Introducing a single 30% income tax rate would help to boost the UK’s ailing economy, according to a report by economists and company directors.
The report, published by the 2020 Tax Commission, also calls for the abolition of national insurance and stamp duty, and for the basic personal allowance to be raised to £10,000.
It suggests that these measures would result in a tax cut of £3,400 for a two-earner household with an income of £28,000, and could lead to an 8.4% increase in UK GDP after 15 years.
The Commission, which was established by the TaxPayers’ Alliance and the Institute of Directors (IoD), aims to address the complexity of the UK tax system.
The lobbyists also propose limiting taxation as a whole to a third of national income, and limiting spending to the same level. However, this would mean extending cuts in public expenditure to 2020.
Chairman of the Commission and editor of the City AM newspaper, Allister Heath, said; ‘It is time for Britain to make a vital choice between tweaking the status quo and letting our economy continue to be crippled by complex and punitive taxes, and drastically changing course with a radical but realistic plan for a tax system fit for the 21st century.
‘The 2020 Tax Commission has set out that plan and would ensure that income is taxed once at a single, much more reasonable rate. It could create the conditions to establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here.’
Meanwhile Graeme Leach, director of policy at the IoD, commented; ‘This is a radical and practical plan for reforming our tax system to make it fairer and better for the economy’.
‘Fiddling with the system causes more complexity and has little benefit to growth – this proposal would put a rocket under economic confidence’.