LOWER TAXES, HIGHER REVENUES

Commnetators are right to suggest that we may be

approaching a tipping-point, where raising taxes
becomes counter productive.

Evidence suggests that there is an inverse
relationship between the tax rate and the amount
of revenue collected. The higher the tax rate the
lower the Government's revenue In making the
case for lower taxes, we need only look to the
Russian Federation, following the demise of the
Soviet Union in

1991. In order to invigorate a sclerotic economy,
the introduction of a flat tax resulted in a 25% rise
in revenue from personal income tax, followed by
a similar increase in the second year and 15% in
year three.

The Laffer curve predicts such an outcome,
attributing the primary reason for increased
revenues to higher levels of economic growth,
stemming from the introduction of the flat tax. If
the UK Government were to adopt this model it

would also benefit the exchequer by increasing
declared income and reducing bureaucracy by
simplifying the way tax is calculated and collected.

 A flat tax would have a transformative effect on
employers and employees alike. It would
incentivise, generate growth, boost consumer
confidence and raise living standards.