Plea for tax reform

Hunt urged to reform tax system which 'discourages work'

The UK tax system is discouraging people from working, Matthew Lynn in the Telegraph suggests. Looking at why people are “less and less willing to work,” he says: “For many, thanks to our punishing tax system, it simply isn’t worth it.” He notes that this is the biggest tax-raising parliament on record, going on to warn that the “byzantine tax system is especially brutal to those seeking to better themselves." Mr Lynn says that while the headline top rates of tax are 40% and 45%, “the complex interaction of benefits, phased thresholds and student loans means that sometimes the effective marginal rates can be far higher even for people on considerably lower incomes.” He also cites analysis showing that for those in work, marginal tax rates are “at such levels that there is often little incentive to seek a pay rise or work hard for a promotion.” Research from Tax Policy Associates shows that millions of people are paying marginal rates of more than 60%, “and hundreds of thousands paying even more,” with some even above 100%.