Flat rate income tax rates might be appealing, reduce tax avoidance and evasion and promote faster economic growth but they are unlikely to be instituted in the UK - at least in the foreseeable future, according to experts at the Birmingham office of Haines Watts.
Although commentators believe a flat rate income tax looks set to become a significant talking point, there is unlikely to be legislation in this Government's life-time, said Terri Halstead, tax adviser at the accountancy firm.
Countries that have already adopted flat rates of tax include Hong Kong, Romania, Russia and Lithuania.
"The arguments for a flat rate of income tax are appealing - although not to the Chancellor in the short term," said Ms Halstead.
Specifically, a flat rate of income tax is likely to reduce compliance costs, tax avoidance and evasion and help achieve faster economic growth.
"Numerous studies have shown that reducing taxes and compliance costs would enable the economy to grow faster than it would otherwise, stimulating business resulting in increased wealth for the population.
"People will be better off with the saving from each tax payer fluctuating between 12 per cent for those around the average yearly wage to 0.2 per cent for those in the highest earning bracket," said Ms Halstead.
However, the biggest factor against a flat rate of income tax is a short-term reduction in Government revenue.
Initially, it is forecast that the taxation revenue received by the Government would be reduced by as much as six per cent of GDP - £65billion. This would be offset to some extent by the immediate reduction in compliance and enforcement costs.
Ms Halstead added: "Some studies have shown that the offset will be completed within three years and from then forwards, various reductions will actually increase the effective amount the Government is receiving. This could lead to a reduction in the flat rate of tax imposed.
"It is generally accepted that the economy would grow faster leading to increased investment, increased wealth and further increased employment."
However, when asked, the Chancellor has refused to entertain any kind of discussion on the matter.
"The idea of bringing in a flat rate tax was included in the Veritas manifesto in the General Election. It would represent a major policy shift for all of the three main parties.
"Whilst in the long term it might be economically attractive, politically it is a non-starter - but it does provide an interesting talking point!" said Ms Halstead.
n A letter from Revenue and Customs to businesses in the Birmingham area is causing unnecessary apprehension among the business community, according to accountant Malcolm Winston, a partner at UHY Hacker Young.
It implies that the recipient's self assessment return will get particular scrutiny and may be subject to an investigation.
But, Mr Winston says, this is not the case.
"They are advising taxpayers to check they haven't understated their turnover or claimed expenses that aren't allowable," he stated.
"Although the content of the reminder is quite in order, strictly speaking, the tone is rather misleading. It infers that there will be serious consequences if any inaccuracies occur.
"Several of my clients see this as a warning that they have been singled out for special attention. They worry that the HMRC Sword of Damocles is about to fall on them."
Most business people rely on their accountant to complete their tax returns but the HMRC letter warns, that "even though you may employ an agent, you are the person ultimately responsible for the accuracy of the return".