations like Facebook but have so far done little and the social networking site are getting away with it, hence the public scrutiny. This is understandable for the obvious reasons, however, I can't help but to think that the tax system has to change dramatically if we're all to proudly contribute in some way. I recently received a letter from HMRC which stated that £1,267 of the Income Tax I paid between 2014/15 went to the welfare system compared to £65 on overseas aid. While it's fascinating to see where my money is going but should Philanthropy be our new tax system?

We seem to be falling into some trap. If I'm paying £65 to helping people overseas, how am I then obligated to pay more to Water Aid, for example? Perhaps I wanted £200 of my tax going towards foreign aid and £150 on defence rather than £271 so that those less fortunate abroad benefit without the reliance of needy yet worthwhile causes. Us Britons are always a charitable bunch - we donate in excess of £100 million a year to Comic and Sport Relief, and at last month's BBC's Children in Need, a record £37m was donated to worthy projects funded by the telethon campaigns.

Children in Need 2015 line-up (Image: IBTimes.co.uk)

We're more than happy to pay for one-off nights or causes like Children in Need and later this month, ITV's Text Santa, yet not to the government. The current tax system is highly limiting and while letters such as the breakdown of where my salary reduction is spent, I feel we should have the freedom to choose departments and/or causes our money should go to, and also what portion of our wage to go to these.

I can go as dramatic as to say that the government can turn into a charity - shape up their 'corrupt' image and we don't need to feel obliged to pay a certain percentage of what we get to them. You'd be surprised how much we'd be willing to contribute to each department - even now, millionaires are investing in new Free Schools that are reportedly doing well. This would then see the government integrate with communities better and have their own fundraising activities to boost education, transport, the BBC and the like. Major Private Corporations can play a huge part in this too. I feel the government have to think creatively at changing the tax system and encouraging us all to be Philanthropists can be a positive step towards this. Keeping as much of our money as possible and knowing exactly where it's going can give us a better incentive to be better with our finances.