At the moment the state takes money from the poor in the form of taxes. This doesn't add to the tax revenue because the state then has to give out benefits back to the poor. This is a bad way to do things because it is bureaucratic and creates perverse incentives. Far better to simply not take the money from poor people in the first place. Therefore we should:

• Abolish VAT
• Abolish National Insurance contributions
• Raise the threshold at which income tax is paid (to around 10,000 GBP). And while we're at it, have a single rate of about 35% to simplify things.
• All capital income, dividends, capital gains and interest should be taxed at the same rate; 35%.

These changes would be funded by:

• Ending The Drugs Prohibition
• Legalizing prostitution
• Ending protectionism and embracing free trade
• Paying less in state benefits.
• The savings on VAT and NI administration costs (of government and business).
• Abolishing the national minimum wage.

Why the national minimum wage is a bad idea

• The policing and bureaucracy of administrating the minimum wage costs a significant amount of money.
• If an employer and employee agree to say 4 GBP / hr, I don't think it behoves the state to stop them.
• According to Adam Smith, if employees and employers have the freedom to agree whatever wage they want, the wealth of the country as a whole increases faster.

A common tax rate on all forms of capital income

All capital income, dividends, capital gains and interest should be taxed at the same rate; 35%. The same percentage as tax on income. Willem Buiter explains it well.