Too many taxes are buried in prices. From Value Added Tax to the cost of extravagant subsidies for renewable energy, all people see is the shop charging them a higher price. That is convenient for politicians trying to hike our taxes, but it distorts democratic decisions over the level of taxes and spending, and which taxes to increase and decrease.
That is why we have seen steady increases in Employers’ National Insurance. It is why climate regulations are structured so a huge part of the cost is buried in the electricity market. And it is telling that the taxes people resent most are the lump sums they have to write a cheque for each year.
Making the tax system transparent is therefore the right objective for anyone who believes in a more honest, competitive and efficient tax system. The 2020 Tax Commission recommended abolishing National Insurance partly because it would reduce administrative costs and make for more efficient taxes, but also so it would end the fiction that low paid workers pay a 20 per cent basic rate and make for more honest taxes.
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