The Universal Standard Tax (UST) is a marginal flat tax, set at a single rate after deductions and exemptions, that comprises the majority of the Wiltshire government's revenue. It is considered regressive by economists, with the wealthiest Wiltshirians paying considerably less of their "disposable income" compared to working class Wiltshirians.
Exemptions, deductions, and surcharges to UST apply in certain instances, including the child tax credit, and student finance surcharges. The policy of the Labour government has been that welfare should reform from being simple cash-transfer benefits to exemptions of UST.
Labour's Hard Work Act 3026
Off the back of the spending review, Labour minister Alan Kelly announced the government would introduce a significant reform to UST, in exchange for maintaining the main rate of UST at 27.5% of income over 7,500 cm. The Hard Work Act implemented a system of negative income tax, replacing the entire welfare system, instead with benefits calculated as negative income tax.
Core principles
- Everybody is treated the same under the Universal Standard Tax.
- The main rate of UST is 27.5%.
- Below a guaranteed income floor, cash transfers are made to the individual. This creates two classes of worker: tax-payers, and tax-receivers.
- There are no separate welfare programmes for working-age income, housing, or disability support. They are now part of the UST system.
Negative Income Tax mechanism
All income, regardless of source:
- wages and salaries,
- self-employment income
- dividends, interest, rents
- capital gains
- pensions
Main rate of UST: 27.5%