AAT calls for tax reform rather than tax rises

Scrapping the marriage allowance and switching stamp duty land tax (SDLT) liability from buyer to seller are among a raft of recommendations put forward by the Association of Accounting Technicians (AAT) as a way of raising over £27bn to plug the government’s spending gap without further tax rises

The report comes after the Prime Minister committed to raising a further £20bn of annual investment for the NHS, and against a background of a £21bn shortfall in defence spending over the next ten years, the potential loss of £23bn in fuel duty revenues, and the continuing high spending deficit.

The AAT’s report suggests that taxing or borrowing more is not the only solution and argues that its proposals ‘also show that improvements, not just to intergenerational fairness but in delivering greater fairness overall, can be made without necessarily costing the taxpayer any more money.’

The report’s recommendations include getting rid of the marriage allowance, which the AAT argues is too small a sum to influence an individual’s decision to marry and is in no way an indication as to whether or not a political party supports the concept of marriage. This would save £385m a year, enough to fund two new hospitals.

It wants SDLT liability switched from the buyer to the seller, which AAT says would be ‘a simpler, fairer, more effective system’ to benefit all first-time buyers as well as those looking to move up the property ladder.  By removing the newly introduced first-time buyer policy, the association says the government will be saving £670m a year by 2021 whilst protecting the £9.3bn currently raised, because although those paying will change, the amount will not.

The repot takes aim at what the AAT calls ‘the sacred cow’ of pensioner benefits, recommending that the qualifying age for free eye tests and prescriptions is raised from 60 to the state pension age, and calling for an end to the winter fuel allowance and the Christmas bonus.

It wants both business property relief (BPR) and agriculture property relief (APR) to be restricted to ensure both are properly focused on businesses and farms instead of incentivising particular assets to be held primarily, and often purely, for tax reasons, with estimated savings of over £1bn.

The AAT is also pushing for reforms of higher rate tax relief for pension contributions, with a flat 20% tax rate which it says would mean a reduction for higher earners, protection for basic rate payers and a £13bn annual dividend for the taxpayer.

Phil Hall, AAT head of public affairs and public policy, said: ‘AAT’s recommendations will not clear the deficit or enable investment to be showered across the country but they do identify over £27bn of annual savings and deserve serious consideration as a worthwhile, credible and thought-provoking contribution to the UK taxation and investment debate.’

The report acknowledges that ‘some of these changes carry considerable risk of political and media criticism’, but argues that ‘if the benefits are properly communicated to the electorate, it is unlikely that many people would oppose changes that free up substantial funds to invest in schools, education and defence whilst avoiding uncomfortable tax rises or passing bigger debts on to our children and grandchildren via the excessive UK deficit.’

Hall said: ‘Rather than knee-jerk responses, we need policy makers who will look at what’s effective and what isn’t, what’s fair and what’s not and where investment is really needed rather than where it’s politically expedient to spend taxpayer’s money.’

Time for change: AAT alternatives to tax rises is here.

Report by Pat Sweet

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