Calls to radically change the tax system.

[davieG]

BBC

A single 30% rate of income tax is needed in order to boost growth in the UK, a report by lobbying groups says.

The 2020 Tax Commission's report also calls for the abolition of national insurance, and for the basic personal allowance to be raised to £10,000.

It claims that the changes would result in a tax cut of £3,400 for a two-earner household with an income of £28,000.

The Treasury said it was committed to a "simpler, fairer and fiscally sustainable tax system".

The commission is a joint project between the Taxpayers' Alliance and the Institute of Directors.

It wants a simpler tax system in the UK, but also says that further spending cuts are needed.

BBC political correspondent Mike Sergeant said those spending cuts would be far beyond the cuts planned so far.

Critics might also say the plan amounts to a massive tax cut for the wealthiest, our correspondent said.

And while the coalition says it is working to simplify taxes, most of the ideas in this report are not even being considered by ministers, he added.

'Vital choice'

The commission says shifting to a single income tax rate would add £49.1bn to the national deficit in the first year, if the changes were not phased in or if spending were not cut further.

But it predicts that after 15 years the change would actually reduce overall borrowing by £35bn.

The commission recommends limiting taxation as a whole to a third of national income, and limiting spending to the same level, which would mean extending cuts in public expenditure to 2020.

Its proposals include scrapping stamp duty, inheritance tax and air passenger duty, and cutting fuel duty by 5p.

Continue reading the main story

“Start Quote

We are already taking action in a number of the areas identified in the report”

Treasury spokesman

And it would replace corporation tax and capital gains tax with a 30% tax on dividends, interest and rent.

"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," said Allister Heath, chairman of the commission and editor of City AM.

"The 2020 Tax Commission has set out that plan and would ensure that income is taxed once at a single, much more reasonable rate. It could create the conditions to establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here."

A spokesman for the Treasury said the government welcomed the 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," the spokesperson said.

"We are already taking action in a number of the areas identified in the report, for example, making progress towards increasing the personal allowance to £10,000 and further reducing corporate taxes in Budget 2012."

The personal allowance - the amount of income you can receive without having to pay tax on it - is £8,105 for the 2012-13 tax year, and will rise to £9,205 from April 2013.

[MooseBreath]

That would result in a big tax break for high earners, a token gesture for low earners (difficult to see where they've got that £3400 from, it must ignore ni and the figures must have been chosen specifically to show the highest number - not exactly making things clearer - and taking into account that the tax free allowance is due to rise anyway this will not make things any better for the poor), while people on middle incomes get squeezed again. So it's basically less tax for the rich, more for everyone else. No thanks.

[breadandcheese]

I don't think the 2020 Tax Commission's proposal will ever gain enough political traction. It could only ever come to fruition if tried successfully in other countries first. I also think the need for progressive taxation is hardwired (for the better) in our country's DNA.

An alternative proposal by those at the IFS.

http://www.taxjournal.com/tj/articles/strategy-uk-tax-system-41261

[masterg59]

this has got to be the way, people in the highest tax brackets spend small fortunes on tax accountants so don,t end up paying anywhere near 30% anyway. so if everybody paid 30% on EVERYTHING (bar 1st 10k) no loop holes, no tax write offs, you earn it you pay it, there would be no tax accountants and the highest earners could then have monies to re-invest in there businesses. charging anyone 50/60/70% of there earnings they are just going to find ways off not paying. middle earners pay more tax now than most of the top earners due to loop holes etc.

[Daggers]

this has got to be the way, people in the highest tax brackets spend small fortunes on tax accountants so don,t end up paying anywhere near 30% anyway. so if everybody paid 30% on EVERYTHING (bar 1st 10k) no loop holes, no tax write offs, you earn it you pay it, there would be no tax accountants and the highest earners could then have monies to re-invest in there businesses. charging anyone 50/60/70% of there earnings they are just going to find ways off not paying. middle earners pay more tax now than most of the top earners due to loop holes etc.

Not to mention everyone being charged 80/90 and even 110% of their earnings.

[FoxyPV]

So once you hit £10k you lose 30% and those earning the top rate get a tax cut? Seems fair.

[masterg59]

Not to mention everyone being charged 80/90 and even 110% of their earnings.

what i meant by 50/60/70% was if you put the top rate up

[Guest]

Introduce a Salary cap for everybody.

[Jon the Hat]

Flat rate tax does it for me. Have yet to hear or read a convincing argument as to why someone earning more should pay a higher % once you allow a decent threshold to take the lowest paid out of poverty.

[Jace]

this has got to be the way, people in the highest tax brackets spend small fortunes on tax accountants so don,t end up paying anywhere near 30% anyway. so if everybody paid 30% on EVERYTHING (bar 1st 10k) no loop holes, no tax write offs, you earn it you pay it, there would be no tax accountants and the highest earners could then have monies to re-invest in there businesses. charging anyone 50/60/70% of there earnings they are just going to find ways off not paying. middle earners pay more tax now than most of the top earners due to loop holes etc.

You make some great points there

[davieG]

Is this £10k a calculated figure based on the realities of living or is it just a nice round figure plucked out of the air?

[Captain...]

