Tuesday, May 24, 2005

Indexing tax rates

Labour in the latest budget is finnaly deciding ot index tax brackets against inflation BUT if it was origionally set at the right rate isnt it entirely in the wrong place now?

I note that failing to index tax brackets to inflation is a trend towards a flat tax rate as well as higher rates and everyone slowly disappears into the higher brackets. there is really somthing in that for everyone to dislike in addition to the argument that if there was a reason in the first place to set tax brackets at a certain level that reason should still be valid now.

The government should sit down and consider what is the best method of applying tax rates and then ensure that it is indexed against whatever is the indicator that might throw it out (e.g. GDP per capita growth).


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