Tory minister lets slip: We want to bring in regressive flat tax

The Tories still want to look into implementing a flat tax system, whereby the poorest taxpayers would pay the same tax as the richest. In a recording obtained by the Daily Mirror, Cabinet Office Minister Oliver Letwin is heard telling a right wing think tank a “discussion will no doubt open up” about the possibility of bringing in a flat tax.

The Institute for Fiscal Studies calculates that in order to raise current tax revenue, a flat tax on income would have to be set at 31%. People earning between £10,000 and £41,865 a year currently pay 20% in income tax. At the other end of the scale, it would mean a significant tax cut for top earners, who currently pay 45% tax on earnings over £150,000 a year.

The system is only used in a small number of countries, including Russia, Anguilla and Guyana.

Letwin said:

“In 2010, indeed now, we were not in a position to take a large fiscal cut. There may come a time when the situation is different and that discussion will no doubt open up.”

In the past, George Osborne has described the policy as an “exciting idea”.

Shadow Chief Secretary to the Treasury Chris Leslie responded to the comments by saying it was this sort of thinking that led to the formation of the Poll Tax:

“David Cameron’s close friend and Cabinet colleague Oliver Letwin has let the cat out of the bag.

“He’s been caught letting slip what’s on the real Tory agenda for a second term – the old right-wing idea of a flat tax championed by George Osborne ten years ago.

“Not content with having already cut taxes for millionaires, a Tory flat tax would mean even lower taxes for the richest and higher taxes for millions of working people.

It is not the first time Letwin has been in trouble over tax. Before the 2001 election, Tory strategists forced him into hiding after he leaked a story to the Financial Times which suggested the Conservatives would make £20bn in tax cuts – £12bn more than the figure stated in their manifesto. Will he be sent into hiding again?

Yo can listen to Letwin’s comments here.