This week Rishi Sunak stood in a nearly empty House of Commons and unveiled his Budget. He has a peacetime high deficit of 355bn on his hands and needs to find a delicate balance between starting to pay off the deficit and pumping enough money into the economy towards a sustained recovery.
This was not the Budget to push for too drastic reform as there will be some painful moments ahead but perhaps now is the time to look at the structure of our tax system as a whole to see whether it is relevant to the times were are in and the times that are coming.
Tax the wealthy?
Ask any taxpayer what they would do to reduce the deficit and the majority will say the same thing - tax the wealthy. But how and which tax rates do you raise? How do you quantify 'wealth'?
Government tax revenue does not necessarily increase as the tax rate rises. There is a peak tax rate where government revenue is highest and then falls (as indicated by the Laffer Curve.) So should a different type of tax be considered, such as an annual wealth tax?
Register for free to continue reading
It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:
Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.