There is a widespread expectation that tomorrow will see the Government announcing some tax cuts. One target might be Inheritance Tax (IHT) which is widely disliked by those who tend to vote Conservative even though the actual impact is often very small. Inheritance tax can be easily avoided with some planning and expert advice.
It is undoubtedly the case that overall level of personal taxes are too high and the tax system too complicated. For example we have the ludicrous situation where the Government has just paid out £500 in “Winter Fuel Payments” to me and my wife which is not taxable even though I can easily afford our fuel bills. It’s just a pointless gesture it seems.
Cutting Inheritance Tax won’t make me feel any richer as only my offspring will get the benefit and that many years in the future. The only justification for removing or reducing IHT is to simplify the tax system, particularly as it generates relatively small amounts of revenue. Electorally it won’t help as only the wealthy will benefit when the Conservatives need to appeal to the middle-class to get their vote up.
The TaxPayers Alliance have just published an updated report on how to implement a simpler tax system. The Single Income Tax was originally published in 2012 and is a proposal to fundamentally reform Britain’s tax system, replacing a complex swathe of direct taxes with a single tax on all income charged at a single rate of 30 per cent. See https://www.taxpayersalliance.com/the_single_income_tax_2023_update for more details and it’s well worth reading.
What will we get tomorrow? I predict more polishing of the existing system with a few bones thrown to the rabid socialist dogs. What we need is proper reform by gross simplification of the tax legislation.
Roger Lawson (Twitter https://twitter.com/RogerWLawson )
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