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UK Think Tank Calls For 20 Taxes To Be Axed

by Amanda Banks, Tax-News.com, London

02 November 2016


The Institute of Economic Affairs (IEA), a think tank in the UK, has proposed a radical reform of the UK tax system, including the repeal of some 20 taxes.

The IEA has released a study that recommends that the current tax regime should be replaced with what it says would be a simpler, less burdensome tax system, following "a major and original statistical analysis of the economic costs of high taxes and, equally importantly, which taxes cause the most economic harm."

It recommends that the UK Government should scrap: corporation tax, national insurance, capital gains tax, inheritance tax, council tax, business rates, the television license fee, the apprenticeship levy, stamp duties, alcohol duties, tobacco duties, vehicle excise duty, and air passenger duty.

In its place, a collection of taxes would raise around 20-25 percent of national income through:

  • A flat-rate income tax, set at 15 percent of income above a personal allowance of around GBP10,000;
  • Distributed corporate profits would also be taxed at this rate. Value-added tax (VAT) would be set at 12.5 percent, with most exemptions abolished;
  • A new housing consumption tax on rents and imputed rents to mimic VAT at 12.5 percent;
  • A new location land-value tax; and
  • Fuel duty, which would be retained at around half the current rate.

"Because lower taxes would lead to higher growth and because there would be a tax system that led to far fewer distortions of economic decisions, it is likely that employment, productivity, and wage levels would rise considerably," the IEA report says.

Mark Littlewood, Director General of the Institute of Economic Affairs, said: "The economic evidence is clear: spending is far too high and the tax system is far too complicated. This new report provides a rigorous approach to discovering and documenting the size of the state and how government spending and regulation affect the wider economy. But, most importantly, the authors have undertaken an original statistical analysis of the economic costs of high taxes and, which of those are the most pernicious. It provides a manifesto for how to create a lasting legacy of an economy with lower and simpler taxes that will boost prosperity for all."

TAGS: inheritance tax | tax | business | value added tax (VAT) | insurance | corporation tax | United Kingdom | excise duty | regulation

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