20 taxes to scrap: How to grow the UK economy by simplifying the tax system

  • The five-year average tax burden in the UK is now at a 70-year high. The impact and opportunities of Brexit, coupled with the need to revitalise the economy in the wake of the Covid-19 crisis, mean 2021 would be a good time for the government to embark on a tax-cutting programme.

  • This paper analyses 20 taxes that could be scrapped or significantly changed. If carried out, these reforms would simplify the tax system, reduce the overall burden of taxation, and eliminate many harmful distortions that stifle the UK’s productivity and prosperity.

  • The UK could have a tax system that has a low negative effect on welfare and efficiency, with small compliance and administration costs; a system that is nondiscriminatory, avoids double taxation, and that is transparent and easy to understand.

  • As such, we suggest that the TV Licence, Inheritance Tax, Stamp Duty Land Tax, the stamp duties on buying shares, the Apprenticeship Levy, Vehicle Excise Duty, Capital Gains Tax, the bank surcharge, and duties on alcohol, tobacco, and gambling, could be scrapped.

  • Other property taxes such as Council Tax, the Community Infrastructure Levy, business rates and affordable housing and other s106 obligations, could be replaced with a single land value tax. Under this proposed system, disincentives for property improvements and housebuilding would be removed.

  • Although not originally intended as such, Air Passenger Duty has morphed into a green tax, but its discriminatory and incoherent application means there is a strong case for its abolition. Emissions from aviation can instead be addressed by the government’s general environmental policies.

  • The Climate Change Levy and renewables obligations add economic distortion and complexity to the tax system. These levies could be brought into a single, less distortionary, environmental taxation system – either through the Emissions Trading Scheme or a comprehensive carbon tax.

  • Finally, Corporation Tax and the Diverted Profit Tax could be replaced with a single tax on capital income administered at the corporate level, similar to how PAYE works on wages. Doing so would promote neutrality between capital income and labour, eliminate the debt-capital bias, and spur productivity growth.

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Policy Advisor to Mark Littlewood

Sam Collins is the Policy Advisor to Mark Littlewood, IEA Director General. Sam has spent most of his working life in the political and charitable sectors in New Zealand, Britain and the United States of America. Working most recently as the Director of The Hope Foundation for Street Children (UK) and currently as Director of The Age Endeavour Fellowship, Sam has previously been Operations Officer and Communications Consultant at the IEA, as well as a researcher at Progressive Vision. Sam has a BA/Hons in Politics and History from the University of Canterbury in New Zealand, and was the New Zealand National Party candidate for Wigram for the 2011 General Election.

Alexander C. R. Hammond is the Director of the Initiative for African Trade and Prosperity, a Free Trade Fellow at the Institute of Economic Affairs, and a Fellow at EPICENTER. Formerly, Alexander worked in Washington D.C. as a Research Associate in the Cato Institute’s Center for Global Liberty and Prosperity, a Foreign Policy Fellow at Young Voices, and an Associate at the Charles Koch Institute. Alexander often writes about economic freedom, African development, British politics, and global wellbeing. He is also the author of’s Heroes of Progress column. Alexander’s works have been translated into multiple languages and have been featured in The Washington Times, Reason, The National Interest, The Washington Examiner, CityAM, Newsweek, CapX, Business Insider SSA, News24, FEE, the Cato Institute website, the HumanProgress blog, and various other outlets both in the United Kingdom and overseas.