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Integrating Income Tax and National Insurance: an interim report

Stuart Adam () and Glen Loutzenhiser
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Stuart Adam: Institute for Fiscal Studies and Institute for Fiscal Studies
Glen Loutzenhiser: Institute for Fiscal Studies

No W07/21, IFS Working Papers from Institute for Fiscal Studies

Abstract: Income Tax and National Insurance are now sufficiently similar that merging them appears to be a plausible option, yet still sufficiently different that integration raises significant difficulties. This paper surveys the potential benefits of integration - increased transparency and reduced administrative and compliance costs - and the potential obstacles, assessing the extent to which each of the differences between Income Tax and NICs - in particular the contributory principle, the levying of an employer charge and the differences in tax base - constitute serious barriers to integration. The paper concludes that few of the difficulties look individually prohibitive, but that trying too hard to avoid significant reform of the current policy framework could produce a merged tax so complicated as to nullify much or all of the benefits of integration.

Keywords: Taxation; social insurance; administration (search for similar items in EconPapers)
JEL-codes: H24 H25 H83 K34 (search for similar items in EconPapers)
Date: 2007-12-21
New Economics Papers: this item is included in nep-acc, nep-ias, nep-law, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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