Flat Tax-A proposal by the Adam Smith Insttute
Discussion
The Adam Smith Institute has just published 'A flat tax for the UK-a Practical reality' written by Richard Teather.
He proposes that there should be a new personal allowance of £12,000 and a flat rate of 22% on all income above that level.
The cost of this proposal would be £40 bn in lost tax revenue-but the author reckons that this will be made up within a mere 4 years due to faster economic growth.
Some of the benefits he touts include less tax evasion and improving the attractiveness of Britain to wealthy foreign nationals.
Personally I am more than a bit sceptical of this proposal-I can see the benefit of a higher personal allowance-something which would benefit us all-but the lower paid most of all.
However I do not see the lost tax revenue being replaced so quickly as he forecasts-sure economic growth would be increased-but that drastically?
>>> Edited by JagLover on Tuesday 29th March 10:53
He proposes that there should be a new personal allowance of £12,000 and a flat rate of 22% on all income above that level.
The cost of this proposal would be £40 bn in lost tax revenue-but the author reckons that this will be made up within a mere 4 years due to faster economic growth.
Some of the benefits he touts include less tax evasion and improving the attractiveness of Britain to wealthy foreign nationals.
Personally I am more than a bit sceptical of this proposal-I can see the benefit of a higher personal allowance-something which would benefit us all-but the lower paid most of all.
However I do not see the lost tax revenue being replaced so quickly as he forecasts-sure economic growth would be increased-but that drastically?
>>> Edited by JagLover on Tuesday 29th March 10:53
Plotloss said:
I imagine the lost tax revenue will also be regained as this system would be a lot simpler to manage and hence would require a lot less civil servants...
Thinking about it you might also be able to recoup some of the money currently spent on tax credits-but still £40 bn that is a hell of a gap to close.
Plotloss said:
I imagine the lost tax revenue will also be regained as this system would be a lot simpler to manage and hence would require a lot less civil servants...
That's the key thing, I believe. MUCH simpler to manage. Everyone gets the same allowance, everyone pays the same percentage. No more "tax codes". Returns become simpler to process. Complicated IT isn't required.
It also has a knock on effect in helping those on benefits back into work. At the moment some people can be barely better off working than they were on benefits...a 12K tax free allowance would go a very, very long way towards addressing that.
Not a bad idea.
Don said:
Plotloss said:
I imagine the lost tax revenue will also be regained as this system would be a lot simpler to manage and hence would require a lot less civil servants...
That's the key thing, I believe. MUCH simpler to manage. Everyone gets the same allowance, everyone pays the same percentage. No more "tax codes". Returns become simpler to process. Complicated IT isn't required.
It also has a knock on effect in helping those on benefits back into work. At the moment some people can be barely better off working than they were on benefits...a 12K tax free allowance would go a very, very long way towards addressing that.
Not a bad idea.
But a simpler system will mean redundancies in the public sector and we all know we can't have that - the bloody country would crumble into the sea!
(On a serious note : good idea)
Edited to say : erm, just noticed Plotloss said the same thing. I should read first...
>> Edited by neil.b on Tuesday 29th March 11:15
gooby said:
Is there still going to be fuel tax, car tax, council tax, speeding tax, savings tax, VAT?....
If it was just 22% full stop, he would get my vote in a heartbeat.
I believe all the other taxes will stay at the same level they are now.-sorry
Though I imagine since we are talking a flat tax-the basic tax rate on interest will rise to 22% (from 20%)
This caught my eye...
So at £15K it costs 6% of the GDP but we save 8% of the GDP in annual savings...
The civil service is the biggest money pit in the UK, surely?
1 in 4 employed by the state.
This country has gone mad.
Article said:
Although the figures look large, to put them into perspective the tax loss from a flat tax with
a personal allowance of £15,000 is roughly 6% of GDP. The Taxpayers’ Alliance identified
£81 billion of annual savings, enough to fund the full package with a £20,000 personal
allowance; even the James Review identified nearly £35 billion of administrative savings.
So at £15K it costs 6% of the GDP but we save 8% of the GDP in annual savings...
The civil service is the biggest money pit in the UK, surely?
1 in 4 employed by the state.
This country has gone mad.
A similar report (and policy change) is being semi pursued in the States along the simple lines that personal income tax should be abolished and all tax revenue is generated from a sales tax.
The stumbling block seems to be the retailers who dont want to be become tax collectors - even though they already pay State sales taxes.
The stumbling block seems to be the retailers who dont want to be become tax collectors - even though they already pay State sales taxes.
Thinking about it we could extend the same principal to Vat-and also claw back some of the tax revenue.
If the rate of Vat were reduced to say 15% then applied to everything-this would remove another source of compelxity in the tax system and if the flat tax does increase econmic growth and lead to a recovery in the tax take-then this rate could be reduced still further.
If the rate of Vat were reduced to say 15% then applied to everything-this would remove another source of compelxity in the tax system and if the flat tax does increase econmic growth and lead to a recovery in the tax take-then this rate could be reduced still further.
tinman0 said:
A similar report (and policy change) is being semi pursued in the States along the simple lines that personal income tax should be abolished and all tax revenue is generated from a sales tax.
The stumbling block seems to be the retailers who dont want to be become tax collectors - even though they already pay State sales taxes.
The flat tax movement has even greater scope for change in the states due to the complexity of the allowances there.
Problem is the British public are too thick to realise that benefits.
Tories come out and say '£12K, 22% thereafter'
To the unwashed this looks like a policy that benefits the rich but the figures suggest its not.
The Labia marketing machine will focus on the stupid mans take on proceedings and the truth of the matter will be lost.
Labour changed the game in '97 its not about representing the public anymore its about taking an ailing product to market in a slick manner.
As said earlier benefits protect Labours core electorate...
Tories come out and say '£12K, 22% thereafter'
To the unwashed this looks like a policy that benefits the rich but the figures suggest its not.
The Labia marketing machine will focus on the stupid mans take on proceedings and the truth of the matter will be lost.
Labour changed the game in '97 its not about representing the public anymore its about taking an ailing product to market in a slick manner.
As said earlier benefits protect Labours core electorate...
anonymous said:
[redacted]
At present the Tories have promised targeted tax cuts of £4bn a tenth of this amount-of which nearly half is already committed to relieve pensioners council tax bills.
It is a question of which comes first-finding the savings in government spending and then releasing some of that in tax cuts-or do the tax cuts first and then try to find savings after the event.
In any case the Tories are trying to fight this election near to the centre ground of politics and have promised big rises in spending on Education and health if they are elected.
tinman0 said:
A similar report (and policy change) is being semi pursued in the States along the simple lines that personal income tax should be abolished and all tax revenue is generated from a sales tax.
The stumbling block seems to be the retailers who dont want to be become tax collectors - even though they already pay State sales taxes.
Nice idea but if you put all tax as sales tax can you imagine the size of the black economy...
"That'll be 200 quid if you want a receipt or 75 for cash... cough "
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