LONDON – New research has shown that the UK tax system is extremely inefficient, with several inexplicable caveats.
On May 13th the UK based think-tank the Institute of Fiscal Studies issued a new statement claiming that the national tax system is excessively complex and inefficient, costing the economy approximately GBP 4 per GBP 10 earned.
In its statement the IFS conceded that the government has been consistent in its approach towards maintaining the rate of tax on corporate incomes at 20 percent, and towards increasing the level of personal tax allowances for individuals.
However, despite the positive steps, the government it was also noted that the tax allowance and consistent tax rate are overshadowed by the fact that National Insurance Contributions have been raised every year, effectively counterbalancing any tax cuts.
Further, it was noted that the thresholds for income taxes have not been pegged to inflation, drawing more people into higher tax brackets every year.
The experts of the IFS noted several examples of extreme inefficiency, whereby a GBP 1 dollar increase in the sale price of a property may trigger an extra GBP 40 000 to the tax bill, or whereby individuals earning between GBP 100 000 and GBP 120 001 will face an effective tax rate of 60 percent.