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Cameron praises flat taxes – but are they fair?


According to a story in yesterday’s Telegraph, David Cameron has been praising the Latvian tax system, calling it ‘attractive-sounding’ during a speech at the Northern Future Forum Conference in Riga.

In particular, he singled out the Latvian 24% flat rate of tax as a potential alternative to the UK’s progressive-style income tax.

Is he planning something similar? Who would gain or lose from a flat rate of tax in the UK?

Well, it depends a lot on how the tax is designed, as well as the way it interacts with other aspects of the tax and benefit system, including VAT and tax credits.
But one study by the IFS, looking at ...