George Osborne’s new deputy at the Treasury once posed in a steamroller to campaign for a flat tax system on behalf of an arch-Thatcherite pressure group.
Greg Hands, the new chief secretary to the Treasury, argued in favour of a system that “gets rid of all the bands and taxes everyone at the same percentage of their salary”. This would mean a tax rise for basic ratepayers and a huge cut for higher earners if the change was fiscally neutral.
The Treasury has not replied to a request for comment on whether Hands still backs this idea, but he was such a passionate advocate of the policy in 2006 that he led a campaign in its favour for the Conservative Way Forward group.
He took part in the stunt at a Conservative party conference in Bournemouth at the same time that David Cameron made it clear he would not be prioritising tax cuts over protecting spending on health and education.
A leaflet promoted by Conservative Way Forward urging Cameron to “flatten taxes, not the economy” argued that the income tax system consisted of a confusing raft of bands and allowances that could be replaced by a system under which everyone was taxed at the same percentage of their salary.
The group claimed it would offer individuals more control over their money, reduce the cost and time of completing tax forms, cut bureaucracy, lead to lower interest rates and still exempt the poor from paying any tax.
There were reports that the steamroller ran over cartoon pictures of taxmen and the word “tax” in giant letters.
The only party that ended up advocating a flat tax of 31% of income at the 2010 election was Ukip. However, it has now ditched the policy for being too divisive.
Other Tories promoted by Cameron in his post-election reshuffle have also backed the principle of flatter taxation in the past. In 2013, Sajid Javid, the new business secretary, gave an interview saying he was still a Thatcherite who believed in “not just lower taxes but flatter taxes, simpler taxes”.
The Institute for Fiscal Studies has calculated that a flat tax with a personal allowance of £10,000 would need to be set at around 31% to be broadly fiscally neutral. Labour said this would amount to an increase in income tax for 24 million basic-rate taxpayers while offering a huge cut to the very richest.
For example, someone earning £30,000 would see their income tax increase by £2,200 while a person earning £1m would see a cut of more than £120,000.
This article was written by Rowena Mason Political correspondent, for theguardian.com on Tuesday 19th May 2015 16.25 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010