10% flat rate tax in the UK? What would be the impact?
Discussion
On public service provision, absolutely non according to the ECB, the UK government currently losses 16% of it's income as 'waste' about £80bn pounds down the swanny.
Fag pack calculation, if that waste were eliminated we could all be enjoying a flat rate 10% income tax with NO, reduction in public service provision. We could even keep paying chavs to have babies etc. no problem.
No hospitals need close, no schools need shut etc. All those public sector workers can keep their jobs ( well almost all of them )
Fag pack calculation, if that waste were eliminated we could all be enjoying a flat rate 10% income tax with NO, reduction in public service provision. We could even keep paying chavs to have babies etc. no problem.
No hospitals need close, no schools need shut etc. All those public sector workers can keep their jobs ( well almost all of them )
JagLover said:
I think dreams of a flat rate tax of 10% are pure pie in the sky.
Oh yes I agree the government likes wasting money and sees no reason why it should stop doing so, apart from anything else even if the ECB points out that it's wasting £80bn of our money Brown is hardly going to publicly admit it.
Besides tax is a political and social engineering tool as much as an economic one and Labour want to send the message to voters that they punish the rich with progressively higher tax rates and reward the poor with tax credits (rebates)
It makes perfect sense to reduce income tax. People will have more money in their pockets to spend on things. Things will need to be manufactured, thus creating jobs for people who will spend more money - thus the money ciculates and you have a thriving economy. Equally, people will be more motivated to earn more, thus creating a more entrepreneurial society. Currently, the more you earn the higher the percentage tax you pay - hardly incentivising! Personally, I wouldn't object to reducing income tax (including NI and employers NI) and increasing VAT. At least you've got the "choice" of what Tax you pay.
I gather that in Estonia (I think) they introduced a single (low) tax threshold and the revenue to the Government increased (for the reasons mentioned above).
>> Edited by srebbe64 on Thursday 22 September 10:05
I gather that in Estonia (I think) they introduced a single (low) tax threshold and the revenue to the Government increased (for the reasons mentioned above).
>> Edited by srebbe64 on Thursday 22 September 10:05
Afraid anyone over 45 years old is not going to like this but I feel we should raise the state retirement age to 75 years.
Also encourage people like me in their 20's to make better pension provision.
Student Debt, idiots borrowing to buy property and low pay add to people of my generation not making suitable pension contributions to pay more.
Also encourage people like me in their 20's to make better pension provision.
Student Debt, idiots borrowing to buy property and low pay add to people of my generation not making suitable pension contributions to pay more.
srebbe64 said:
It makes perfect sense to reduce income tax. People will have more money in their pockets to spend on things.
Indeed the world bank recommend that the state share of the economy be no higher than 30% after which GDP begins to suffer. Those countries operating a flat rate of income tax have enjoyed on average 3% higher GDP growth.
The tax system doesn't need to incentivise people to work harder and earn more they'll do that naturally, but it's crazy to effectively use the tax system as a punishment and a disincentive to do so.
This topic is a total red herring. The complexity of UK tax is not in the tax rates but in all the rules and regulations surrounding taxes. They will NEVER be simplified.
In addition, why all this concentration on Income Tax? As we know, there are a myriad of other forms of taxes. Simplifying the tax rates for Income Tax would only be a drop in the ocen considering overall UK taxation.
In addition, why all this concentration on Income Tax? As we know, there are a myriad of other forms of taxes. Simplifying the tax rates for Income Tax would only be a drop in the ocen considering overall UK taxation.
timmy30 said:
Indeed the world bank recommend that the state share of the economy be no higher than 30% after which GDP begins to suffer. Those countries operating a flat rate of income tax have enjoyed on average 3% higher GDP growth.
How is a recommended tax take of 30% of the economy compatible with the rate of 10%?
What is fanciful is not the principle of flat taxes, but that the rate could ever be 10%.
The Comservatives did introduce the "Lower Tax Rate" of 10% just before they lost office. The plan was to abolish the 22% "Basic Rate" tax band. Unfortunately, they kept delaying doing this and then got booted out of office. If they had had the guts too carry out their promise before 1997 I doubt if Brown would have tried to re-introduce a tax rate between 10% and 40%
los angeles said:
... why all this concentration on Income Tax?
Correct. It's in indirect taxation that we get hit hardest and most comprehensively. As I said before, let's start by reducing VAT to pre-Thatcher days and take off a bit more: a flat 10%.
Only if that was on all goods and services supplied with no exceptions.
and I would still think it should be a higher rate.
JagLover said:
Indeed the world bank recommend that the state share of the economy be no higher than 30% after which GDP begins to suffer. Those countries operating a flat rate of income tax have enjoyed on average 3% higher GDP growth.
How is a recommended tax take of 30% of the economy compatible with the rate of 10%?
What is fanciful is not the principle of flat taxes, but that the rate could ever be 10%.
10% income tax
timmy30 said:
10% income tax
Fine
What rates are companies going to be taxed at then?, If it is the current rates most private companies will switch to being Sole Traders or Partnerships for tax reasons.
I just don't think you can have a 30% tax take from the economy with a flat rate of income tax of 10%.
JagLover said:
10% income tax
Fine
What rates are companies going to be taxed at then?, If it is the current rates most private companies will switch to being Sole Traders or Partnerships for tax reasons.
