Article by Rob Durrant-Walker, Tax Manager with UHY Calvert Smith, York. This article appeared in the November 2005 issue of Tax Adviser. The average length of a Finance Act between 2000 and 2005 was apparently 481 pages, according to the ICAEW. What if the whole statute book could be written 'on the back of an envelope'?
This article considers in general terms the theory of 'flat tax', those countries that already use it, and implications for the profession.
It couldn't happen here? Think again. The concept of flat tax is in vogue internationally and is becoming less of an unthinkable idea here. It would represent revolutionary change in the UK tax system. Incoming German Chancellor, Angela Merkel, has proposed to bring it in from 2009 if she can; and Shadow Chancellor, George Osborne, is a proponent with the Conservatives setting up a commission to review it. The Daily Telegraph has been pushing it in its editorials as an idea whose time has come. As professionals we at this time seem to be something akin to 'the enemy within'that the miners were in 1985.
Many east European countries already have a version of flat tax - Estonia and Lithuania in 1994, Latvia in 1995, Russia in 2001, Serbia, Ukraine and Slovakia in 2003, Georgia in 2004 and Romania in 2005. Guernsey, Jersey and Hong Kong, to name a few others, have had it for a long time. Poland, the Czech Republic, Hungary and Greece may follow.
Technical Department
020 7235 9381
November 2005 by Rob Durrant-Walker
