The Peoples Party will deliver a massive simplification of the tax system by introducing a flat tax.
The Peoples Party will ABOLISH the following taxes:
- 40% and 45% rates of income tax
- Stamp Duty, Capital Gains Tax and Inheritance Tax
- Duties on Beer, Wine and Spirits
- All taxes on savings
- Corporation Tax
- Employers National Insurance contributions
- Business Rates for small businesses
- Car Tax – Vehicle Excise Duty
- Insurance Tax
- Air Passenger Duty
- Other miscellaneous small taxes
- Import duties and limits
- Quasi taxes such as the Television Licence fee
Basic rate Income Tax and National Insurance contributions will be replaced with an income based Education Tax and Health Tax. These will be set at 22% and 10% respectively, making a total flat tax rate of 32%, the same as the combined rates of basic rate Income Tax and Employees National Insurance contributions.
Tax would only be due on income above £12,500.The next £5,000 of income would be disregarded for people with one child, with a disregard of £2,000 for each subsequent child. A family with two children would not actually pay any income based tax until earnings passed £19,500.
All adults would complete a simple tax return, confirming their income from employment and disclosing any additional income. In return, they will be automatically entered for a national tax lottery, with a weekly top prize of £10m. Prize winners would undergo a full audit of their tax affairs prior to receiving their winnings. Tax year will start on 1st January rather April 6th.
Experience in other countries has shown that the adoption of flat taxes will not only raise revenues but contribute to greater economic prosperity. In particular, it will encourage higher earners to work harder, to invest more and take greater risks, leading to both larger after tax incomes and greater tax contributions.
By removing allowances and broadening the tax base, it will also reduce the scope for tax evasion and avoidance. All income, with the exemption of interest on savings would be subject to tax. Simplification will make for easier enforcement that will cut the revenue losses from the “black economy.” Those subject to an Inland Revenue investigation would be entitled to free Accountancy Aid.
Overall, the impact of the People Party tax policies will be to cut the burden of taxation from the current 40% of GNP to nearer 30%. This level is generally accepted by economists as being the optimum level for delivery of both good government and economic growth.