Sample Solution

A tax should be desirable so that the government may defend itself against public criticism, by supporting its expediency. An unjust tax will always face sharp unwillingness on the part of the tax payers to pay and they will try to evade them, every new tax must have a justification to create a feeling of acceptance. Dalton stated that “in a good tax system, there should be a double illusion that the rich should pay more than what they think they should, so the rich will be contented and the poor become virtuous and in this way, the incentive to work and save will be sustained”.

Issues with UK Tax System

The UK needs to change the separate systems of income tax and National Insurance, with different sets of rules and exemptions, pointlessly increasing administration and compliance costs and making the system less transparent. NI is not a true social insurance scheme anymore; it is just another tax on earnings, which is added to the total revenue. The current tax and benefit system is unnecessarily complicated and convinces many people not to work or to work too little.

Coherence requires first that the income tax system itself be sensibly structured. We need to move away from pointless complexities such as that which any amount between £100,000 and £123,700 means the personal allowance reduces and can actually mean that some people would get more net income if they earned less.