THE Conservatives must become the champions of simpler and lower taxes and will investigate whether Britain could benefit from a so-called flat tax with everyone paying at the same rate regardless of income.

George Osborne, the Shadow Chancellor, promised yesterday to establish a commission, independent of any political party, to look at the implications of the flat tax and a simplification of the British system.

He told the Social Market Foundation that Gordon Brown was not interested in a proper discussion of an idea that the rest of the world was waking up to and the Conservatives would do the thinking instead.

The flat tax has two key principles: the first is that people should be given a high tax-free allowance, meaning that those on low incomes pay no tax at all; the second is that the single rate at which the tax is paid is kept low.

There are no exemptions and no tax relief.

Mr Osborne said that inefficiencies introduced by different rates of tax on different activities were removed and the war of attrition between accountants searching for loopholes and taxmen trying to sew them up was ended.

He added that a flat tax could be progressive. A large personal allowance meant that many people on low incomes were taken out of tax altogether and those on middle incomes found that a big slice of that income was tax-free.

He admitted that the idea had problems. Until now flat taxes had been introduced into former communist countries with undeveloped tax systems.

“In Britain we have a complex and established tax system that has evolved over centuries,” he said. “We are rightly keen on tax reliefs, like age-related allowances and tax exemptionms for charities and pensions. There are important questions about how we could maintain existing revenue streams while introducing a flat tax.”

He said, however, that because of the complexity and confusion introduced by Mr Brown into the tax system there was a strong case for flatter, simpler and fairer taxes. “I believe that the case for a flat tax, even with the obvious obstacles, at least needs serious consideration.”

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