Business Backs Income Tax Rate of 30%
The Institute of Directors has endorsed a radical proposal that recommends replacing part of the U.K. tax system with a single income tax rate of 30 percent and reducing the government’s share of the national economy to one-third, the Financial Times reports.
The TaxPayers’ Alliance, the pressure group that campaigns for lower taxes, and the IoD, published on Monday their report, “The Single Income Tax,” as part of the 2020 Tax Commission, a joint project.
The report’s proposal to limit the government’s share in the economy to a third is far from mainstream. The government at present raises about 38 percent of national income, while its spending share is about 46 percent.
Some suggestions, such as combining income tax and national insurance contributions, and raising the personal allowance to £10,000 ($12,368), are in line with the coalition government’s policy.
Others, such as scrapping stamp duty and having a uniform tax for both labor and capital income, echo the Institute for Fiscal Studies’ Mirrlees report, another blueprint for tax reform.
The IoD, which represents thousands of British company directors, and the TPA argue that government policy needs to go even further.
“Fiddling with the system causes more complexity and has little benefit to growth; this proposal would put a rocket under economic confidence,” said Graeme Leach, IoD director of policy and an author of the report.