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| Gina Miller Jeremy Hunt, disobey these three golden rules at your own risk


Tax reforms should always be based on three golden rules – they must be simple, fair, and sustainable.

Our tax system is riddled with inefficiencies, complexities and loopholes. Many large corporations use this opaqueness to avoid paying their fair share, while small-business owners are trapped in a web of confusion and burdensome bureaucracy. Meanwhile, workers see their pay packets shrink, shouldering the burden of a system that favours the wealthy and stifles opportunities for the less well-off to have better lives.

I hope the chancellor, Jeremy Hunt, has considered those three golden rules in pulling together his autumn statement this week. But I fear from his comments at the weekend – when he stated that everyone will be paying more tax – that he has not.

By following those rules, my party has an economic policy that would fundamentally change the way we incentivise work. We believe that Hunt should be using his forthcoming statement to roll national insurance into income tax.

National insurance is, in essence, a jobs tax. As an extra tax line item, national insurance helps to obscure the true level and burden of taxation. Any rise will hit family businesses that are already struggling because of the pandemic. Small and medium-sized enterprises (SMEs) will have to make contributions on top of pay, forcing them to lay off workers they can no longer afford to keep. These businesses are the backbone of the UK economy, responsible for 62 per cent of all economic activity. SMEs need to be supported for the good of us all.

The Federation of Small Businesses, for example, found that the on-again, off-again 1.25 per cent rise in national insurance could push 50,000 people out of work. Capital Economics said that close to 130,000 fewer people would be employed after a couple of years.

Consequently, more people end up on benefits, such as universal credit, at the very time when the drain on the country’s coffers (due to successive Tory chancellors) means that public services are suffering from chronic underinvestment. Moreover, national insurance is a regressive tax, disproportionately hitting the poorest in society, which is fundamentally unfair.

This is madness. National insurance was right for its time when it was introduced in 1911 as a necessary measure to protect working people from loss of income when they were sick or unemployed. More than a century later, it is no longer fit for purpose. National insurance was never meant to be – at nearly £150bn – the country’s second-biggest levy, accounting for a fifth of all tax revenue.

Merging national insurance with income tax would also help with our drive for radical simplicity. We also propose limiting the number of tax bands. This would reduce the bureaucratic cost to both the state and individuals, while reducing the possibility of loopholes. This ultimately leads to more tax revenue.

Another progressive, longer-term approach to tax reform is to shift the balance from wages towards unearned income, land and property. This would involve overhauling the hated business-rates system – something that Hunt should surely pursue for personal gain, as such a reform is clearly a vote-winner.

At present, business rates depend on the value of the property a company occupies, which gives online retailers a huge competitive advantage. They might pay some rates on their UK warehouses, but, relative to their turnover, this is a great deal less than is paid by high-street businesses.

Merely cutting business rates is not a long-term solution. Businesses also pay rent to the owner of the land on which the premises sit. The scarcity of this land means that reducing business rates simply results in higher rents.

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Business rates should be assessed according to the value of the land, rather than the rental value of the property. With more frequent revaluations, this would create a more predictable, simpler system. To top it off, though, I believe that the owners, rather than the tenants, of these properties should pay business rates, reducing the administrative burden on our high-street shops and offices.

A third area ripe for simplification is inheritance tax. Currently, the high rate of inheritance tax is offset by countless legal means of mitigation, which allows many of the largest estates to avoid paying the proper amount. Instead, there should be a lower flat rate over and above a set figure, without the numerous reliefs and exemptions.

For example, there could be a flat-rate system of 10 per cent on all lifetime gifts above £30,000, with no nil-rate band available in life, but a single death allowance of £500,000, and 20 per cent on death for estates. While this might seem like a large headline cut, the effective average inheritance-tax rate currently rarely goes above 20 per cent – and even that figure ignores lifetime gifts outside seven years.

These are just three of our economic policies, but they would help to modernise and increase fairness in a complex, confused and outdated tax system, abiding by the three golden rules. We ask Jeremy Hunt to take note.

Gina Miller is leader of the True and Fair Party and a prospective parliamentary candidate for Epsom and Ewell

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