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Should the UK have a single 30% rate of income tax?

Should the UK have a single 30% rate of income tax?

The Institute of Directors and the TaxPayers’ Alliance have published a joint report calling on the government to replace eight taxes with a single income tax rate of 30%.

The call for a radical overhaul of the current system of taxation is part of the 2020 Tax Commission project, which is a joint collaboration between the two organisations. The proposals include cutting taxes to a third on national income, raising personal allowances to £10,000 and introducing a single tax on capital income and labour.

The pressure group wants the government to abolish employers’ and employees’ NICS, capital gains tax, corporation tax, inheritance tax and stamp duty on shares and land. Furthermore, it says it would abolish air passenger duty and reduce fuel duty by 5p per litre. Local authorities would also need to raise 50% of the money they spend from local taxes.

Allister Heath, the chairman of the Commission, said that although the proposals are far-reaching, they are practical. The reforms would lead to a simpler, more transparent tax system and result in significant growth. He went on to explain that if the government adopted the proposals by 2020, GDP would increase by 9.3% within a decade.

PwC’s Alex Henderson said these are radical proposals but he pointed out that the OTS has already suggested merging income tax and NICs, reviewing the regulations surrounding inheritance tax and suspending some tax rules. Assessing whether legislation devised 25 years ago is still justified would also help simplify the tax system, he added.

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Image: Flying a straight line by david.nikonvscanon

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