We have ‘cliff edges’ which hold back growth, and unnecessary complexity which deters investment. The tax system is also undermined by a widespread belief that some people get away without paying tax.
Cliff Edges
Income tax and VAT are plagued by cliff edges. Taxpayers at relatively modest levels of income can face a high marginal rate of tax (see Chart 1).
The second cliff edge is VAT (see Chart 2). The cause is the VAT registration threshold of £85,000 – the highest in the world.
Source: www.politicshome.com
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