Powerful IEA report urges Chancellor to be bold on tax
The Chancellor should adopt bold measures to simplify our chaotic tax system, according to a powerful new report by the Institute of Economic Affairs. Recommendations include:
- Reducing spending to between 30 and 33 per cent of GDP, including replacing much of the welfare system with a Negative Income Tax.
- Abolishing the 45p 'additional' and 10p 'savings' rates of Income Tax, and the personal allowance income limit (aka the 60p rate) while indexing the personal allowance and higher rate thresholds to end fiscal drag.
- Abolishing National Insurance by merging it into Income Tax.
The report also cites the Single Income Tax in reference to the full merger of National Insurance, including employer contributions, before recommending that all future tax policy changes should be judged against it:
"both The Taxpayers’ Alliance ‘Single Income Tax’ and IFS Mirrlees Review suggested going further, advocating the complete abolition of both employee and employer national insurance and their replacement with a single tax on labour income"
"The ‘Single Income Tax’ has probably been the most complete and substantial proposal for reform of the UK tax system... something like the ‘Single Income Tax’ should be the long-term ambition against which all tax policy changes are judged"
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