Tories may transfer to a system of ‘flat taxes’ the place everybody pays the identical fee, Kemi Badenoch signifies

A future Conservative party could move to a system of ‘flat taxes’ where everyone pays the same rate, Kemi Badenoch indicated yesterday.

The Conservative leader said the idea of a simpler, flatter tax system was ‘very attractive’.

But she said a future Tory government would first have to cut government spending dramatically to make a single rate tax system affordable.

George Osborne publicly flirted with the idea of introducing a ‘flatter’ tax system two decades ago, but never introduced it.

Supporters of the idea argue that a single low tax rate can stimulate growth and boost tax revenues over time. 

A number of EU countries have adopted the idea including Hungary, Romania and Estonia, which Sir Keir Starmer will visit today and which operates a single income tax rate of 20 per cent.

But critics have warned that operating a single rate in the UK would require a tax increase for lower earners while delivering a big tax cut for those on higher incomes.

Speaking at a rally against Labour’s plans to hike inheritance tax on family farms and businesses, Mrs Badenoch warned they could lead businesses to slash investment and jobs and reduce the overall tax take for the Treasury.

Kemi Badenoch (pictured in London on Monday) said the idea of a simpler, flatter tax system was ‘very attractive’

Speaking at a rally against Labour’s plans to hike inheritance tax on family farms and businesses, Mrs Badenoch warned they could lead businesses to slash investment and jobs (file photo)

Asked about the idea of flat taxes, she told the event in London: ‘This is an idea that I’ve heard many times. It’s very attractive, but if we’re going to get to that sort of scenario, there’s a lot of work we need to do first-hand.

‘At the moment, we are a welfare state with a little bit of a productivity attached to it. We’ve got to turn that around. We cannot afford flat taxes where we are now. We need to make sure we rewire our economy so that we can lighten the burden of tax and the regulation on individuals and on those businesses that are just starting out, in particular.’

Yesterday’s event in London was the latest step in the campaign to persuade Rachel Reeves to rethink the Budget decisions to end the historic inheritance tax exemption for family farms.

The Treasury claims the plan will raise £500 million and close a loophole exploited by wealthy individuals who can avoid inheritance tax by buying up agricultural land.

But farmers and rural experts have warned the plan will hammer the sector and lead to the break up of thousands of family farms over time.

A study by CBI Economics yesterday found that similar changes to business property relief will hit family businesses and lead to a fall in Treasury revenue of around £1 billion as firms slash investment.

Farmers protesting outside the Northern Farming Conference in Hexham, Northumberland against proposed changes to IHT. Ms Badenoch said a future Tory government would ‘reverse this tax grab at the earliest opportunity’

Mrs Badenoch said a future Tory government would ‘reverse this tax grab at the earliest opportunity’.

‘The government says it is doing these things to raise taxes,’ she said. ‘We believe that actually it’s going to shrink the tax take because it will destroy the businesses that provide that income.’

Meanwhile, Rachel Reeves announced she will publish a new economic forecast from the Office for Budget Responsibility on March 26. 

The update could provide a fresh assessment of the early impact of the Budget, which levied a record extra £40 billion of taxes and has triggered a wave of warnings about the likely impact on growth.

The Chancellor indicated she will not use the occasion to raise further taxes, saying she wanted to move to holding just one Budget per year.