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One Single Income Tax

Comment 5th July 2010

The UK tax system is incredibly complex.

This complexity has two major draw backs – firstly it is very costly to collect administer. Secondly the complex system means mistakes are more likely and tax avoidance is possible.

Why does this matter?

Although it is argued that multiple taxes make the system fairer, for example tax on fuel is fairer because everyone does not drive a car. VAT is only on luxury items etc. However this is not the case, fuel is needed to bring food to the country, so ultimately everyone pays. Water is not a luxury but the service to have it brought to us is.

The complex nature of the tax system makes it easier to avoid for those with the means to manipulate it. Generally this means the rich, who can afford lawyers, accounts etc. can avoid tax. Take the example of Jaffa cakes… they fought a lawsuit in 1991 to argue that they are cakes (not subject to VAT) and not chocolate covered biscuits, which you would pay VAT on. Although slightly amusing the cost of the case and subsequent lost VAT tax is the price we now pay. A simple tax system would avoid such unnecessary waste.

Another problem with the system is that its complexity means mistakes are more likely. Why is it that the government have a clause that argues it is 'your (the individual) responsibility to make sure tax we pay is correct, or in other words "if you get it wrong it's your fault and if we get it wrong it's your fault for not checking and telling us". A company wouldn't get away with this why should the Government? If it was simpler the government might not have to rely on this clause, as it would b easy to work out.

It is estimated that income tax would have to be raised by 7% to abolish other taxes. Although a huge rise the subsequent saving in bureaucracy and the reduction in prices would make the reality if this far less painful than we might first think.

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