IFS questions UK tax system

IFS questions UK tax system
The current UK tax system is punishing top earners, claims a key economic think tank.

Opting to rely on revenue from a relatively small number of tax payers could be damaging to the long-term economic future of the UK, explained the Institute for Fiscal Studies (IFS).

Government figures show that 300,000 people earning more than £150,000 a year are responsible for 30 per cent of all income tax and 7.5 per cent of total tax revenue.

The IFS believe this could lead to instability in the country’s finances, with the possibility that higher earners could look at ways to reduce their tax bill. It also means a change in circumstances, such as job loss, could have a significant impact on government income,

Rowena Crawford, a senior economist at the IFS, added: “The world is more mobile than it used to be.

“You become sensitive to the payment behaviour of those individuals. If you push them too far and they emigrate then you lose revenue.”

The think tank also raised concerns about government plans to increase the personal allowance to £10,000. Instead, the IFS believes it would be more cost-effective to look at increasing National Insurance contribution allowances.

Created in 1969, the IFS is the country’s leading independent microeconomic research institute.

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