The Institute for Fiscal Studies has made some radical proposals for an overhaul of the UK tax system.
Their latest Mirrlees Review has concluded that the UK tax system is too complex and inefficient.
By radically overhauling the structure of the tax system, it would be possible to save billions of pounds and create thousands of additional jobs, as part of a long-term programme of reform.
Some of the key proposals include:
-Merging income tax and National Insurance contributions
-Using up-to-date property valuations to calculate council tax payments
-Applying VAT to nearly all spending, including food and financial services intermediation which are currently exempt
-Making all savings interest tax-free, so that the tax system does not discourage saving
-Changing the tax system to provide more incentives for those age 55-70 and parents of school age children to work.
Simplifying the UK tax system could certainly make life easier for millions of people, particularly people in retirement who often have to deal with more complex tax affairs than people in employment.
One missing component from the Mirrlees Review is a detailed costing of the proposals. This is something that the Treasury will now complete, to see which of the recommendations for tax simplification have practical merit.
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