Britain's shadow chancellor George Osborne today espoused a flat tax rate for Britain, while attacking Chancellor Gordon Brown for being "stuck in the past".
British shadow chancellor George Osborne
Mr Osborne said that while many other countries were reducing taxes, the Labour Government was increasing tax and making the system more complicated.
He praised flat tax rates, and said he was setting up a commission to look at how to overcome the obstacle. Internal documents prepared by the British Treasury had listed the benefits of the flat tax rate, saying there could be higher economic growth and many other advantages.
Welcoming the idea of flat taxes, he said: "We have a simple tax system which is simple to understand where there are no loopholes, where the very rich do not avoid tax through employing expensive accountants, and we have a tax system that people can understand."
People earning $20,000 a year would pay the same rate of tax as those on £100,000, but there would be a large personal allowance of about £10,000, he said.
But he conceded: "There are many problems with introducing a pure flat tax, of the kind that many countries in Europe have adopted, into a mature tax economy like Britain.
"We are very attached to some of our exemptions and reliefs, like saving for a pension," he told BBC Radio 4's Today programme.
"I'm fully conscious we may not be able to introduce a pure flat tax, but we may be able to move towards simpler and flatter taxes." Attacking the Government he said: "I want to contrast this with the complexity that Gordon Brown has introduced into the tax system. "The tax law has actually doubled while he has been chancellor, and there are 24,000 new tax inspectors."
He went on: "The rest of the world, including many countries in Europe, are reducing taxes at the moment. "The Prime Minister is talking about how we face this intense competition from countries such as China and India. The rest of the world is responding to that by reducing taxes. "In this country we are increasing taxes and making our tax system more complicated. "It is out of kilter with the rest of the world. It's not good for the British economy, and it shows my opponent Gordon Brown is stuck in the thinking of the past."