Description
The British tax system has undergone a decade of change under the Conservative Government: VAT doubled, income tax rates cut, National Insurance contributions increased, domestic rates replaced by the poll tax and the teeth drawn from capital taxation. The tax burdern has been increased, and redistributed from the well off to people on and below average income. A future Labour Government will wish to introduce equally radical changes to reverse these trends. This report provides a coherent set of proposals to do that, based on clear analysis of the shortcomings of the present taxes. Produced by leading tax experts on the Left, it shows how Labour's general aims set out in the Policy Review can be implemented in government.
The report proposes reforms to personal direct taxation in order to restore and strengthen its progressivity. A series of graduated income tax rates is suggested, rising from 0 per cent to 50 per cent in several steps. Combined with changes to National Insurance contributions, the effect would be to cut the tax paid by the great majority of taxpayers, while redistributing the burden more fairly. Other measures include:
- a truly independent tax system for husband and wife
- a social security tax on investment income above certain limits
- abolishing tax breaks such as the Business Expansion Scheme and tax relief on private medical insurance in order to reduce tax rates
- a tougher taxation of capital transfers.
On local taxation, the report suggests long-term replacement of the poll tax with a regionally-based income tax and the restoration of rates based on capital values. Recognising that this cannot be implemented quickly, the report proposes to ameliorate the effects of the poll tax by restoring 100 per cent rebates for the lowest income groups.
The report, the first major enquiry into the British tax system since the Meade Committee in the 1970s, marks a major contribution to public debate on taxation. Above all, it dispels the myth of Conservative tax cuts and demonstrates the existence of feasible and attractive alternatives for Labour. ISBN:0716335050
