As a starting point my vision for a tax system would be a 20% rate for all taxes .. income tax, capital gains tax, inheritance tax, corporation tax, VAT etc etc.
Taxpayers and companies would have one annual tax annual allowance of say 20,000 which would go towards all forms of income, capital gains, gifts etc.
Do away with the paraphernalia of reliefs that infest and complicate the tax system (like gifts 7 years before death, entrpreneurs relief, rent a room, pension contributions, married couples allowance, EIS, SEIS, etc ), get rid of ISA's, rationalise in work benefits.
I would love to have the time and resources to work through the numbers to make sure enough was raised for essential services but to remove all the unnecessary complications and to remove the desire or need for tax payers to try and plan your way around different taxes
Replies (10)
Please login or register to join the discussion.
I'd love to continue to have a job, and as "The tax guy" here, complication ensures my employment continues.
Leaving aside for a moment that needing to fund essential services is rather a key point of tax plans. A few initial thoughts.
How does the VAT part work? 20% of turnover for VAT each quarter and then 20% corporation tax on profits?
Doesn't solve the problem of what is taxable profits/gains anyway.
No PPR exemption? Someone simply moving house suddenly has to pay a big chunk of tax for doing so? I know the housing market is over-blown at the moment but that is not the answer.
International position? Just because there are no different UK taxes to plan around won't stop tax planning.
No exempt gifts for IHT. So someone giving a cash wedding gift (currently exempt from IHT) will be taxable? For that matter, won't all gifts be taxable?
There is simplifying the tax system, and there is living in cloud cuckoo land.
At last! A tax policy we can all agree on.I think I prefer the idea of free owls for all.
Does my mum with her £11000 pension get a rebate of 20% of £9000 for what she spends on VAT ?
I would imagine there'll be a lot of Cockneys complaining about the huge increase in IHT on Lahndon properties they inherit.
Not such a soundidea, soundadvice. It won't be ten minutes before you're coming up with exceptions and reliefs.
The problem with a ‘fair’ tax system is that it would create an unbalanced economy.
After implementing the 20% for all, you’d quickly need to make changes to allow tax breaks for people working, but living in poverty. You’d need to get that money from somewhere, so you’d raid the rich. The car industry grinds to a halt, so you give them a tax break. Oh, you need to fund it from somewhere? Raid small business.
Very quickly, you end up back to where we are, with a complex tax system, for a complex economic world.
Agreed.. and anyway, what is 'fair'? The aim to be 'equitable' seems more sensible, but not simple.
The problem is that you have already had to concede on several points, proving that your idea is a simplification too far.Clearly not much traction for this idea then.
Pity really because it would be good to be able to simplify the ridiculous labyrinth of different rates, reliefs and allowances that exist at the moment.
The tax system does need rationalising, but some rules (such as PPR) serve a useful purpose and should be retained (in some form). A root and branch review would be good, but simply cutting down to the stump is unworkable.