ABSTRACT
The political mythology of taxation often differs from the reality. Denis Healey, as Wilson’s Chancellor, raised the tax burden from 31 to 35 per cent in one year in 1974 because of the fall in Gross Domestic Product and increases in taxation. The income-expenditure tax switch went part of the way towards the reform recommended by the Institute for Fiscal Studies committee chaired by James Meade, which reported in 1978. It was only in 1985 that the Government made its first move to reform National Insurance Contributions. The Right Approach to the Economy announced four main elements in the tax strategy in 1977: Lower personal taxation to restore work incentives, an enterprise package of measures to stimulate business growth, stronger encouragement to personal savings and capital building on the widest possible scale, and Simplification of the system. Independent taxation with fully transferable allowances would be identical to joint taxation in most important respects.
