Single 30% Tax Rate 'Essential' For Growth
A single 30% rate of income tax and further public spending cuts are needed to boost growth, according to a report backed by a campaign group and business leaders.
The major study demands simplification of the UK's tax system, including the abolition of national insurance and stamp duty.
The report, by the 2020 Tax Commission, claims the changes would result in a £3,400 tax cut for a two-earner household with an income of around £28,000 and could lead to an 8.4% increase in the UK's gross domestic product after 15 years.
The commission, a joint project between the TaxPayers' Alliance and Institute of Directors, calls for 30% tax rates on income and capital.
Under the plans, national insurance contributions would be scrapped with a single 30% rate of tax on income and a £10,000 personal allowance.
Corporation tax and capital gains tax would be replaced with a 30% tax on dividends, interest and rent.
Inheritance tax and stamp taxes on shares would be scrapped along with air passenger duty, while fuel duty would be cut by 5p under the proposals.
Taxation would be limited to a third of national income, as would public spending - meaning an extension until 2020 of cuts in government expenditure.
Councils would see their grants from central government cut but would be given new powers to impose local income and sales taxes.
The proposal to shift to the single income tax would increase the budget deficit by £49.1bn in the first year if the changes were not phased in or if there were no further cuts to public spending.
But the commission predicts that the boost to the economy would result in a £35bn fall in annual borrowing after 15 years.
Allister Heath, chairman of the 2020 Tax Commission and editor of City AM, said: "It is time for Britain to make a vital choice between tweaking the status quo and letting our economy continue to be crippled by complex and punitive taxes, and drastically changing course with a radical but realistic plan for a tax system fit for the 21st century."
Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "Right now the Government's first priority has to be strong economic growth to create jobs and ease the pressure on families struggling to make ends meet. Tax reform is essential to make that possible."
Graeme Leach, director of policy at the Institute of Directors, said: "This is a radical and practical plan for reforming our tax system to make it fairer and better for the economy."
A Treasury spokesperson said: "The Government welcomes this report's contribution to the long-term debate on tax policy, it contains some radical suggestions and will stimulate useful debate.
"The Government is committed to a simpler, fairer and fiscally sustainable tax system and supports the case for reducing headline rates of tax to support economic growth."
what do you think?
Yea great plan... Leave people with even less money to spend, putting more and more companies out of business and people out of work... Im sure it will work!
did you actually read the whole article?
Do you actually believe the whole article?
In other words... cut the taxes businesses have to pay so that the taxpayer can pay them instead. Why not just cut income tax altogether and put everything into VAT instead? Sure - a pint will cost 25 quid but no income tax and we'd have the option of saving the money for the future.
Major Companies already relocate their operating centre to countries with low tax rates Both BP and Barclays I believe operate and pay tax in Ireland corporation tax at 10% saving BP 3.5 billion tax per annum Large companies are global they will go where tax is lowest
Pretty sure a massive rise in VAT would crip ple our already fragile tourism industry dont you think?
And what, exactly is wrong with the word crip ple?
if you tax businesses you will cri pple the economy whether you like or not that is the harsh reality....businesses breed jobs so if you tax them to death they will die alongside employment so its a no brainer. It has to come from somewhere ..... If you tax the mega rich like footballers and F1 drivers they will relocate taking their money out of the economy like they did in the sixties with the 95% tax so again no brainer .... so what is the answer
It's a great idea. Will it catch on?
Sounds like one of these ideas that sounds great at the time but in reality would never work
Fairer? Right, scrap inheritance tax, air passenger duty(who can afford a trip abroad?) and stamp tax on shares. Hmm wonder who will benefit most from these ideas? Yet another boost for the wealthy. Quite sickening really.
And where is the fairness in taxing those who chose to save their taxed earnings by investing in their future rather than blow every penny they earn becoming a burden on the tax payer The government encourage us to save for our future, then penalise us when we do.
The only people I know who go on holiday are those who are on benefits or good working tax credits and deliberately only work 16 hours a week ..... System is wrong.....Why now tax people in another bracket ....It seems if you try and support yourself by working hard and getting promoted you stitch yourself up
So essentially ... 'TAX THE POOR FOR THE BENEFIT OF THE RICH'! Obvious really, isn't it ... can't have the likes of Jonathan Woss and Clarkson wondering where the next Aston Martin is coming from while everybody else is luxuriating in their second-hand Ford Fiesta! Extrapolate that yourselves to the Merchant Bankers, Politicians, Footballers and other such exceedingly useful people ...
