London low tax success?

The centre of London is buzzing. The streets are crowded day and night. There are traffic jams at 11pm. The pavements are congested after dinner or the theatre. The shops are busy. There is a wide range of very expensive boutiques in a number of different high street locations. The central London economy has detached from the more humdrum reality in most provincial towns and suburbs. Rents are rising, property values have climbed part of the way out of the 2009 trough, and flats and houses go for incredible sums.

The main reason is that central London is now a very cosmopolitan place. Much of the new money coming in to buy the flats and the expensive clothes comes from overseas. There have been waves of money in the last year from Arab countries where people have been worried by the Arab spring and the Libyan war, from Greece, where rich people have wanted to get out before the euro collapse, and from the usual BRIC countries as successful people decide to diversify their asset base and own a safe home in the west. London makes people feel welcome, and provides that range of culture, shopping, top class property, and international society they want.

One side of me welcomes this. It is great to see enterprise thriving. The best of the retail is brilliantly done. The west end can afford good street furniture, great floral and light displays, wonderfully designed shop windows, and high quality merchandise. The property stock has never been in better condition. The high values encourage owners to spend more on perfecting the space they own, and expanding it wherever possible. If top of the range residential property is worth £2000 to £3000 a square foot, and an owner builds a high quality mansard or basement extension for under £1000 a square foot, there is every incentive to do so if they have the cash to splash.

That is where the other side of me has worries. The truth is very few UK citizens paying high UK taxes can now afford to buy a property in the centre of our capital city. Very few could afford to shop on a regular basis in the exclusive and expensive boutiques and grand stores that populate the West End. As I glance up at the blue plaques on the walls of comfortable London town houses commemorating where previous generations of UK artists, authors, inventors, business people, politicans and others lived , I am looking back on a lifestyle which has gone. Those houses now will be mainly owned or lived in by occasional visitors from abroad, or used by the more affluent institutions as Embassies, offices or smart blocks of flats.

The problem for someone like me who usually welcomes change and is not jealous of the success of others is the question of tax. Many of those who can afford the luxuries and properties of the west end enjoy much more favourable tax arrangements than the rest of us. That is how they can bid the prices of these places to heights we could not consider. London is acting as host to part of the world’s rich elite. They come because we do not make windows into men’s bank accounts. Just as we host Wimbledon for other countries’ tennis stars to win, so we host parts of central London for other countries’ rich to enjoy.

I do come down in favour of carrying on offering central London as our window for the world, our Wimbledon of first choice for the rich and successful. At least we can go and look at how such a society lives. UK ctiizens can make good livings out of providing services and goods to the rich who come. I accept that if we tried to enforce UK taxes on their incomes from out side the UK around the world, they would go somewhere else that was less demanding. By all means end the Stamp duty loophole, and ensure they pay UK taxes on UK incomes and businesses. On balance I think the UK and London is better for this cosmopolitan presence.

Maybe the moral of the story is that lower taxes work and help create and stimulate wealth and income. If Central London can enjoy some benefits from non dom tax status, why not try lower tax rates on income and enterprise for UK citizens living anywhere in the UK as well? Who knows, it might catch on, and generate more tax revenue in total.

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133 Comments

  1. lifelogic
    Posted December 27, 2011 at 7:59 am | Permalink

    The congestion in London is main caused by silly bus/bike lanes, pointless huge islands, traffic lights intentionally phased to block the traffic and poor road works management. The solution to stamp duty is not to tax anyone with stamp duty. Turnover taxes at 5% are absurd.

    The solution to getting the British to be able to afford to buy in London is to lower the taxes on the British residents too, to sensible levels. Certainly the absurd 50% and 28% CGT (on gains which have not even been made in real terms after inflation).

    The government should be reduced to providing law and order, defence, a very basic safely net for those unable to work – perhaps subcontracting the taking of the bins away. Taxpayers need to pay about £10,000 per worker to provide more than enough for this – that is all that is needed.

    So cap taxes at £50,000 PA for the rich and get rid of tax returns for them – this gives the government plenty.

    • Andy
      Posted December 27, 2011 at 9:29 am | Permalink

      Agree with much of what you say. Politicians only seem to have one objective: to spend ever larger amounts of money raised (or stolen) from long suffering taxpayers. We need to reduce the size of the state and return power and responsibility to the people. Perhaps we should look at introducing a ‘flat’ tax, abolishing every other tax and making this simple tax the only way the State can gain revenue. We should also stop the political class being able to borrow like the last lot did. Time for some honesty.

