IMO there should be a flat rate tax so everyone pays the same amount (percentage wise). Those at the lower end/poverty line would get refunded via tax credits.

You shouldn't really need tax credits if the tax-free allowance is high enough.

I'd be up for a raised threshold and a flat rate tax myself. You would get a lot of tax in from people who wouldn't bother with tax avoidance schemes.

It would depend what the flat rate is. I'm thinking 25% as that would make it not worth the hassle for a lot of people.

Of course, there would still be people trying to avoid it altogether, but some efforts could be made to try and close some of the loopholes.

The point where you start paying tax was recently raised to £10K buy the coalition (best thing they've done so far IMO). If you have individual tax allowances, any couple could earn 20K before they pay penny in tax. And they're only paying 20% on the first tranche above that.

The UK direct taxation system currently isn't anywhere near the most onorous around for the low paid. The problem is the amount of indirect taxation they pay as part of their daily lives. Indirect taxation is much more regressive than direct taxation.

Jon

When you get people reducing their tax rate to close to 3% why is even 25% acceptable. It might only benefit those that earn above say £40000 but not enough to emigrate and live abroad. Those above that will still live offshore. Even footballers who play here have substantial sums of their money paid offshore as image rights etc. so they might get a lot are also hiding a lot more.

Raising the personal allowance also helps higher rate taxpayers* far more than basic rate taxpayers. It also stops helping people on a low income once the allowance exceeds their income. Raising it further wouldn't help those people at all, so it's a limited tool for people on a low income or part time workers.