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Why tax is still too taxing

[16 July 2015] The UK’s Inland Revenue service, also known as HMRC, likes to tell everyone that ‘tax doesn’t have to be taxing’. Its latest advertising campaign has also shown people in yoga poses who, having filed their tax returns on time, have supposedly found inner peace.

But just how much enlightenment is there among the 64,000 HMRC staff and their political bosses? The UK tax code now stands at a door-stopping 21,000 pages, and its 10 million words make it one of the world’s longest. Hong Kong manages to survive and prosper with a mere 300 pages. In 2010 the chancellor, George Osborne, called it ‘one of the most complex and opaque tax codes’ on the planet.

People have sat on so many learned committees proposing tax-code simplification that their futile reports must be almost as weighty as the code itself. In The Times on 6 July, the columnist Matt Ridley said: ‘In 2012, the 2020 Tax Commission… recommended abolishing eight taxes and folding all income tax, national insurance, capital gains tax, transaction taxes and corporation tax into a single income tax with a 30 per cent maximum rate and a £10,000 exemption.’ But its report has been ignored.

There’s also something called the Office of Tax Simplification, whose six employees sucking on the public teat must wonder if anything they suggest will ever be adopted. They want income tax and national insurance to be merged, but it never happens. Meanwhile, the population waste time dealing with two taxes when they could deal with only one. And all because they have to be fooled that national insurance isn’t really a tax.

Who benefits from tax complexity? Not low earners, that’s for sure. It’s the loophole specialists – and the wealthiest who can afford to employ them – who gain the most. [cont]

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