Dr Madsen Pirie: Despite the nanny state, the British people retain a sense of personal responsibility and ambition

Dr Madsen Pirie is President of the Adam Smith Institute. Follow the ASI on Twitter.

Although politicians and civil servants might want to give us advice about what foods we should eat and how much to drink, the UK population does not agree that they should.  And when asked in a recent poll if politicians and civil servants are well-equipped to make personal decisions on their behalf, nearly two out of three Britons disagree.

These are heartening figures to those who think that the state nanny intrudes too much into our lives.  Government pays vast sums of money to the advertising industry to encourage us regard salt as some kind of poison, and sugar as something to be shunned.  It employs large numbers of people to persuade us to eat five vegetable and fruit types every day, and to limit our consumption of alcohol to about one glass of wine per day.  Not content with that, it pays people to exhort us to walk more.

There are very few aspects of modern life from which government is absent.  It tells us, sometimes in whispers, but more commonly in a shout, how we should live.  It treats smokers as lepers, to be banished from civil society's indoor spaces and made to sin if they must on the streets.

Dr Madsen Pirie: Employees of small and medium businesses should be given the status of self-employed people under contract

Dr Madsen Pirie is the author of The Growth Agenda: The Self-Employment Option and President of the Adam Smith Institute.

Small and medium enterprises employ about half of the UK workforce and create roughly two-thirds of all the new jobs. The government recognises their role and wants to make life easier for them, specifically by deregulation. It has discovered, as its predecessors did, that this is not easy. Every regulation has its defenders, and every one has a fleet of civil servants sailing alongside it pointing to legal difficulties and Britain's EU obligations.

Today the Adam Smith Institute publishes the first salvo in its "Growth Agenda" series. This one covers the self-employment option, and its proposal calls for a complete change in the Treasury mindset. Instead of trying to sweep everyone out of self-employment and into employed status, they should allow and encourage all small and medium enterprises (SMEs) to give their employees the status of self-employed people under contract.

This would free small employers from the burden of calculating PAYE and National Insurance. Instead the employee would be responsible for his or her own tax and insurance bills. The Treasury finds it convenient at present to have employers do this, but it imposes a huge burden on them, a burden of time as well as cost. HMRC would need to find new ways of operating to collect these payments from employees, but there is no doubt that it would give a massive boost to enterprise and job creation.

Dr Madsen Pirie is the author of The Growth Agenda: The Self-Employment Option and President of the Adam Smith Institute.

Small and medium enterprises employ about half of the UK workforce and create roughly two-thirds of all the new jobs. The government recognises their role and wants to make life easier for them, specifically by deregulation. It has discovered, as its predecessors did, that this is not easy. Every regulation has its defenders, and every one has a fleet of civil servants sailing alongside it pointing to legal difficulties and Britain's EU obligations.

Today the Adam Smith Institute publishes the first salvo in its "Growth Agenda" series. This one covers the self-employment option, and its proposal calls for a complete change in the Treasury mindset. Instead of trying to sweep everyone out of self-employment and into employed status, they should allow and encourage all small and medium enterprises (SMEs) to give their employees the status of self-employed people under contract.

This would free small employers from the burden of calculating PAYE and National Insurance. Instead the employee would be responsible for his or her own tax and insurance bills. The Treasury finds it convenient at present to have employers do this, but it imposes a huge burden on them, a burden of time as well as cost. HMRC would need to find new ways of operating to collect these payments from employees, but there is no doubt that it would give a massive boost to enterprise and job creation.

Dr Madsen Pirie: Tax simplification should follow simple rules

Dr Madsen Pirie is the President of the Adam Smith Institute.

The UK tax code could certainly use simplification.  Since Labour won power in 1997 the code has doubled to over 11,000 pages just for the legislation.  The move to set up an Office for Tax Simplification is commendable, and the Adam Smith Institute will certainly be submitting evidence to it.

Tax simplification is best achieved by following rules. Adam Smith himself set out four canons which he thought taxation should follow.  Firstly, for any tax, the collection costs must be low compared to its yield.  Secondly, the amount to be paid must be known and certain, and not depend on the discretion of tax officers. 

Thirdly, the timing of payment should be convenient to the payers, preferably when they have received some money.  Smith's fourth canon was that taxes should be levied according to ability to pay.  They should be paid by those who can afford to do so.

There is a fifth one that can be added to Smith's list.  No tax should damage or limit the economy out of all proportion to any revenue it raises.  The point is that nearly all taxation changes behaviour and distorts the economy.  Taxes on goods make them more expensive.  Taxes on wages mean people have less to spend.  Nearly all of them result in less economic activity than would have happened in their absence. 

The trick is to have taxes sufficiently light in their impact that the economy continues to grow and generate wealth.  In practice this is probably best achieved by low tax rates that apply uniformly.  This means a relatively light burden spread evenly without sending people off onto tax-avoidance behaviour.  The problem is that politicians have preferred lots of exemptions and allowances, winning them favour with special interest groups, but committing them to higher rates to raise the same revenue.

Dr Madsen Pirie is the President of the Adam Smith Institute.

The UK tax code could certainly use simplification.  Since Labour won power in 1997 the code has doubled to over 11,000 pages just for the legislation.  The move to set up an Office for Tax Simplification is commendable, and the Adam Smith Institute will certainly be submitting evidence to it.

Tax simplification is best achieved by following rules. Adam Smith himself set out four canons which he thought taxation should follow.  Firstly, for any tax, the collection costs must be low compared to its yield.  Secondly, the amount to be paid must be known and certain, and not depend on the discretion of tax officers. 

