A coalition of thinktanks from across the political spectrum has urged Chancellor Rachel Reeves to use this month's budget to overhaul the UK's 'broken' tax system. The group, which includes the rightwing Adam Smith Institute and the leftwing New Economics Foundation, published proposals for 'pro-growth reforms' to 'tax all income from work equally'.
The coalition called for abolishing stamp duty and merging income tax and national insurance, arguing that the current system contains 'many arbitrary and nonsensical rules' that penalise work and discourage investment. 'The UK's tax code is riddled with inconsistencies and distortions that discourage investment, penalise work and hold back productivity,' said Arun Advani, director of CenTax, which coordinated the report.
Separately, the National Institute of Economic and Social Research (NIESR) urged Reeves to make 'brave choices' and seek £50bn in spending cuts and tax rises to triple her fiscal buffer. The NIESR warned that the trajectory of UK public debt is becoming unsustainable and suggested increasing the basic rate of income tax to address it.
The coalition also proposed reforming council tax by basing rates on latest house values, and lowering the headline rate of VAT while applying it to more types of spending. Chancellor Reeves faces a spending gap due to expected downward revisions to productivity growth by the Office for Budget Responsibility, as well as the £7bn cost of U-turns on winter fuel allowance and welfare reforms.
