UK Tax System Essay Example | Topics and Well Written Essays - 3250 words

UK Tax System - Essay Example With the government's source taken from the public taxation always greater than the amount that is intended for use by the government, taxes are levied to fund several programs. Other governmental policies are also geared towards the redistribution of wealth from the rich and poor respectively in relief operations, public education, social security benefits and reparations. However, fundamental methods of collection are not foolproof and possibilities for inefficiencies are always prevalent. Tax policies being a highly political and controversial issue do require extensive analysis and determination on its viability to gain the paying sector's acceptance and economic performance. The neo-classical economic theories whose studies believe that taxation brings about economic inefficiencies have suggested changes in the tax systems that would work to minimise the distortion. Tax remittances of the ordinary working sector accommodating deficiencies brought about by certain deficits were s een as the basis for the recognition of its disadvantages. However the complexities of the British Tax system have served to greatly increase the stress and expense to millions of taxpayers as tax season approaches in Kay(1990)1. Simplification of the British tax system has allowed the common platforms of many political parties in grandstanding tax rules and exemptions. Disadvantages in the assessment, calculation and collection of taxes are often criticized as ineffective and administratively expensive according to Emes and Clemens (2001)2. Determined to maintain absolute performance of the economy, changes were aimed at creating several programs that redistribute wealth and prosperity to all. Tax cuts became a scene in fiscal reforms that has announced reductions in income taxes and simplification of the system which focused on the tax laws themselves without upsetting the current balance of tax burdens or taxes paid by the individual. Alternative tax base system was introduced that basically focused on income, expense and wealth. Income derivatives in the corporate ladder include Value added tax (VAT) and excise taxes while individual income tax has pre-existed along with social insurance continuity. On investment and entrepreneurship, under expenditures or consumption taxes, capital gains and sales taxation is considered tentative in nature. Property tax summarized under wealth taxation has gained support claiming that anti-wealth tax is funded by a coterie of wealthy taxpayers whose instinctive rejection of the sys tem comes from the broad aspiration to become wealthier and amass more fortune by any means. Income derived from gainful employment; pensions; shares and dividends; interest on savings and trust and rentals is deemed taxable at a certain level. Forming the bulk of revenues for the British government, each earning person below the age of 65 is afforded an income tax allowance or a tax-free allowance each year of 5,035Gbp. For earning persons of over 65 but below 74, any income above 7,280Gbp is taxable while elderly individuals whose income is below 7,420 are exempted from paying taxes. But where income is in excess of one's tax-free allowance, taxation is based on the age-related allowance. Earners, whose income is 1 to 2,150 above their mandated tax allowance, shall enjoy a flat 10% tax rate. Those whose accumulated gross