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.

Conclusion

A good tax system is one which has primarily good taxes and fulfils most of the canons of taxation. It should be a balanced system where there are all types of taxes in the right proportion. The tax and benefit system should therefore be progressive, coherent, and designed to reflect income distribution and how different groups respond to work incentives. In the current system, there are a disarray of tax rates, a lack of a coherent vision of the tax base, and arbitrary discrimination across different types of economic activities. However, income tax does fundamentally treat the individual proportionately equal and helps provide items all benefit from. Ultimately, a good tax system is definitely better than none.