Tax Simplification Could Boost GDP by 8.4%
A report from the 2020 Tax Commission calls for taxes to be simplified and for a single income tax rate at 30% to be created in order to boost the economy.
The 2020 Tax Commission is a joint project between the TaxPayers’ Alliance (TPA) and the Institute of Directors (IoD). This new report, which has been welcomed by business groups including the Forum of Private Businesses (FPB), presents a radical plan for growth. It makes a number of recommendations, calling for the following changes to be made by 2020:
- The UK tax system to be simplified with taxes cut to 33% of national income.
- Eight taxes to be scrapped entirely.
- A single proportionate income tax to be created at 30%.
- The personal allowance to rise to £10,000.
- Taxes on capital and labour income “disguised as business taxes” to be abolished and replaced with a tax on distributed income.
- Income Tax and Employees’ and Employers’ National Insurance to be merged.
- Corporation Tax and Capital Gains Tax to be replaced with a single tax on capital income — dividends, interest and rent — at a rate of 30%.
The 2020 Tax Commission says these proposals would result in substantial tax cuts for all households and provide a significant boost to economic growth. According to analysis by the Centre for Economic and Business Research (CEBR), the changes would increase GDP by 8.4 per cent over 15 years.
Allister Heath, chairman of the 2020 Tax Commission said that the new plan could “create the conditions to establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here. Politicians who are serious about Britain’s future need to take it up.”
Graeme Leach, commissioner and director of policy at the IoD said:
“This is a radical and practical plan for reforming our tax system to make it fairer and better for the economy. We need radical action to kick start the economy, and this is a comprehensive way to do that in one go.”
Alex Jackman, senior policy adviser at the Forum Of Private Business welcomed the report.
“As all businesses know only too well, the current tax system in the UK is notoriously complex. It stifles economic growth and therefore affects living standards across the country. Now more than ever the country requires a tax system that is fair, simple, and proportionate for everyone who pays in. Crucially, the finished product must also encourage economic growth and jobs — none of which the current system does with any aplomb.”