Central government, however, generates its revenues mainly from income tax, national insurance contributions, value added tax, corporation tax and fuel duty.
Definition: "A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion of income), as opposed to a graduated, or progressive, scheme. The term flat tax is most often discussed in the context of income taxes."(Expert Report 2005)
At first confined to academic conversation and a few small islands, the flat tax has lately been introduced in numerous of the ex-communist countries of middle Europe, counting latest members of the European Union. Additionally, Poland has announced its intention to adopt a flat tax system. As a result far none of the 'old' EU nations has taken this step, though Ireland is introducing a flat tax for companies (Feldstein).
Hypothetically we could calculate an average rate of tax under the current multi-rate system, and charge everyone this rate under the flat tax. Though this would consequence in taxpayers (mainly the lower earners) paying more tax. In practice so most flat tax systems propose a single rate approximately the similar as, or lower than, the existing standard rate. ...Show more