      • lifelogic
        Posted December 27, 2011 at 4:52 pm | Permalink

        Even a flat tax means the rich pay far more perhaps 100 times more for their “state services” than the poor. A flat tax with a £50K maximum due seems reasonable, fair and has the benefit that it releases lots of accountants and lawyers to do something more productive than tax planning.

    • Bazman
      Posted December 27, 2011 at 11:49 am | Permalink

      10 k per worker? Explain what this means. Not wages surely?

      • uanime5
        Posted December 27, 2011 at 4:18 pm | Permalink

        Wouldn’t surprise me. Several million for him, minimum wage for everyone else.

      • lifelogic
        Posted December 27, 2011 at 4:47 pm | Permalink

        UK work force circa 29million people for current tax receipts see:-

        http://www.hmrc.gov.uk/stats/tax_receipts/tax-nic-receipts-info-analysis.pdf

        The state should anyway shrink to about half its current size – which would clearly be a great benefit to virtually everyone.

        • Bazman
          Posted December 27, 2011 at 8:45 pm | Permalink

          So what does the 10k mean? Wages per year? A simple question.

          • lifelogic
            Posted December 28, 2011 at 9:02 pm | Permalink

            Average tax paid per worker to the state to cover services provided.

    • lifelogic
      Posted December 27, 2011 at 1:31 pm | Permalink

      Mind you whatever you do to taxes not everyone, who wants to, will be able to afford to live in Mayfair, Chelsea, Sandbanks or St Georges Hill. If they really want to they will just have to work harder, marry well or become a butler.

    • uanime5
      Posted December 27, 2011 at 4:17 pm | Permalink

      Why not cap wages at 150,000 PA as well. If there’s going to be maximum level of tax there needs to be a corresponding maximum level of salary.

      • libertarian
        Posted December 27, 2011 at 7:53 pm | Permalink

        I’m trying really hard not to be rude.

        Please explain to me why on earth you would want to cap private income and name one person who would benefit from this

        • uanime5
          Posted December 28, 2011 at 4:41 pm | Permalink

          To reduce income disparity which will benefit everyone other than the super-rich.

      • lifelogic
        Posted December 27, 2011 at 9:18 pm | Permalink

        Nonsense, taxes are a payment in return for services delivered, defence, law and order, dust bins etc. why should we need to pay more than about 10K per worker just for these? Wage levels are nothing to do with it.

        • uanime5
          Posted December 28, 2011 at 4:42 pm | Permalink

          You’d have to dramatically increase minimum wage if you want everyone to pay £10,000 in taxes.

          • lifelogic
            Posted December 30, 2011 at 11:40 pm | Permalink

            10,000 average!

    • libertarian
      Posted December 27, 2011 at 7:52 pm | Permalink

      Pretty much agree with everything you say there life logic

      Stop stealing our money and wasting it on pork barrel projects

  2. ian wragg
    Posted December 27, 2011 at 8:33 am | Permalink

    You can live in London if you highjack an aeroplane and demand asylum. The state will gladly rent you a £1000 per week mansion for you and your brood. Hence the high taxes for the silent majority.
    Cosmopolitan London is 5% rich and 85% housing benefit (as long as your not English).

    • Timaction
      Posted December 27, 2011 at 12:07 pm | Permalink

      I agree. London is now a “foreign” City that English people avoid!!

    • Sean O'Hare
      Posted December 27, 2011 at 2:07 pm | Permalink

      And the other 10%?

  3. Antisthenes
    Posted December 27, 2011 at 8:35 am | Permalink

    “Much of the new money coming in to buy the flats and the expensive clothes comes from overseas.”

    When you are broke then you are reduced to selling off the family silver.

  4. Martin
    Posted December 27, 2011 at 9:10 am | Permalink

    Central London has always struck me as being a sort of detached place from the rest of the UK. The presence of high paid capital city jobs (both private and public) partly explains that. Another factor as you hinted is that London’s West end is the premier shopping, entertainment center in Europe, maybe even the world. The other thing that helps London is the vast public transport network that gets workers and users of the West End /City in and out.

    Central London does present a rather “Eldorado streets paved with gold image” to the rest of the country. Visitors to the capital see Zone1 and not the poverty of many of the adjacent suburbs.

    The poet William Wordsworth wrote Upon Westminster Bridge over 100 years ago. London still has a special thing that still exists albeit in a 21st century form that I suspect tax tweaks don’t cause!

  5. Rebecca Hanson
    Posted December 27, 2011 at 9:10 am | Permalink

    It sounds like some towns in the Lake District! Here one of the solutions is to plan and build low cost housing which is only for local residents. It’s only partial but it helps. What is being done in London?

