UK Needs Tax Overhaul

November 3, 2016 Taxation in UK

Income tax in the UKLONDON – A total revamp of the UK tax system could see the incomes of the country’s poorest individuals rise by as much as 26 percent.

In a new report the UK-based think tank the Institute for Economic Affairs (IEA) called for a massive overhaul of the national tax system, which, they claim, could improve economic efficiency and boost incomes of both low-income earners and high-income earners.

The IEA claims that the government should entirely drop 20 different taxes, including corporation tax, national insurance, capital gains tax, inheritance tax, council tax, business rates, the television licence fee, the apprenticeship levy, stamp duties, alcohol duties, tobacco duties, vehicle excise duty and air passenger duty.

Further, the personal income tax system should be revamped and replaced with a flat tax at a rate of 15 percent, with a tax-free allowance of 15 percent.

Corporate income tax would be levied at the same rate on all distributed incomes.

The national VAT would be set to a rate of 12.5 percent, however, almost all currently available exemptions are to be dropped.

It is expected that a full implementation of all suggestions will result in the incomes of the top 10 percent of earners rising by an average of 13 percent, while lowest earning taxpayers would see their incomes rise by 26 percent.