The UK is a high taxation area, the main rates of income tax whilst starting at 0% quickly rise to 45%. In this article I advocate moving the country to a more competitive and sustainable rate closer to 20%.
£0 - £12,500 0%
£12,501 - £50,000 20%
£50,001 - £125,000 40%
£125,001 and above 45%
Benefit of lower taxes
First off the higher rates impact on the very people in the economy who generate the wealth, being the entrepreneurs, professional and business owners.
The UK saving rate is around 4% so 96% of income is spent, by reducing the rate of tax, increased incomes will be spent in the wider economy which in turn will create more jobs and raise income for Government via VAT and more employment paying the basic rate.
If the highest tax rate % is 15% (or ideally lower) then there is far less reason to seek to avoid tax using offshore investments.
Greater incentives to work
Less tax makes it more attractive to work.
My proposals would look like this
£0 -£12,500 0%
£12,501 and upwards 15%
That way all citizens pay the same basic 20% rate on all their income after a basic allowance.
This change should be phased in over a number of years, though the upper rate needs to be abolished at the earliest opportunity.
Year 1 19% basic rate and 35% higher rate
Year 2 18% basic rate and 30% higher rate
Year 3 17% basic rate and 25% higher rate
Year 4 16% basic rate and 20% higher rate
Year 5 15% basic rate
This would reduce the inflationary pressures cause by too rapid a change in the regime.
How to bridge the funding cap which this transition will bring
Increase VAT from the current level of 20% to around 25%
Privatise the highways
Further reduce other budget spending
This along with other initiatives will make the UK, richer, more dynamic and attractive as a place to work and invest.