    • Rebecca Hanson
      Posted December 27, 2011 at 12:06 pm | Permalink

      Thinking further along these lines highlights the learning that those who own second home in a place contribute a great deal to both the economy and the community in their second place of residence if they are there a great deal.

      But if they buy properties for investment purposes and are rarely there they are damaging to that economy as they force up house prices but do not consume local products and services and they ensure that the houses they own do not contain people who contribute to a thriving community.

      It is therefore much more useful to dissuade the second type of international property owner than the first. If you can’t dissuade them tax them so that those who are contributing to the UK economy can pay less.

      • Alan Wheatley
        Posted December 27, 2011 at 3:43 pm | Permalink

        Second homes were a hot local topic when I was living the Yorkshire Dales National Park. One thing that amazed me is that letting a residential property for commercial gain was not considered a change of use in planning terms. So if, say, a permanent resident sells their house it can be bought by an absentee landlord and let as a holiday home, and there is nothing the local community or the planning authority can do to stop it, even though what is obviously a change of use in social terms may well have a detrimental effect on the permanent residents.

        Second homes not let commercially and commercial holiday lets are quite different, but usually get treated as the same but critics and the authorities.

        • Rebecca Hanson
          Posted December 27, 2011 at 8:16 pm | Permalink

          Which is better for London Alan – having it’s central residences being used as owned second homes for the international super rich or as holiday or long term lets?

          • Alan Wheatley
            Posted December 28, 2011 at 4:36 pm | Permalink

            Not my call. It should be a matter for the local planning authority acting in the local interest.

          • Rebecca Hanson
            Posted December 29, 2011 at 8:43 pm | Permalink

            What if the local interest differs from the national interest?

        • A different Simon
          Posted December 27, 2011 at 10:26 pm | Permalink

          Very good point .

          There is clearly scope to require a change of use .

          Ultimately we need decent options for people attempting to provide for their own age so they dont all have to do it by restricting access to housing .

    • alan jutson
      Posted December 27, 2011 at 12:36 pm | Permalink

      Rbecca

      Low cost housing for sale, only works if a clause is inserted about future selling prices also being at a low price to locals, or being sold back to the original builders at an agreed percentage sum of the open market, otherwise it leads to profiteering, as it has in many other places.

      This was the fault with selling off Council Houses at a vast discount, in many caes the kids funded the purchase, so that they could inherit at a later stage without capital gains tax (inheritence tax applying only above a certain limit)

      • Rebecca Hanson
        Posted December 27, 2011 at 4:54 pm | Permalink

        Newer low cost houses built in the Lake District tend to have a local occupancy clause on them which means that when they are resold they can only be sold to local people. The purpose of this is to prevent younger generations being forced away from their families because they can’t afford houses due to the price inflation created by second home owners.

        I’m not sure this is the right line of thinking for London – where generations have been forced to move away from their families to lower cost areas, but these areas are well connected by public transport so the family fragmentation is not so bad.

        London needs holistic housing planning but, as I explore further below, it needs to be particularly aware of the economic and social damage associated with having unoccupied properties.

        The idea that free market economics alone will provide the best overall is bunkum. There needs to be highly intelligent oversight….

        • libertarian
          Posted December 27, 2011 at 8:00 pm | Permalink

          Sorry Rebecca you are just plain wrong free market economics works just fine, however state interference and regulation don’t.

          Try getting a mortgage on a house with a restrictive covenant on it, its very very hard. You see mortgage lenders can’t easily dispose of it in the event of a default. Where this was tried in North Cornwall low cost local only housing went unoccupied for very long periods of time.

          • Rebecca Hanson
            Posted December 28, 2011 at 1:23 pm | Permalink

            Come and meet the communities in places like Keswick which exist because of planning Libertarian and think carefully about whether Keswick would be a better place if there were no locals living there at all.

        • StevenL
          Posted December 27, 2011 at 9:59 pm | Permalink

          There is no free market in planning permission or credit. Both are bureaucratically rationed by technocrats.

  6. Richard1
    Posted December 27, 2011 at 9:17 am | Permalink

    The objections from the Left to this are not about whether lower taxes raise more revenue or create more general prosperity. What the Left cares about is equality. In their eyes – in a view echoed on the BBC, by senior Church of England Clergy, even (absurdly) by some Coalition Government ministers – equality = ‘fairness’. Only when the argument that enforced equality, by means of high taxes and excessive regulation, is unfair, because it destroys opportunity and livlihoods, can there be a sensible debate about what is the optimal level of taxation, from a purely economic point of view.