Flat rate tax does it for me. Have yet to hear or read a convincing argument as to why someone earning more should pay a higher % once you allow a decent threshold to take the lowest paid out of poverty.

Because every other tax is seriously weighted towards the low earners paying more.

If all tax was 30% of what you earn then fair enough, but VAT, Road Tax, Council Tax all hit the lower earners much harder than the top earners because in the case of Road Tax and Council tax it is a flat rate, in the case of VAT lower earners spend more of their income so pay an extra 20% tax on what they earn (in the case of the poorest who live hand to mouth and need to spend every penny they earn), whereas the rich can afford to save their money and therefore are only paying the VAT on a proportion of their income, and earning interest on the rest.

Paying a higher rate of income tax is a way of redressing the balance.

[Jon the Hat]

Because every other tax is seriously weighted towards the low earners paying more.

If all tax was 30% of what you earn then fair enough, but VAT, Road Tax, Council Tax all hit the lower earners much harder than the top earners because in the case of Road Tax and Council tax it is a flat rate, in the case of VAT lower earners spend more of their income so pay an extra 20% tax on what they earn (in the case of the poorest who live hand to mouth and need to spend every penny they earn), whereas the rich can afford to save their money and therefore are only paying the VAT on a proportion of their income, and earning interest on the rest.

Paying a higher rate of income tax is a way of redressing the balance.

I would call that an argument for a higher threshold rather than against a flat rate. Once you get above a certain amount the argument falls away in my view.

The key to success would be in removing all scope to avoid paying.

[Guest]

Linked to a salary cap.

[21st Century Fox]

Using all available powers to pressure Swiss banks and other tax havens to disclose the identities of those who illegally circumvent paying tax in this country would be a decent starts.

[stourbridgefox]

The Tax Payer's Alliance is a right-wing organisation that lobbies for destroying the welfare state to save rich people paying tax.

So the couple earning around £24 000 would have to factor in private healthcare and school fees into their budgets which would pretty much wipe out any savings from a tax threshold of £10 000.

Do we really want to live in a country where people cannot afford healthcare they might desperately need or where children cannot afford to go to school? The fact is, this country DID used to be like that. We had a social movement of trade unions and then the Labour Party which fought tooth and nail for these things we now take for granted, and which many would thoughtlessly give away for a few extra pennies from less tax.

If a level playing field existed in this country and anybody with the ability could make it to the top, then I could maybe give this argument some credit. But the fact remains that this country is the least socially mobile in Europe. The vast majority in very well paid jobs had parents who were very well paid too. Likewise, the children at the bottom tend to remain at the bottom.

Until this is addressed, we should have a tax system which re-distributes wealth from where it has congealed at the top to those who are in no way given the same chances in life.

[breadandcheese]

The Tax Payer's Alliance is a right-wing organisation that lobbies for destroying the welfare state to save rich people paying tax.

So the couple earning around £24 000 would have to factor in private healthcare and school fees into their budgets which would pretty much wipe out any savings from a tax threshold of £10 000.

Do we really want to live in a country where people cannot afford healthcare they might desperately need or where children cannot afford to go to school? The fact is, this country DID used to be like that. We had a social movement of trade unions and then the Labour Party which fought tooth and nail for these things we now take for granted, and which many would thoughtlessly give away for a few extra pennies from less tax.

If a level playing field existed in this country and anybody with the ability could make it to the top, then I could maybe give this argument some credit. But the fact remains that this country is the least socially mobile in Europe. The vast majority in very well paid jobs had parents who were very well paid too. Likewise, the children at the bottom tend to remain at the bottom.

Until this is addressed, we should have a tax system which re-distributes wealth from where it has congealed at the top to those who are in no way given the same chances in life.

I don't support the tax proposal by the 2020 committee but what you've written is hyperbole.

At any point, do the authors of this report call for the abolition of taxpayer funded healthcare or education? No. I don't think anyone but the very fringes of politics would subscribe to abandoning taxpayer funded healthcare or education (majority of Tories included).

[stourbridgefox]

THEN HOW DO YOU EXPLAIN THE MASSIVE CUTS IN PUBLIC SPENDING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Daggers]

Open up the land to common use again and create an agrarian society based around meeting need, not generating wealth. Abolish the military infrastructure, create free public transport and give everyone seven chickens and a pig.

[21st Century Fox]

Open up the land to common use again and create an agrarian society based around meeting need, not generating wealth. Abolish the military infrastructure, create free public transport and give everyone seven chickens and a pig.

I want a cow too. I plan on getting them to mate to create a Pow or a Cig, that way I don't have to bother mixing pork and beef mince next time I make meatballs. That's what society needs to be structured around, easier, tastier meatballs.

[Daggers]

Cows are bastards.

[Guest MattP]

I would love a cow.

[21st Century Fox]

Cows are bastards.

Cig's (or Pow's) are 50% less bastard.

[breadandcheese]

THEN HOW DO YOU EXPLAIN THE MASSIVE CUTS IN PUBLIC SPENDING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Probably more to do with the fact that public spending accounted for 49% of GDP in 2010-11. I don't know many people who believe this is sustainable.

We have three choices, either raise taxes, reduce public spending or a combination of the two. A combination of the two seems sensible.

[21st Century Fox]

I would love a cow.

Only if you buy it dinner.