I just don't think you can have a 30% tax take from the economy with a flat rate of income tax of 10%.
fine, you like paying tax, you believe that you have to pay tax at current rates or higher, you don't believe taxes can be cut, now go and watch the BBC or read the Independant and they'll tell you how great the British middle class tax payer is for giving all that money to 'poor people' and you can feel good about it. 1p in income tax raises the Treasury £3.25bn in revenue, £81bn equates to a tax reduction of 25p, or to put it another way income tax is 25p higher than it should be.
Look it's your money, if you want the government to carry on wasting it that's fine. I was just pointing out that p*ssing away £81bn of private sector capital may just not be the best use of the money.
john75 said:
Afraid anyone over 45 years old is not going to like this but I feel we should raise the state retirement age to 75 years.
Also encourage people like me in their 20's to make better pension provision.
Student Debt, idiots borrowing to buy property and low pay add to people of my generation not making suitable pension contributions to pay more.
Interesting comment!!.
Why are people idiots to borrow to buy property. I certainly could never hope to save £100k to buy my house! If I did then it would have gone on a TVR by now!
>> Edited by tim2100 on Thursday 22 September 10:38
timmy30 said:
1p in income tax raises the Treasury £3.25bn in revenue, £81bn equates to a tax reduction of 25p, or to put it another way income tax is 25p higher than it should be.
Look it's your money, if you want the government to carry on wasting it that's fine. I was just pointing out that p*ssing away £81bn of private sector capital may just not be the best use of the money.
I suggest you make some adjustments to your indepth calculations you have done on the fiscal cost of a 10% flat rate of income tax, the loss in revenue may be just a little bit higher than you might think.
I happen to be a passionate believer in flat taxes; I just don't delude myself that the rate will ever be 10%.
srebbe64 said:
It makes perfect sense to reduce income tax. People will have more money in their pockets to spend on things. Things will need to be manufactured, thus creating jobs for people who will spend more money - thus the money ciculates and you have a thriving economy. Equally, people will be more motivated to earn more, thus creating a more entrepreneurial society.
Agree wholheartedly
srebbe64 said:
Currently, the more you earn the higher the percentage tax you pay - hardly incentivising! Personally, I wouldn't object to reducing income tax (including NI and employers NI) and increasing VAT. At least you've got the "choice" of what Tax you pay.
Utter cobblers
For a start the 9% part of NI stops at about 29k just as the 40% rate kicks in. This means the middle income band gets hit hardest. Looking at 2 possible cases. A single person even if they smoke and drink and have 2 cars they can only consume so much, so once you reach the end of consumption you stop paying stealth taxes. Thus your overall tax rate comes down as you earn more. This fundamentally flawed but there is little that can be done about it while we have such a massivley greedy public sector that wastes more than 90% of its funds.
The other possible case just for clarity is the married with 3 kids person who yet again say smokes and drinks in moderation. The only difference is that at the front end the tax concessions really dictate the lifestyle of some these people and it is not until the climb out of the stealth tax take threshold that they can begin to make choices like private school etc. This diabolical situation has occured because we have had a succession of Nazi and Stalinist control freak governments, Starting with the Liberals before WW1 who have created a raving monster in the civil service that sits like a tumour consuming everything. The industry had a secondary cancer called the unions which was removed, (mostly) The primary cancer however has yet to see the scalpel. The main difficulty facing any government that wants to opperate is that the growth starts very close to the Royals. So until the public schools and the royal family can be disconnected from whitehall its a difficult issue to deal with.
Personally I would like to have a go with Chemo
Hiroshima style.john75 said:
Do not forget VAT, Duty on Fuel, Booze, Fags, Insurance Premium Tax and Council Tax.
Interesting to note and I got this from Shirley Williams that the rate of Tax as a percentage of GDP increased more under the Tories from 1979-97 then it did under Labour.
Wrong
Measured by tax freedom day there was no change from 1979 to 1997
Since 1997 it has increased by 6 days.
Year Tax freedom day Year Tax freedom day
1963 24 April 1984 11 June
1964 23 April 1985 11 June
1965 27 April 1986 7 June
1966 2 May 1987 4 June
1967 11 May 1988 4 June
1968 17 May 1989 2 June
1969 22 May 1990 1 June
1970 26 May 1991 2 June
1971 20 May 1992 28 May
1972 13 May 1993 21 May
1973 12 May 1994 22 May
1974 28 May 1995 26 May
1975 2 June 1996 24 May
1976 30 May 1997 25 May
1977 28 May 1998 28 May
1978 23 May 1999 3 June
1979 25 May 2000 3 June
1980 5 June 2001 4 June
1981 14 June 2002 26 May
1982 15 June 2003 25 May
1983 12 June 2004 27 May
2005 31 Ma
There was talk a year or so back of privatising the RAF's air to air refueling service 
Private enterprise is not the answer to everything. The Profit Motive introduces its own set of inefficiencies and distortions. The trick is working out what are the best activities to be run as commercial ventures and what are the best activities to retain in the public sector.
>> Edited by Eric Mc on Thursday 22 September 11:20
Private enterprise is not the answer to everything. The Profit Motive introduces its own set of inefficiencies and distortions. The trick is working out what are the best activities to be run as commercial ventures and what are the best activities to retain in the public sector.
>> Edited by Eric Mc on Thursday 22 September 11:20
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