Partner Article

IoD supports government proposals for tax reforms

The Institute of Directors (IoD) has expressed it’s support for simplification of the current taxation system, but urges the government to be cautious when doing so.

In response to the Government’s paper, ‘Integrating the operation of income tax and National Insurance contributions’, Richard Baron, head of taxation believes that the change would bring radical simplification and transparency about tax levels.

He commented: “We welcome any move by the Government towards a simpler tax system, and this paper represents a sensible next step.

“However, it still holds back from serious consideration of a proper merger of income tax and National insurance.”

According to the IoD, the current 20% basic tax rate is incorrect, as when employee and employer contributions are also considered, the rate actually rises to 40%. Nonetheless, if the tax system were to be merged, this could result in some people losing out.

Mr Baron added: “We are concerned that the Government is already narrowing the discussion to highly specific issues such as earnings periods and modest differences between the bases for income tax and for national insurance.

“At this stage there is no reason for the Government to discount any options – there is a full range to be considered between minor tweaking and complete merger.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .