According to Monty Jivraj, fundamental tax reform is necessary to guarantee that taxes are growth-friendly, simple to understand, and manageable by the taxman. This will aid in the nation’s recovery from the coronavirus crisis.
There is an “increasing realisation” that after the coronavirus, economic life will not be the same, and the tax system will “play an essential role” in recovery and the shift to the “new normal.”
According to current projections, public borrowing will reach £273 billion in 2020–21, or 14% of GDP. This would be the worst annual deficit since the Second World War, according to the OBR.
There is a large catalogue of possibilities to consider. There should be a priority placed on six areas to ensure the implementation of specified, simple, fair taxes that are growth-supporting, administratively straightforward, and manageable.
The six categories include rethinking the taxation of wealth and capital as well as reforming National Insurance contributions and workplace income taxation.
Has the goal of inheritance tax been fulfilled? Do you think the UK should enact a wealth tax? Should council tax reform be enacted?
Reducing inequality, determining a “tax base” to determine who should pay how much tax and on what, a path to carbon-based taxation, and what social “goods” should be fostered through tax relief were other major topics on the agenda.
Current tax revisions don’t meet the “criteria” of being straightforward and growth-friendly.
The government was ordered to “fully reconsider” its contentious amendments to IR35, or the off-payroll working restrictions, in a critical report released by a Lords select committee on Monday. The research found the regulations to be very onerous for companies and unjust to contractors.
The history of devolved tax reform in the UK is not very noteworthy. Frequently, it’s motivated by immediate concerns and short-term policy goals, with quickly crafted legislation, hurried through parliaments without enough debate.
The research throws a focus on other significant tax reforms that have been pushed through with insufficient regard to how they would operate in practice. These changes have been criticised for lacking certainty, simplicity, and justice in the implementation of new tax regulations.
IR35, pensions liberalisation, inheritance tax gifts with reservation, the diverted profits tax, the loan charge, and the digital services tax will each warrant a shameful mention in the archives of British tax history. These are only some of the examples that may be found in UK tax legislation.
This month, the think tank The Institute for Government joined the chorus of those calling for tax reform and proposed that the government create a “tax commission” to foster public discourse on the issues with the existing system.
Such improvements ought to be put into effect by the Office of Tax Simplification, which is required by law to offer the government impartial recommendations on how to simplify the tax system.
The OTS has previously advocated for inheritance tax simplification and examined employee benefits and tax breaks.
Since the UK was placed under lockdown on March 23, the populace has largely responded favourably to governmental limitations, demonstrating what the nation is capable of achieving when necessary.
Now is the time to decide how to support the NHS as well as the future structure of the tax system since both individuals and corporations have demonstrated goodwill.
