A commission report has called for radical simplification of the tax system. It says there should be a single 30 per cent rate of income tax; the basic personal allowance should be raised to £10,000; and national insurance, stamp duty and inheritance tax should all be abolished.

The changes are proposed by a commission set up by the TaxPayers’ Alliance (which campaigns against higher taxes) and the Institute of Directors. It says the changes would mean a tax cut of £3,400 for a two-earner household with a yearly income of £28,000.

The commission calculates that moving to a 30p income tax rate would add £49.1 billion to the national deficit in the first year. But after 15 years, it is argued, the move would reduce overall borrowing by £35 billion because of the stimulus to economic growth that the commission expects. The report recommends limiting taxation as a whole to one-third of national income, and limiting spending to the same level, which would mean extending to 2020 the public spending cuts planned by the government.

Source: The Single Income Tax: Final Report of the 2020 Tax Commission, TaxPayers’ Alliance/Institute of Directors

Links: Report | Summary | Press release | BBC report | Guardian report