Tuesday, 13 April 2010

Tax Plans: Labour Vs UKIP

On Sunday's Andrew Marr show the UKIP leader, Lord Pearson, outlined how his party would like to introduce a flat rate of tax at 31% for everyone earning above £11,000.  Wow, that sounds fair you might think.  And it means we would have a much less complex tax system.  But how would it pan out?  For your convenience I've graphed the tax take for various income levels directly contrasting income tax to be paid under the current Labour system and the proposed UKIP system.  

Basically, this would be great news for anyone on minimum wage; with this system you would save about £705 a year (assuming UKIP used the same Tax Free Allowance levels as currently exist).  Not bad at all.  But as soon as you cross that magical £11K barrier things turn ugly.  Sure, everyone would like to see high earners pay a bit more tax.  But do we want a society where someone earning £12K goes from paying £1105 in tax to paying a £1712.75?  That's a massive 55% increase on the tax that individual is paying.  The picture is exactly the same for many middle-income earners.  This is a classic right-wing approach to politics, appealing to the low-paid, disenfranchised voter in order to pedal more extremist nonsense.  I'll leave you to make your own mind up on whether you'd like to see such a tax system in place!  

I can only imagine that given UKIP's policies on the EU (leave) and their model for a fair and equitable society (Switzerland) it would please a lot of Tory backbenchers to have them as coalition partners in the event of a hung parliament.  God help us all!

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