Thirdly, the timing of payment should be convenient to the payers, preferably when they have received some money.  Smith's fourth canon was that taxes should be levied according to ability to pay.  They should be paid by those who can afford to do so.

There is a fifth one that can be added to Smith's list.  No tax should damage or limit the economy out of all proportion to any revenue it raises.  The point is that nearly all taxation changes behaviour and distorts the economy.  Taxes on goods make them more expensive.  Taxes on wages mean people have less to spend.  Nearly all of them result in less economic activity than would have happened in their absence. 

The trick is to have taxes sufficiently light in their impact that the economy continues to grow and generate wealth.  In practice this is probably best achieved by low tax rates that apply uniformly.  This means a relatively light burden spread evenly without sending people off onto tax-avoidance behaviour.  The problem is that politicians have preferred lots of exemptions and allowances, winning them favour with special interest groups, but committing them to higher rates to raise the same revenue.

Dr Madsen Pirie is the President of the Adam Smith Institute.

The UK tax code could certainly use simplification.  Since Labour won power in 1997 the code has doubled to over 11,000 pages just for the legislation.  The move to set up an Office for Tax Simplification is commendable, and the Adam Smith Institute will certainly be submitting evidence to it.

Tax simplification is best achieved by following rules. Adam Smith himself set out four canons which he thought taxation should follow.  Firstly, for any tax, the collection costs must be low compared to its yield.  Secondly, the amount to be paid must be known and certain, and not depend on the discretion of tax officers. 

Thirdly, the timing of payment should be convenient to the payers, preferably when they have received some money.  Smith's fourth canon was that taxes should be levied according to ability to pay.  They should be paid by those who can afford to do so.

There is a fifth one that can be added to Smith's list.  No tax should damage or limit the economy out of all proportion to any revenue it raises.  The point is that nearly all taxation changes behaviour and distorts the economy.  Taxes on goods make them more expensive.  Taxes on wages mean people have less to spend.  Nearly all of them result in less economic activity than would have happened in their absence. 

The trick is to have taxes sufficiently light in their impact that the economy continues to grow and generate wealth.  In practice this is probably best achieved by low tax rates that apply uniformly.  This means a relatively light burden spread evenly without sending people off onto tax-avoidance behaviour.  The problem is that politicians have preferred lots of exemptions and allowances, winning them favour with special interest groups, but committing them to higher rates to raise the same revenue.

Madsen Pirie: Why the Coalition should rethink its plan to raise capital gains tax

Dr Madsen Pirie is the President of the Adam Smith Institute, a leading free market think-tank.

The coalition has meant compromises; all coalitions do.  Some things that should have happened will not, and some things will happen that should not.  In the rough and tumble of politics things can be modified and smoothed at the edges, and made acceptable.  Most of the coalition programme looks good.  In addition to the much-needed reforms, it might once again arouse the self-confidence in Britain that we are a society which can solve its problems.

Now for the bad news. The proposal to raise capital gains tax to the level of income tax must be changed.  To raise it from 18% to 40% (or even 50%) will be a hammer blow against saving and investment.  The political cry that "the rich must pay their fair share" has been used to justify a tax hike that will hit quite small savers, the more so if the threshold is dropped to £2,500 as trailed in the Lib Dem manifesto. 

Savers have been hard hit. Gordon Brown raided their pension funds, turning the best pension fund in Europe into a nightmare of black holes.  Then he praised spending for its job-sustaining power, ignoring the fact that it is saving that provides the investment to enable tomorrow's jobs.  And now interest rates have sunk below inflation, guaranteeing that anyone who saves is actually losing money by doing so.

To top all this with a huge rise in capital taxes is folly.  It will hit people who have invested in buy-to-let homes for their pension. It will hit many people whose 'gains' have resulted from inflation, rather than any real rise in value. It will drive people to save outside Britain, moving capital offshore.

Dr Madsen Pirie is the President of the Adam Smith Institute, a leading free market think-tank.

Madsen Pirie: To transform Britain permanently, the next Government should start by taking the lowest paid out of income tax and replacing council tax with a local sales tax

Dr Madsen Pirie is the President of the Adam Smith Institute, a leading free market think-tank. His new book, Zero Base Policy, was published yesterday, and can be purchased via Amazon.co.uk.

Anyone who supposes that a dozen years of Gordon Brown's vandalism can be put right by tweaking a few policies and running things rather more efficiently is mistaken. The parlous state of Britain requires a jump-shift in policy rather than an improved continuity. Proposals which lie beyond the box of the commonly acceptable might not make for good election manifestos, but they could mend a broken economy and a broken society.

My Adam Smith Institute colleague, Dr Eamonn Butler, detailed in his book, The Rotten State of Britain, how bad things have become, and how the optimistic promises of 1997 failed to bring results. The UK, once a model low tax economy now ranks amongst the heavily taxed ones. The pensions system, then the envy or Europe, now faces an unfillable black hole. Where we were promised "education, education, education," we have lower social mobility and more children leaving school without any meaningful qualifications. In place of the comparatively free society we enjoyed, we now have a society of snoopers, with severe restrictions on our freedom of speech, of assembly, and of the right to peaceful protest.

The counterpart of this critique is a programme of action to set Britain back on the path to prosperity and progress. This week the ASI publishes Zero Base Policy, setting out a shopping list of 33 proposals to put things right.