There is a lot of debate in the papers and elsewhere about Tory Shadow Chancellor George Osborne’s plans to take Britain to a flat rate of income taxation. The “flat cap tax”, so entitled because working-class northerners will have to pay more, would replace our current, progressive tax system, which aims to redistribute wealth from rich to poor.
Recess Monkey happened to be reading a fluff piece for the flat tax in the Sunday Telegraph this week, when he noticed a table that went uncommented upon in the article.
In Estonia, often cited by Osborne as a flat tax success story, the headline income tax rate of 23% plus 0% Corporation Tax and 0% Inheritance Tax must make Tory economists wet with excitement.
However, there’s no mention of the 33% employers National Insurance contributions, marginally higher VAT (which adversely affects the poor) and the fact that we have a tax allowance of £4,895 as opposed to Estonia’s £877, and that we have a starting rate of 10% for the first £2090 of taxable income.
If George Osborne remains Shadow Chancellor until the next election, the Tax section of the Tory manifesto might as well say, “Under a Tory government, all the poor will line up in a row, compliantly bending over so the rich can take it in turns to bugger them senseless”
Plus ça change!
recessmonkey@gmail.com
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I note from the BBC site that (aside from Hong Kong) all the countries using flat rate tax are nations where until relatively recently, tractors were made Government Ministers…
dynamite said this on September 7th, 2005 at 12:56 pm
Ummm, as far as I know nobody is seriously proposing a flat tax without a minimum earning level. I believe the figure often suggested is around £12,000, and so a great many “working class northerners” would in fact be much better off.
However, I fear this idea may not sell well with the country, precisely because of the misunderstanding you demonstrate above.
Alan said this on September 7th, 2005 at 1:08 pm
You’re right of course, but that is only achievable if you have a very high flat tax rate or you cut public services.
And this is what it is all about - the flat tax figures rolled out by the Tories would be made to look good by assuming massive public service cuts…
…but “flat tax” doesn’t upset the public as much as “privatise schools and the NHS” so that’s how the Tories will spin it.
Recess Monkey
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Recess Monkey said this on September 7th, 2005 at 1:14 pm
Unfortunately you misunderstand the point of a flat tax. It is not about lowering taxation but instead about increasing the efficiency with which tax is collected. Which is why in the countries that a flat tax has been introduced the tax burden has gone down but revenues have increased. In other words there will be more money for public services.
The only people it will hurt are accountants and lawyers!
Milton said this on September 8th, 2005 at 11:17 am
I agree that the cost of collecting Income Tax is far to high but it only amounts to about 1% of the amount collected.
So assuming a flat tax didn’t cost anything at all to collect (and I’m sure it’s not that great), the overall reduction couldn’t be more than one percent. Unless of course it were used as a cover for public service cuts…
Recess Monkey
Recess Monkey said this on September 8th, 2005 at 11:55 am
Hasn’t Blair already buggered the working classes?
I mean they are relatively poorer compared to the rich now than they were in 1997.
Guido Fawkes said this on September 10th, 2005 at 11:25 am