It is time for Britain to make a vital choice. Our economy is stagnant, crippled by excessive public spending, a mismanaged and inefficient public sector, an extraordinarily complex and punitive tax system and a public mood that has become increasingly anti-capitalist.
There are two options. We can either decide to tweak the status quo – try and keep a lid on public spending, reform bits of the public sector and hope for the best. Or we can drastically change course: adopt an entirely new tax system fit for the 21st Century and establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here.
We at the 2020 Tax Commission are firmly in this second camp: the old order is broken and needs radical reform. But we are also realists: our proposals, while far-reaching, are practical. They are within the realms of what a competent, ambitious and principled government could deliver over the next decade.
If one were to set out to design a malfunctional tax and benefits system from scratch you would probably end up with what we have in the UK.
Debate has raged for days over Adrian Beecroft’s proposed employment law reforms, exposing some fundamental problems in our politics. Having been asked to apply his expertise and intelligence to a serious issue, and having volunteered his time, the savaging he has received from some quarters shows why many of our finest minds outside politics are reluctant to get involved in public policy, causing Britain to miss out on new ideas that it sorely needs.
We all know the moral arguments for taxation: it pays for police, roads, hospitals and other vital services. But there is a moral case against taxation too – and a surprisingly strong one.
George Osborne called our tax system a "spaghetti bowl" in 2010. He had a point. We have one of the world’s longest tax codes at over 11,500 pages, and this has real consequences for families and businesses in the UK. If someone sat down to design a tax system from scratch, they wouldn’t come up with the one we have now. It exists because of years of tweaking at the edges to raise more revenue from more and more people, and offering breaks to preferred industries.
Ken Livingstone once wrote that everyone "should pay tax at the same rate on their earnings and all other income". For all our differences, I agree. If you earn the same amount as a shareholder collecting a dividend or as a plumber fixing someone's central heating you should pay the same amount in tax. And apart from the personal allowance, so you can earn enough to cover the basics tax free, if you earn twice as much, you should pay twice as much in tax. Doesn't that sound like a reasonable objective?
It is time for Britain to make a vital choice. Our economy is stagnant, crippled by excessively high public spending, high levels of leverage, a mismanaged and inefficient public sector, an extraordinarily complex and punitive tax system and a public mood that has become increasingly anti-capitalist. There are two options. We can either decide to tweak the status quo – try and keep a lid on public spending, reform bits of the public sector and hope for the best. The problem with such a soft option is that it may stave off an immediate budgetary crisis but it will condemn Britain to permanent relative economic, social and cultural decline.
From "Red" Ken Livingstone, the Labour Party candidate for mayor of London, to Mitt Romney, the presumptive Republican nominee for president of the United States, politicians have been getting in trouble over their taxes. With voters struggling to make ends meet and pay their own tax bills, they have never been more sensitive to the charge that relatively well-off politicians aren't playing by the same rules. Now that the complexity and opacity of the tax system is getting our leaders in trouble themselves, will they finally see the case for serious tax reform?
No one dispenses advice to the eurozone better than David Cameron. His speech yesterday was a fountain of good sense and hard truth. Quite rightly, he said there’s no point in any uncompetitive, debt-addicted country thinking it can just muddle along. Radical, structural reform is needed. He didn’t say which of the many basket-case European economies he had in mind, but one sticks out. It is increasing its debt faster than anywhere else in Europe. It languishes behind even Pakistan and Nicaragua on the global regulation league tables. Its growth prospects have almost evaporated.
How do you solve a problem like the United Kingdom?