Time to axe tax

DEMANDS for a complete review of tax law deserve our support (Letters, 15 May).

All chancellors pay lip-service to tax simplification and rationalisation. All make tax law more complicated, often for “fairness”, but invariably ignoring the law of unintended consequences and benefiting only the army of bureaucrats in public and private sectors – administering, maximising and minimising tax revenues – in a socially unproductive reshuffling of income and wealth.

Ludicrously, income tax and national insurance contributions still have different rules and thresholds. The marginal rate on incomes from £100,000-£120,000 a year is 62 per cent, and even from £50,000-£60,000 including child-benefit withdrawal (rising to 73 per cent for those with four children) – on just the kind of small entrepreneurs we need to boost the economy and real employment. The myriad of income tax allowances should be greatly reduced.

Stamp duty is not progressive, resulting in massive increases payable for small house price increases. Council tax bands are more than 23 years old.

VAT exemption rules are absurd (viz the “pasty” tax). Almost all exemptions and zero-rating should be abolished. We would waste far less food if it was all VAT-able. Most children have more clothes than needed; small adults can often fit them; there is no logic in their exclusion from VAT. Employers’ NIC, business rates and corporation tax should also be abolished. Firms do not have votes, so what happened to “no taxation without representation”? If we believe in a mature “one person one vote” democracy, we each should accept full responsibility with our wallets for the public expenditure we vote for, without a corporate milch-cow . In a five-year transition, the savings by employers would be paid as increased wages, pensions and social welfare benefits, on nationally-agreed annual scales. 

Result? Greatly reduced VAT and income tax rates, and probably 100,000 bureaucrats released into productive employment.

John Birkett

Horseleys Park

St Andrews, Fife