It was only a matter of time before the simple-minded advocates of flat taxes reached British shores. Who better than the Adam Smith Institute to spread the word? Their new report, A Flat Tax for the UK - a Practical Reality (PDF), calls for income tax to be simplified into a flat rate tax of 22%. Under the proposal, there would be a tax-free personal allowance of £12,000.
Meanwhile Tim Worstall reports on news that Poland is following the Eastern European trend towards flat taxation systems.
I agree with Tim (and the Conservatives, and it seems, even the Adam Smith Institute) that those receiving the minimum wage should not have to pay tax. But aside from being simpler, I doubt a flat tax would be much improvement to the current UK tax system. When coupled with a 17.5% VAT, the obvious risk is of a highly regressive tax impost.
I go slightly further, I don’t think those on less than about 10k should be paying income tax or NI. There’s even a leftish justification for that in Richard Layard’s numbers on happiness. Up to about $20 k dollars a year happiness increases with rising income. It’s as good a justification as anything else for a moral basis for taxation.
Posted by: Tim Worstall | Monday, March 21, 2005 at 11:47 AM