By Tim Harford
It is hard to disagree with Martin’s view that the tax system should be made more efficient. It is also hard to summon up much optimism on this point.
Not only do we not have a carbon tax in the UK, but VAT on domestic heating is lower than VAT on most other goods and services: the tax system encourages leaky, over-heated houses with inefficient
boilers.
The latest UK budget introduced yet more complexity. The eye-catching 50 per cent tax band was not enough; allowances had to be withdrawn, tax relief for pensions complicated beyond understanding, a
two-tier ISA system introduced that discriminates between the over-fifties and the under-fifties (but never fear! That system will last for only six months).
To hope for a super-streamlined tax is naive, but even modest simplifications now seem more remote than ever. The institution of Budget Day [in the UK] does not help: if it had been explicitly designed to encourage showboating, sleight of hand, uncertainty and short-termism I do not see how the job could have been done better.
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