Our tax system is just about the most unfair and inefficient imaginable. The Institute for Fiscal Studies has said that the UK has “an opaque jumble of different effective rates [of tax] as a result of tapered allowances and a separate National Insurance system”. The system urgently needs reform but which politician has the stamina and originality of thought to achieve it?
However, some change might be coming. It has been reported that George Osborne is considering merging National Insurance (NI) and income tax into a single tax. Such a move would, it has been suggested, have advantages for a Conservative chancellor. It would further weaken the contributory principle that was the foundation of the welfare state but that has long since been eroded; it would also raise the headline rate of taxation, and thus increase a desire for tax cuts because people would have a clearer sense of how much of their income they were paying to the state.
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