We will deliver a massive simplification of the tax system by introducing flat taxes and abolishing many smaller taxes.
|The Peoples Party must ABOLISH the following taxes:|
|Income based taxes on those under 30|
|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|
|Employers National Insurance Contributions|
|Business Rates for small businesses|
|Car Tax – Vehicle Excise Duty|
|Insurance Tax and Air Passenger Duty|
|Other miscellaneous small taxes|
|Import duties and limits|
|Quasi taxes and charges such as the television licence fee|
The tax system must be straightforward and transparent. People should be aware of what they are paying to assess better the value of the services they receive. If they want greater provision, then they should expect to pay higher tax, and vice versa.
Basic rate Income Tax and National Insurance Contributions must be replaced with an Education Tax and Health Tax. Initially these should be set at 22% and 10% of income respectively, making a total flat tax rate of 32%, the same as the current combined rates of basic rate Income Tax and Employees National Insurance Contributions. The level of the flat taxes will be determined by the funding needs of education and health policies.
Using 2022-23 figures, tax would only be due on income above £12,600. The next £5,000 of income would be disregarded for people with one child, with a further deduction of £2,000 for each subsequent child. A family with two children would not pay any income based tax until earnings passed £19,600, rising to £32,200 if both parents worked.
All adults over 30 would be required to 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 before receiving their winnings.
Removing allowances and broadening the tax base will reduce the scope for tax evasion and avoidance. With the exemption of the child disregard and interest on savings, all income would be subject to tax. To help cut the tax burden on most people, we should also consider a “rich” or “wealth” tax on those with assets of over £10m.
Simplification will make for easier compliance and enforcement, which will cut the tax losses from the “black economy.” Those subject to an Inland Revenue investigation would be entitled to free accountancy aid. The tax code, currently ten million words should be cut to no more than 1,000; approximately 4 pages of A4. The tax year should be a calendar year, starting on 1st January, not 6th April.
We must also simplify the tax system by abolishing smaller taxes that do not bring in significant revenue but require much bureaucracy and administration. Duties on beer, wine and spirits are outdated and should be abolished. The price of a pint of beer would fall by about 70p and wine £2.50 a bottle.
We must cut the burden of taxation from over 35% of GDP to less than 30%. This level is widely accepted as being optimum to finance the delivery of good government and to secure sustained economic growth.
Lower taxes will not only give a better deal from government, but in allowing people to keep more of their own money, increase disposable incomes.