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Ever thought that our tax system is too complicated? That there
are too many separate taxes, too many forms, too many tax breaks
that you may or may not know about, and may or may not be eligible
for?
We now have
one of the most complex tax systems in the world. And thanks to
increased regulation and more taxes over the last eight years we
have proportionally, the largest army of tax collectors in the world.
This is in stark
contrast to our competitors where a tax revolution is sweeping the
developed world. Germany, Spain, Holland and Denmark are all reducing
their taxes, while other countries further east such as Poland,
Estonia and Slovakia are opting for simple 'single rate' or flat
taxes.
Gordon Brown
has doubled the volume of tax law in just eight years reflected
in the extra 24,000 tax inspectors now employed to run the system.
Accountants who spend their days taxing us with one hand, only to
offer us a tax break with another. The complexity of our system
now means many people are unaware of what they are due and what
they correctly owe. In this confusion the average family now pays
an extra £1,200 than in 1997 with the poorest one-fifth of
our working population paying proportionately more tax than any
other. This not only affects us as individuals, it also challenges
our ability to compete in on the global stage.
Britain has
fallen from fourth to eleventh in the world competitiveness league.
As competition from abroad, particularly China and India increases,
our productivity growth has slowed and the amount of foreign investment
we attract has halved since 1997.
There has always
been a strong argument for lower taxes as this encourages low un-employment
and therefore lowering the burden on the State. There is now a case
for lower, simpler and flatter taxes. The cost of our present system
has risen from £21bn to £48bn since 1997. in other words
the cost of administering taxes is a contributing factor to the
increase in the taxes themselves.
A flat tax would
do away with our complex system. Set appropriately, many low income
families would not pay any tax at all. Those on middle incomes would
find a large slice of their income is tax free, while the richest
find all the loopholes they presently enjoy would be abolished.
The Conservative Party have set up and independent commission to
consider the merits of a flat tax and how much it would cost to
introduce a system here in the UK.
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