FLATß TAX TO TRANSFORM UK ECONOMY

George Osborne in considering the contents

of his pre-budget report will be only too well

aware that he need nothing less than a

game-changer to address the still rising“

level of public debt. At £1.5 trillion this is

about to exceed the UK's annual GDP.

He will know that it is a proven fact that,

beyond a certain level, higher taxes result

in lower revenues, as the increasing burden

of public spending diminishes the will to

work. The knock-on effect of a flat-tax 

would be to boost incomes and productivity

which are unsustainably low compared

with our global competitors.

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 chancellor will be mindful that 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 a flat-tax. If the UK
Government were to adopt such a model it would

benefit the exchequer by increasing declared
income and reducing the dead-hand of 
bureaucracy by simplifying the way tax is
calculated and collected.

A flat tax would drastically reduce the complexity of
a system that has grown exponentially. With over
17,000 pages Tolley's Tax Guide - the world's
longest - reflects how the need for specialist 
interpretation wastes vast amounts of public money 
by diverting taxes and talent from other vital areas.
Small businesses have to fund an army of
accountants and lawyers, in order to navigate the
system. People with creative ideas are discouraged 
from starting small businesses, the backbone of the
economy.

The chancellor, now with an overall, albeit small, 
majority, has made plain his intention to achieve
a high-growth, low-tax economy. The introduction
of a flat-tax over the medium term is the big idea,
which could release the latent energy of the British
people, driving aspiration and an accelerating GDP.

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