Partner Article

Give councils more tax powers say IoD

A new report has recommended that Local Authorities should be allowed to raise half their income from local taxes to boost economic growth.

According to the TaxPayers’ Alliance and the Institute of Directors, the Government should also consider standardising the income tax rate at 30% rather than using a sliding scale, and increase the tax allowance to £10,000 annually to boost spending power for those on lower incomes.

The two organisations made their recommendations after spending 18 months studying potential growth plans, and found that by allowing councils to use local taxes would help them to compete with each other over local tax rates to improve public sector efficiency.

Graeme Leach, commissioner and director of policy at the Institute of Directors, said: ’Fiddling with the [tax] system causes more complexity and has little benefit to growth – this proposal would put a rocket under economic confidence.“

The two organisations have also called for the abolition of taxes on capital and labour income, which they claim are disguised as business taxes, as well as the removal of transaction, wealth and inheritance taxes.

They also believe that by reducing transport taxes, the Government would increase UK Gross Domestic Product by 8.4%, equating to an additional £5,000 per family in 2012/13.

Mr Leach added: ’This is a real opportunity to make life easier for people, get more money on the High Street and give Britain a tax system which is right in principle and works in practice.

“We need radical action to kick-start the economy, and this is a comprehensive way to do that in one go.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .