ONE conclusion reached in the Davis Tax Committee’s first interim report on value-added tax (VAT) is that "(there is) clear evidence that multiple rates add significantly to the complexity and administrative burden of the tax (and thus) … the adoption of multiple rates is not recommended". Why then has the committee seemingly discarded the evidence that a flat personal income tax rate is also less complex, easier to administer and brings in more revenue?
The late, great Nobel Prize-winning economist, Milton Friedman, proposed a flat tax system in the early 1960s to simplify tax collections and to encourage people to work, save and invest.
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Jasson Urbach is an Economist and director of the Free Market Foundation.
Publish date: 20 July 2015
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.