Fully reviewing and replacing the tax regime

MattMattMattUK

Will the incoming government commit to a full review of the tax system, followed by replacement or high levels of reform?

The current tax system is overly complicated, it is the most complicated in the world, governed by more legislation and guidance than in any other country. This not only makes it inefficient but also means that there are hundreds, if not thousands of loopholes as well as meaning tax advisors are often needed for tax planning where as in other countries that submission would be a simple online form.

The income tax regime should be reviewed, we have the largest tax free allowance in the EU, the bottom two thirds of earners have the lowest effective rate of income taxation in the EU, where as the top third have the fifth highest. If we reduced the tax free allowance to £2,000 (around the EU average), and combined Income Tax and National Insurance and then amended the rates to 35% up to £60k, 45% up to £120k and then 49% above that it would generate billions, also bringing us into line with Scandinavian countries. Finally married/civil partnered couples should be able to joint file for tax purposes, sharing allowances and combined thresholds.

Corporation Tax should be reformed to make it similar to the German and Scandinavian models where there are large allowances to encourage reinvestment into the business, but higher rates on businesses that purely extract profit. This combined with a withholding tax on dividend, meaning that base rate income tax is always due unless the shareholder is a charity or pension fund.

Economically damaging taxes such as SDLT and morally unfair taxes such as Inheritance Tax should be abolished.

Council Tax should be replaced with in individual community payment and local income tax, making sure every adult contributes to the local community, but that those with the greatest incomes also contribute more.

Benefits should be fully reformed making them both taxable and and contribution based, but greatly increased for the disabled who are woefully under provided for. Housing benefits should be levelled nationally so that taxpayers are not subsiding people to live in incredibly expensive areas, far more than the average taxpayer can afford, this would also have the benefit of not contributing to the overcooking of the housing market in London and the South East.