In a recent survey by The Chartered Institute of Taxation (CIOT), 89% of taxpayers agree that the rules on tax should be simplified. John Cullinane, CIOT President, says: “The majority of taxpayers in Britain are in the PAYE system. Unlike companies or people who are self-employed they are not in the front line of dealing with the tax system, yet they realise the system is now unwieldy. Of course, many will have experienced the family tax credit system and that gives them some insight into how the system functions.”
In the Chancellor’s Budget yesterday there were moves towards making two areas of tax less complicated: capital allowances for business and income tax rates. Last year John Cullinane asked the Government to review the income tax rates to help make PAYE less complex. It was suggested that the five rates could be replaced with two. The CIOT has also been making the case that complexity is causing uncertainty for business, is counterproductive in dealing with avoidance and is creating pitfalls, uncertainties and compliance costs for the generality of taxpayers.
John Cullinane adds: "Simplification of tax rates and capital allowances announced in the Chancellor's speech show a welcome acknowledgment that the tax system has become too complex as The Chartered Institute of Taxation has long argued. We very much hope that the same trend will be as evident in the small print as it is in the headlines. It will take major reform to reduce the existing complexity but this is a very positive step in that direction. We hope that the trend will continue in future Budgets, whoever the Chancellor is."
The research was carried out on behalf of the CIOT by CommunicateResearch.
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Notes to Editors
In 2006 John Cullinane wrote in the Financial Times: “The real problem is the complexity of the system. Why do we have 5 tax rates – 10%, 20%, 22%, 32½% and 40% - on different classes and levels of income, not to mention NIC rates, means-tested age allowances, and so on? We could probably cater for the underlying policy objectives with two. It is the spurious complexity of the excess which create the Hobson’s choice between the prohibitively expensive option of tax returns for all and the less transparent but equally real costs of operating PAYE and falling hardest on the poor and the enterprising.”
CommunicateResearch interviewed a random sample of 1,000 income tax payers throughout Britain online from 23 February to 1 March 2007. The sample was drawn from a nationally representative sample of British adults for which quotas were set by age, gender, region and social grade.