Institute of Directors calls on Government to bring in flat tax to help middle income families
The Institute has suggested that Britain should introduce a ‘flat tax’ system to stop middle income families from paying punitive rates. The Director General, Simon Walker, said that high marginal tax rates ‘degrade the motivation to work’ for many.
This call for action comes after it emerged that some middle income families are paying an effective rate of 73% because they have been stripped of their child benefit. Experts say these families are effectively paying more than someone on £150,000 might pay.
Households where the biggest earner has a salary of £60,000 or more saw their child benefits scrapped in last year’s Budget. Households with someone earning between £50,000 and £60,000 lost an increasing proportion of the benefit under the change that came in on 7 January 2013. Child benefit brings families £20.30 per week for the first child and £13.40 per week for each subsequent sibling, therefore those affected have lost an average of about £1,300 per year.