TAX NEWS - June 2010

UK Tax: Call for root and branch tax reform in Budget

Gore Brown Investment Management has called for root and branch change to the structure of taxation in the emergency Budget tomorrow (22 June).

The investment management firm said the Budget should address four key areas; encouraging and supporting wealth creation, simplifying the tax structure, developing a consistent approach to income, capital gains and enterprises and delivering a tax burden that was fair to all.

Simon James, founding partner of Gore Browne Investment Management said employers' national insurance should be reduced.

He said: "The shift from taxation of income to taxation of spending, which has happened over the last decades should continue.

"Zero-rated VAT categories should be phased out.

"The UK is an international anomaly in this regard.

"High effective marginal rates of tax for the low paid need to be removed, to encourage either joining the workforce or working for greater reward."

Mr James also called for simplification of the tax structure to make compliance easier and reduce the Treasury's administrative burden.

He said: "According to HMRC there are more than 400 tax reliefs, exemptions and allowances.

"Abolishing these distortions would increase government receipts by £1.1 billion, according to the Tax Reform Commission, and allow tax reduction elsewhere."

"The bottom line is that we need to generate more wealth, or a bigger GNP, if we are to increase tax receipts meaningfully.