TaxPayers’ Alliance and Institute of Directors publish comprehensive plan for growth

Dated: 21 May 2012

  • Culmination of 18 months’ evidence gathering by the 2020 Tax Commission and start of a major new campaign
  • Presents a comprehensive plan for growth, vital to address problems within the current tax system and the double dip recession
  • Calls for taxes to be simplified and eight taxes to be scrapped entirely
  • Calls for a single proportionate income tax at 30 per cent
  • Detailed plan for radical but realistic reforms that could be implemented by 2020

Click here for the full report

The 2020 Tax Commission is a joint project between the TaxPayers’ Alliance (TPA), Britain’s independent grassroots campaign for lower taxes, and the Institute of Directors (IoD), Europe’s largest membership organisation for business leaders. The Commission’s final report calls for radical but realistic reform of our tax system, that is vital to kick start growth. In a 400 page report, published today, the Commission calls for the abolition of eight taxes and the creation of just one – a Single Income Tax. This is the second TPA and IoD collaboration following the agenda-setting How to save £50 billion in 2009. Several recommendations from that report have been implemented by the Government since the 2010 General Election.

The 2020 Tax Commission proposals would result in substantial tax cuts for all households and provide a significant boost to economic growth. For example, a two earner household, with an income of around £28,000 would receive a tax cut of around £3,400.

According to a full analysis of the proposals by the Centre for Economic and Business Research (Cebr), a leading economics consultancy, the changes would increase GDP by 8.4 per cent over 15 years - equivalent to an additional £5,000 per family in 2012-13.

The recommendations of the 2020 Tax Commission are:

  • Taxes should be cut to 33 per cent of national income
  • Marginal tax rates should not exceed 30 per cent, and the personal allowance should rise to £10,000
  • Taxes on capital and labour income disguised as business taxes should be abolished and replaced with a tax on distributed income
  • Transaction, wealth and inheritance taxes should be abolished
  • Other consumption taxes need to stay for now, but transport taxes should be cut
  • Local authorities should raise half of their spending power from local taxes

Click here for the full report

Other highlights from the 2020 Tax Commission’s final report:

  • Income Tax and Employees’ and Employers’ National Insurance would be merged into a single tax on labour income, with rates levelled down so that certain groups don’t face higher bills
  • Corporation Tax and Capital Gains Tax should be replaced with a single tax on capital income – dividends, interest and rent – at a rate of 30 per cent
  • Stamp Duty and Inheritance Tax would be abolished
  • Fuel Duty cut of 5p a litre and the abolition of Air Passenger Duty
  • To ensure fair treatment of families with children or a single earner, the proposals would allow part of the Personal Allowance to be transferred within families (a Family Transferable Allowance)
  • Cutting the ratio of spending and taxation to 33 per cent of national income would require spending to continue to fall until 2020 at roughly the same pace that it is currently expected to fall until 2015-16


Click here for the full report

Allister Heath, Chairman of the 2020 Tax Commission:
“It is time for Britain to make a vital choice between tweaking the status quo and letting our economy continue to be crippled by complex and punitive taxes, and drastically changing course with a radical but realistic plan for a tax system fit for the 21st Century. The 2020 Tax Commission has set out that plan and would ensure that income is taxed once at a single, much more reasonable, rate. It could create the conditions to establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here. Politicians who are serious about Britain’s future need to take it up.”

Graeme Leach, Commissioner and Director of Policy at the Institute of Directors:
“This is a radical and practical plan for reforming our tax system to make it fairer and better for the economy. Fiddling with the system causes more complexity and has little benefit to growth – this proposal would put a rocket under economic confidence. This is a real opportunity to make life easier for people, get more money on the High Street and give Britain a tax system which is right in principle and works in practice. We need radical action to kickstart the economy, and this is a comprehensive way to do that in one go.”

Matthew Elliott, Commissioner and Chief Executive of the TaxPayers’ Alliance:
“Right now the Government’s first priority has to be strong economic growth to create jobs and ease the pressure on families struggling to make ends meet. Tax reform is essential to make that possible. At the same time, the tax system has to be fair, and seen to be fair. Our current complicated tax code where income is too often either taxed repeatedly or not at all doesn’t pass that test. The Single Income Tax is a serious plan for a tax system that can restore Britain’s economic fortunes and leave more of their money in taxpayers’ pockets.”

 

 

  • Organised by the TaxPayers’ Alliance (TPA) and the Institute of Directors (IoD), the 2020 Tax Commission has spent 18 months assessing the economic and moral case for radical tax reform. For more details see here: www.taxpayersalliance.com/2020-tax-commission
  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with around 38,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies. Find out more at www.iod.com   
  • Established in 2004 and now with 65,000 supporters, the TaxPayers’ Alliance (TPA) is Britain’s independent, grassroots campaign for lower taxes and better government. Find out more about the TaxPayers’ Alliance at www.taxpayersalliance.com
  • The full 400 page report can be accessed in PDF format here: http://www.iod.com/MainWebSite/Resources/Document/tax_commission_report_2012.pdf

The contributors to the 2020 Tax Commission are:
Chairman: Allister Heath
Commissioners: Andrew Allum, Richard Baron, Kevin Bell, Rosemary Brown,
Mike Denham, Martin Durkin, Matthew Elliott, Anthony J. Evans, David Frost,
Graham Hampson Silk, Graeme Leach, Andrew Lilico, Mark Littlewood,
Douglas McWilliams, Fraser Nelson, Stephan Shakespeare
Chief Economist: David B. Smith
Principal Editor: Matthew Sinclair
Lead researchers: Rory Meakin, John O’Connell
Other contributors: Eamonn Butler, Scott Corfe, Arvid Malm, Tom Packer,
Matt Ridley, Bilal Sambur, Nima Sanandaji, Tino Sanandaji, Corin Taylor,
Tom Welsh
Further details about the commissioners available here: www.2020tax.org/commissioners/

 

ENDS

Contact Points

Edwin Morgan
Media Relations Manager
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
Tel: +44 (0)20 7451 3392
Mob: +44 (0)7814 386 243
Email: edwin.morgan@iod.com
Website: www.iod.com/policy

Notes to editors

  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 38,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media. Follow us on Twitter to get the IoD’s reaction on business and public policy issues.
  • The IoD offers a wide range of business services which include business centre facilities, with ten UK centres (three in London, one each in Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes.
  • For further information, visit our website: www.iod.com