Could a 'flat tax' work?


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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