Tories propose tax system shake-up

Cocktail shaker

The Conservative Party has promised to bring an end to stealth taxes in a major shake-up of the UK taxation system.

Shadow chancellor George Osborne has outlined a series of reform measures that his party will bring into play should it be elected to power. These include the creation of a department to research tax simplification, as well as longer consultation periods on changes to taxation.

Speaking to the Institute of Chartered Accountants of England and Wales, Osborne said there was an “urgent” need for reform.

A new Office of Tax Simplification, made up of Treasury officials, academics and members of the profession, would examine the existing tax code and make proposals for simplification.

In addition, a Tory government would publish proposed tax changes at least six months before they were introduced.

Osborne said this would mean that there would be no more stealth taxes and it would bring an end to “bad news” being buried in the small print.

He said the current government’s repeated u-turns and series of stealth taxes had collectively undermined the UK's reputation as a stable environment for companies and individuals.

“The reasons for these failures are partly political - Budgets and pre-Budgets have been driven by the shortest of short-term tactical considerations with little apparent regard for the longer term economic consequences. Combined with an obsessive desire to raise taxes by stealth, this has progressively undermined public trust in the tax system,” Osborne added.

Tax burden

Meanwhile, a new report shows increases in taxation have left the majority of people resentful about the current level of the tax burden in the UK.

The report by Friends Provident shows that 81% of people feel they pay more in tax now than they did five years ago, with 73% of them resenting this. Around 43% say stealth taxes are responsible for the increase in their tax burden, while nearly a quarter put it down to changes in income tax brackets.

Council tax increases have hit the majority of people the hardest, followed by levies on motorists such as fuel duty and road tax.

Peter Timberlake, head of public relations at Friends Provident, said that despite people feeling resentful about the level of taxes in the UK, not enough people take steps to reduce their tax burden.

"It is fair to say that the UK is feeling taxed by overtaxation and we would urge people to review their finances to see if they can help better manage the tax they pay," he added.

A recent poll found that 82% of users have seen their tax burden increase over the past five years. No one reported a fall in the amount of tax they are required to pay.

One user, karlcw, said: “For nearly 10 years we've had the fastest rising tax rates in Europe. Our corporate taxation is now higher than many European countries and this is causing businesses to move offshore.”

Another, KRHSMith, added: “I have some reasons to move house now. However the tax burden of moving with stamp duty are such that I'm likely to stay put.”

Click here to see the Moneywise Tax Burden poll and vote in other polls.

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