Low earners became the test this reform could not pass. The decisive verdict was less a rejection of tax reform than of asking people to surrender a guaranteed tax-free buffer in return for a promise of relief elsewhere.
The floor’s most-respected No case said scrapping the allowance would “clobber the poorest”, naming part-time workers, carers and low-income pensioners as those taxed from their first pound. Other No voters returned to the same fear: a lower rate might help some earners on paper, but the allowance’s protection would disappear immediately, while a future government could simply raise the rate again.
Yes voters were not defending the existing system so much as attacking its architecture. Their case called it “complicated and convoluted”, favoured a simpler rate, and linked the change to abolishing employee National Insurance and taxing earned and unearned income alike; one Yes voice said the allowance was “just a totem”. But the sharpest exchange exposed the sides talking past each other: when one voter asked whether opponents had missed the lower rate, the reply began with a £12,000 earner paying nothing now and potentially facing an annual tax bill of £1,800.
The wider reform argument was present, but it did not rescue this particular mechanism. Some voters wanted a higher threshold, a single rate above it, or a wholesale replacement of income tax with a turnover tax; others pointed instead to capital gains, wealth and tax avoidance, arguing that fiscal drag was the wrong target while the wealthy remained lightly taxed. The common ground was that the system needs changing, but not that this was the change to make.
The chamber was not anti-reform; it was wary of reform that removed certainty first and offered fairness later.
23 Opinions
Scrapping the personal allowance is a textbook regressive tax hike disguised as reform. Taking away the £12,570 tax-free buffer clobbers the poorest: part-time workers, carers, and low-income pensioners... taxing them from their very first pound just to hand a rate cut to higher earners.
Superficially attractive but not the issue. There should be a level of say £20/25K below which no tax is paid. NI abolished as it’s not hypothecated & involves wasteful duplication of bureaucracy. Flat tax of say 30% on the rest of income no allowances. CGT at 10 % no death taxes. We can then get rid of most tax legislation & slash vast tranches of useless bureaucracy. Civil Service will oppose but they need to be put in their place. Also reform Public Sector pensions.
The bssic allowance is hardly worth a can of beans, but it does offer some protection for the those on low incomes. Scrapping it in return for a lower basic rate would only be a benefit to tax payers untol the next govrnmentcame to power, and up the basic rate to drag in more tax revenue than they do already. Sprat to catch a mackeral comes to mind
No other country has a personal allowance. We have one for the same reason we have universally credit and the triple lock- our poor are very poor compared to the runaway cost of living. The allowance means the middle class has to bear more of the load - which affects productivity. Scrapping it would not feel that bad. It's just a totem, given too much importance.
It's the most complicated and convoluted system designed so that politicians can gaslight the public whilst robbing them blind. The Isle of Man has a simple, straight rate on income tax and is a huge draw for wealth creators.
Scrapping the personal allowance while simply lowering the basic rate is unlikely to benefit the lowest earners unless the reform is specifically designed to protect them, which it won’t be.
No, it should be reformed by scrapping/replacing all existing taxes (apart tariffs) with one sale (turnover) tax between 30%-40%. Simple, unavoidable, no tax loops and should satisfy budget needs. Seriously cut down budget.
No. I think raising the threshold and having a single tax rate thereafter would simplify the tax system, raise the same amount of tax as at the moment, if the threshold and tax rate values were carefully calculated, would take more of the lowest paid out of the tax system and would encourage the wealthiest to remain in this country and not try and seek tax loopholes
There should be one rate of income tax no matter what one earns. The tax rules are currently far too complicated and open to being manipulated by clever accountants. All income received from wherever should be taxed at the same rate including state benefits, capital gains and inherited wealth.
Wolf in sheep's clothing. Reduction in the base rate for now, and then when there's another economic crisis they'll raise it back up, while now having removed the personal allowance. Penalises the poorest in society for minimal savings.