But ask yourself do the rich pay tax anyway. They can afford the accountants who can advise on where to invest tax free.
Or as a rich yank once said " Only the little people pay tax" , I bet Dave, Gideon and their chums will love this idea.
Fantastic another knife in the back. Dont you think the general public are suffering enough while the fat cats keep skimming the cream, unemployment rising n businesses going to the wall. Seems like only the select few have à right to quality of life, while the masses face bankrupsy, nice goin dave n co
Well I'm still paying my NI and am well aware there will be NO pension for me when I retire!
No. The NI would be rolled up into the flat rate in come tax, so it would still be paid.
If you do not pay NI now and you do not get a pension you can claim benefit. Little point in paying NI in the first place
A flat rate of income tax to simplify the system and cut costs, and a higher flat rate of pension to save the cost of processing benefits claims, have all been discussed within the Tory Party, while the LibDems wanted a higher level for taxes to start, so why has nothing been done about it. Oh yes, I know why. Cameron isn't interested in policy or politics,but is more interested in travelling around, dishing out OUR money, and lecturing the Greeks.
It makes far more sense to have on flat rate of tax, and get rid of all the ancillary taxes and their administrators, after all NI is just another tax, administered by another bunch of civil servants Why not go that little bit further and allow parents a higher tax threshold and do away with child tax credits etc My concern would be - How long after implementation would the government of the day of any party start adding a little extra tax here - a little extra tax their Brown was a master at adding taxes without most knowing they were paying it
Yes and we are still paying New Labour's stealth taxes.
my voice is being disabled and crip pled by orange.
Amazing, isn't it? This - in essence - constitutes a kind of "public spending" (any adjustment of tax rates to put money into a certain sector's pockets is paid for by public money), and although The Monied Right whines about the idea of public money being used to increase the spending power of the less well-off in society (which in ths context of this discussion is EVERYONE who isn't them), this kind of public spending - which is putting money into the pockets of the rich - is OK! So boosting the spending power of workers = bad, boosting the spending power of the elite = good, eh? What a bunch of self-serving turds these people are...
"constitutes a kind of "public spending" (any adjustment of tax rates to put money into a certain sector's pockets is paid for by public money)," And where does the public money come from tax payers who are the public. So what is wrong with giving money back to the public who supplied it in the first place
Our tax system is an abomination and overall level of taxation in this country is eventually going to bring the country to it's knees if it isn't sorted out soon, and this report says as much. These are radical ideas and won't please many. But it's a start. One thing which makes my blood run cold is the suggestion that Councils should have some tax-raising powers, particularly a purchase tax. That's complete lunacy! Also, if the tax system was to be changed so drastically it would be essential to legislate so that no future Government could reverse the change by slowly introducing new taxes like Gordon Brown did, or else what's the point. But we must change, it's do or die time.
This comment has been removed for violations of our Terms and Conditions.
So if you do not pay NI when you are over 65 then your tax rises by 10%. So OAPs will be taxed higher and their tax free allowance will drop. That has been frozen for 2 years under the coalition whereas before, it increased by a minimum of 5%. So the wealthy will have their tax cut from 50% to 40% plus a further 10% cut on NI So the OAPs will pay 10% more and the wealthy will pay 20% less. So over the next 20 years the borrowing will be 1.5 trillion plus 1 trillion in defecit which will increase our total debt to 3.7 trillion and this will give us a -C on economy. Osbourne is now going to totally destroy this country. Between 2008 and 2010 the economy increased under Labour but the Coalition is now exploding us.
I dont trust you, your too biased. I think you make alot of this up.
Get the correct amount of tax from buisnesses and individuals that do everything within their power to avoid paying them before you start penalising the honest workers on pay as you earn and people who can least afford it. What the hell is the 2020 commission and who is paying them to come up with stupid ideas that were dreamt up in a bar on expences.
Im confused by this article :(
I love your honesty, Lydia. :) Don't worry, we are all scratching our heads too!
sales tax , like the US
Geared up as usual,for those on a decent wage,but what aboutTey do not benefit. the many on low income,that pay little or no tax.