Flat Tax Scandal in UK

August 25, 2005

Apparently there’s a tax policy scandal afoot in the UK. The issue: the British treasury deleted arguments in favor of a single-rate tax from a memo exploring British tax reform options. From the Stockhom Network’s e-newsletter:

The Daily Telegraph, a British broadsheet, carried a front-page story on Monday revealing that key sections of a recent Treasury research document that detailed the advantages of a flat tax had been blacked out.

The newspaper subsequently obtained an unadulterated version of the report, which argued that the introduction of a flat tax could create a “mini-economic boom” and would increase “economic efficiency by reducing policy-induced distortions and allowing the market to function more naturally, improving the overall allocation of resources and encouraging labour supply”.

As George Trefgarne went on to argue in his Telegraph column, ‘Under the Freedom of Information Act, such excisions have to be approved by ministers or senior officials, so the inevitable conclusions are: first, that Treasury mandarins are privately taken by the flat tax idea; and second, the Chancellor fears that this could hand a powerful weapon to the Tories.’

Here’s the original telegraph story. Here is an opinion column on the scandal from the Telegraph. Here is the draft treasury memo with the deleted sections in it (MS Word).

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