TaxPersonal TaxIFS: UK tax system ‘punishes success’

IFS: UK tax system ‘punishes success’

IFS warns the government must find more sources of tax or risk economic instability

IFS: UK tax system ‘punishes success’

RELYING ON the UK’s highest earners to shoulder the bulk of the UK’s tax burden is not a sustainable basis for the country’s long-term economic future, the Institute for Fiscal Studies has claimed.

Continuing such a trend could see both the ability and willingness of the rich to pay the highest proportion of taxes risked, the think tank warned.

At present, the 300,000 highest earners – all above £150,000 per annum – pay nearly 30% of all income tax – and 7.5% of all tax revenue.

The threat to public finances stems from the possibility these high earners could opt to emigrate to lower-tax jurisdictions, find tax loopholes or simply see their fortunes decline, the IFS said.

It added the government has become incredibly sensitive to the behaviour of what is a very small group of taxpayers, and should instead look to find new sources, rather than the alternative of borrowing.

“The government might be concerned if the Exchequer becomes increasingly reliant on one particular revenue source, as it increases the risk that a shock to one revenue source would have serious implications for total revenues,” the IFS said in its annual Green Budget.

Steve Baker, the Conservative MP for Wycombe, told the Telegraph: “It is a cruel fairy tale to believe that 99 per cent of the public can live on the earnings of one per cent. A policy of soak the rich is not a sensible one; the system cannot sustain itself.”

Related Articles

Government should rethink “digitally distracted” HMRC, ATT urges

Administration Government should rethink “digitally distracted” HMRC, ATT urges

1y Fraser Simpson, Reporter
UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

Corporate Tax UK has ‘vital role to play’ in beating tax evasion, declares Panama Papers whistleblower

1y Fraser Simpson, Reporter
Parliament to debate digital tax accounts this month

Administration Parliament to debate digital tax accounts this month

2y Calum Fuller, Reporter
Jamie Oliver adds voice to growing calls for sugar tax

Corporate Tax Jamie Oliver adds voice to growing calls for sugar tax

2y Calum Fuller, Reporter
Cut Scots' income tax and target sugar, committee told

Personal Tax Cut Scots' income tax and target sugar, committee told

2y Calum Fuller, Reporter
Knight's suitability as OTS chief questioned by MPs

Corporate Tax Knight's suitability as OTS chief questioned by MPs

2y Fraser Simpson, Reporter
Macpherson to leave Treasury after 10 years in Permanent Secretary role

Corporate Tax Macpherson to leave Treasury after 10 years in Permanent Secretary role

2y Chris Warmoll, Writer
Holyrood to rule out income tax increases despite new powers

Corporate Tax Holyrood to rule out income tax increases despite new powers

2y Calum Fuller, Reporter