Adam Smith Institute

Aiming for tax simplification

The average British worker spends five months of the year working solely in order to pay the demands of the tax authorities. Our annual Tax Freedom Day calculation shows just how big the tax burden has become.

But evidence from Britain and other countries shows that high tax rates are counter-productive: people strive to avoid or evade them, or move their capital or themselves overseas, or just give up work because the reward is not worth the effort. The tax system has also become hugely complicated.

For these reasons, many countries are benefiting from the flat tax – where taxes are set at the same low rate for everyone, making them easy to understand and difficult to avoid, and eliminating the need for complex exemptions.

But many taxes should simply go: capital taxes such as those on savings and inheritance are a drag on the economy and contrary to human nature. Local services should be paid for through local charges, and a local sales tax, rather than through the complicated system of government transfers of today.

Top three economy reports:

• A Flat Tax for the UK (PDF)
• Simpler Taxes (PDF)
• It Pays to Cut Taxes (PDF)