Evaluate the recommendation to provide a tax system with a neutral Assignment

Evaluate the recommendation to provide a tax system with a neutral treatment of life-cycle savings for the vast majority of taxpayers (as described in chapter 13) - Assignment Example In order to restore the health of the treasury and the public finances, the government revised the tax structure which aimed at increasing the tax receipts from the public in UK. The income tax, national insurance taxes, value-added tax and the corporation taxes are the largest contributors to the tax receipts of the government (James, 2009, p.74). Thus the modification of the tax structure of UK has implications for the household savings and has affected the life cycle savings of the households. On the same lines, a new higher income rate of 50% has been announced for individuals with income level over 1.47 billion pounds. The tax structure has also removed the income tax personal allowance in order to make for increased payment of taxes by the government. The tax rates for National Insurance have also been increased by 1%. In order to reduce the impacts on the low earning class of people, the threshold for the national insurance have been increased. The tax structure has also aboli shed the reduced rate of value-added taxes that apply to the selected goods and services offered by the producers. The review of the current tax system in UK revealed that the tax structure is costly and not uniform in terms of lifecycle savings of the individuals. The current tax structure urges the individuals and the households to spend earlier in their lives rather than waiting for the later stages. The current tax system has been reviewed to find that it would lead to rising inflation rates in the economy. The current tax system of UK has been reviewed to find that there are varying tax rates of 40%, 50% and 60% for people belonging to various income brackets. The increases in the income tax, national insurance tax, reduction of personal income tax allowance are measures that could excessively reduce the income levels of the economy and could also lead to higher rates of unemployment. Therefore, it has been