Let's go flat out for simpler taxes

TAX doesn't have to be taxing, the Revenue and Customs says. Tell that to the politicians, say I. This week we have had one tax bombshell after another. A double-whammy of conflicting policies – all of which add to the misery of the nation.

There has been the removal of the starting 10p rate of income tax (accompanied by the drop in the standard rate from 22p to 20p). This has been widely criticised for hurting the poor the hardest.

Then there was the Treasury ruling out Alex Salmond's local income tax idea because it correctly identified it as being national, not local. Never mind that the 3p in the pound would, if the sums were done correctly, be closer to 6p extra tax – the fact that the rate would be the same in enchanting Eaglesham as it would be in exciting Edinburgh exposed Salmond's lie.

As I have argued before in this column, the first step that has to be taken is to simplify our tax system. You should not need an industry of accountants to help with tax returns. The rest of the world is moving towards a flat tax system – with brilliant results.

If Alex Salmond truly wanted a tiger economy in Scotland he would be proposing a single flat tax – the 13 per cent of Russia, the 23 per cent of Estonia or even the 37 per cent of Iceland. Instead all we hear is how he wants to tax working families more, while millions who benefit from local services would end up paying nothing. Not so much a poll tax as a jobs tax.

Salmond should recognise not all income comes from working. Add an extra six pence on to Scottish income tax and watch the mobile smart set go south never to come back.

Gordon Brown and Alistair Darling have nothing to crow about, however, for they simply don't understand how to cut taxes in a way to encourage people to work harder and increase the treasury revenues.

Removing the 10p rate was good, because it reduced the number of tax rates from three to two – but to protect the low earners the starting level at which we all pay tax, our individual tax allowance, should have been raised considerably.

Indeed, were we to raise the starting rate to after the first £10,000 of income we could help the poorest in society by taking them out of tax altogether. How? Because the savings to be had in processing fewer tax codes are huge and the incentives for people to increase their productivity would bring higher revenues.

This ain't just some free market theory. When, in the 60s, John F Kennedy cut taxes the revenues increased. When Reagan and Thatcher did it in the 80s the same thing happened. The reverse is also true. Often when tax rates are increased, revenues fall. Tax doesn't have to be taxing, but let's face it, that's just how most politicians want it to be.

Colourful country
I ENJOYED a quick business trip to Iceland last weekend and used it to reconnoitre for the forthcoming Iceland versus Scotland match later this year. It's a beautifully weird country with geysers, hot pools and stunning scenery. A restorative swim in the Blue Lagoon is obligatory and the food is surprisingly exotic as the influences of Asia are currently in vogue there.

Still, the best restaurant I found was, with intentional irony, called Fish and Chips. It sold haddock freshly fried in batter – served with the best onion rings ever and a mango salad (just to be trendy!). The Tartan Army should set camp outside.

The weirdest site was reserved for some Icelandic fashions – with the clash of colour and styles on any one person reminding me of Edinburgh Art College on speed.

I thought this garishness couldn't be bettered until I passed through Glasgow Queen Street on the way home. Fortunately they were not tasteless Edinburghers returning east – they all got on the first train to Cumbernauld.

Woolly thinking
THE silence of the wee lambs. That's what you could call the world's meek and mild response to Robert Mugabe's attempt to ignore his electoral defeat two weeks ago.

Let me put it in context. If this had happened in Israel, if its government of the day had been trounced and told it was time to go – but stalled and refused – all the limousine liberals and champagne socialists would be banging their drums calling for action. Sanctions against UEFA football matches, boycotts of Jaffa oranges, resolutions in the UN – Israel would be loudly castigated and become the pariah state for the next six months (until America did something to deserve it instead, like electing John McCain).

For the South African President Thabo Mbeki to suggest Mugabe's behaviour is perfectly acceptable sums up the world's appalling double standards and cowardice in the face of one of the most repugnant despots alive. The quicker Mbeki goes – a man who was allowed to address our Scottish Parliament, by the way – the better.