Income tax stifles the economy though.

Ever heard of fiscal drag?

People earning (through salary) enough to actually spend will just continue to look at ways to funnel their money into more tax-efficient schemes (i.e. increased pension contributions) or reduce the number of days they work, simply to avoid getting absolutely destroyed by the taxman (or woman).

Money tucked away in a pension doesn't stimulate the economy. It's basically dead money until it's eventually drawn down. As a reminder, pretty much each time £1 is spent, the government gets 10p... (i.e. £1 of every £2 spent is subject to VAT).

Penalising people for earning a certain amount of money, or basically putting them in a position where there are tax cliff edges, or childcare benefits are lost, etc. is "pure insanity".

It discourages productivity and stifles ambition.

The whole tax system needs complete reform.

User Posted Link has some interesting ideas. Not sure I completely agree with all of them, but food for thought.

Posted By: Dog on November 14th 2025 at 10:42:01

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