A suggested alternative to income tax, taxing expenditure in place of income. This is defended on the grounds that it would tax people on what they take out of the economy rather than what they put in. A system of allowances in respect of special occasions of major expenditure, such as marriage, family formation, and major illness would probably be necessary. On the other hand an expenditure tax would be better than a progressive income tax for people with very irregular incomes. Direct measurement of individuals' total expenditure would probably be impossible, given the extent of the unofficial economy. Levying an expediture tax would therefore involve measuring savings as well as income. A major difficulty with a change to an expenditure tax is posed by the transition: in their life cycles people accumulate assets during their working lives and run them down after retirement. Those who retire near to the change-over date would have paid tax on their incomes while they were accumulating their assets, but would be taxed on their expenditure while they reduced them. This would be widely regarded as unfair.

• bank advances
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