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Wednesday
Feb122014

IFS: Government must find more sources of tax

The think tank the Institute of Fiscal studies has warned the government that its reliance on the UK’s top earners for the majority of the UK’s tax burden is unsustainable and ‘punishes success’.

The country’s 300,000 highest earners currently pay close to 30 per cent of all income tax and 7.5 per cent of all tax revenue.

The IFS has raised concerns that continuing in this manner could see the UK’s richest become less willing and less able to shoulder the tax burden.

According to the think tank, high earners could choose to emigrate to lower tax regimes, go all out to find tax loopholes, or simply see their wealth dwindle.

It added that the government should look for new sources of tax, rather than rely so heavily such a small group of taxpayers.

"The government might be concerned if the Exchequer becomes increasingly reliant on one particular revenue source, as it increases the risk that a shock to one revenue source would have serious implications for total revenues," the IFS said in its annual Green Budget.

Steve Baker, the Conservative MP for Wycombe, told the Telegraph: "It is a cruel fairy tale to believe that 99 per cent of the public can live on the earnings of one per cent. A policy of soak the rich is not a sensible one; the system cannot sustain itself."

Big earners often come under scrutiny for how they manage their taxes. Evasion, avoidance, loopholes – these are all buzz words these days and nobody wants to be hauled in front of HMRC and forced to pay back sizeable chunks of unpaid taxes. However, there are many completely legitimate and transparent ways to reduce your tax bill which will not get you or your company in hot water. Contact St Matthew today to see how we can help you manage your taxes and grow your business.

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