    • lifelogic
      Posted December 27, 2011 at 1:26 pm | Permalink

      I agree fully what the left (and I include the Libdems, the BBC and about half the Tory party) is the “equality god” and the destructive emotion of envy – needless to say they do not usually think it should extend to most state sector high incomes, expenses, pensions or indeed BBC ones – it should only go so far after all.

    • uanime5
      Posted December 27, 2011 at 4:22 pm | Permalink

      From a ‘purely economic point of view’ the optimal level of taxation is as much as possible. Then the Government can afford anything it wants.

      • A different Simon
        Posted December 27, 2011 at 10:27 pm | Permalink

        Yeah , the Govt should demand 100% moron .

      • Bob
        Posted December 27, 2011 at 11:02 pm | Permalink

        Spoken like a non taxpayer.

      • Richard1
        Posted December 28, 2011 at 6:13 pm | Permalink

        The evidence from many countries over many decades is there is an inverse correlation between levels of taxation and growth. Your view is therefore exactly wrong. The optimal level of taxation from an economic point of view is the minimum to provide services which it is deemed essential that the state, rather than private operators, provides.

      • lifelogic
        Posted December 28, 2011 at 9:10 pm | Permalink

        The optimal level of tax (to give the greatest benefit for all) is well below the tax rates that give maximum tax (which the UK already exceeds at 50% + NI).

        We do not want maximum tax take we want the maximum amount left with the productive individuals and companies that produce it. We just want good defence, good law and order and a few other things. Nothing else 20% of GDP is plenty for that.

  7. Rebecca Hanson
    Posted December 27, 2011 at 9:28 am | Permalink

    The high cost of living in London is also an obvious contributory factor to the emergence of ‘bubbles’ of risk taking or assumptions which are seriously disconnected from the reality of life in Britain.

    This happens for all sorts of reasons related to the high cost of living such as –
    – the high cost of living making it very difficult for people to leave jobs which ‘bubble jobs’.
    – the flight of families
    – many people being in London as single people and being disconnected from their families and roots.

    It’s important to understand that bubbles occur where you have organisations with people at all levels who are unable to ground their thinking in the reality of the consequences of their actions. Instead of trying to ‘correct’ the issues above which contribute to this behaviour it would be better to try and explicitly plan for it not to happen in other ways.

    Such intervention much not just apply to corporate regulation, they need to address the thinking of every individual working in roles where they are not directly serving people or manufacturing objects and could include:
    – a time tax – spent working either with people in need or with people running small businesses.
    – the creation of personal cyberprofiles which map their wider personal development (a kind of parallel linkedin which maps the stuff you wouldn’t put on linked but that shows you’re a wider thinking person).
    – work on corporate cultures to ensure people who are grounded are valued and promoted ahead of those who are not.

    I know this may sound completely mad to some but it’s actually deeply considered and well grounded in theories of motivation and risk taking.

    • John Hill & Co
      Posted December 27, 2011 at 8:05 pm | Permalink

      Sounds deeply authoritarian that you wish to “address my thinking” by telling me how to spend my time.

      • Rebecca Hanson
        Posted December 28, 2011 at 1:26 pm | Permalink

        What do you do John Hill and co.?

      • Rebecca Hanson
        Posted December 28, 2011 at 11:39 pm | Permalink

        hmm – my first reply to this hasn’t been published (yet?) and in retrospect I think I can write a better one so here goes.

        The first think we need to do John Hill and co. is to have a public debate which establishes whether or not there are issues to be addressed and if so what they are.

        I’ve worked in many city institutions and have an unusual level of insight into the varieties of activities and also of the wide variety of the established cultures which underpin them. I’m sure you’re aware that in some pockets of the city there are cultures which promote those who think in an exceptionally narrow and often short term way about the benefits to their company at the expense of wider economic benefits to business in the UK and which dismiss the opinions of those who seek to focus on the development of products which add value to industry.

        First of all we need to ask ourselves whether we thing this is a bad thing or not. It is a question which politicians have skirted around because we have been so highly dependent on the tax revenues from this type of activity. But I have seen the best side of the city too and I personally believe (although I am open to being proved wrong by hard analysis) that London provides many high quality financial products and services which do support economic stability and efficiency and that it would be in our best interests to address the dilemma posed here head on and make a clear stand as a nation in favour of supporting the latter type of business and condemning the former.

        If and only if we can obtain a national will to support such an agenda, then the question arises as to how we do that.

        I’m trying to convey the idea that the responsibility for ensuring high quality provision needs to be dispersed across all levels of business from the regulator to the individual. Precisely how we go about ensuring this happens I do not mind and would much rather prefer the ideas came from those who already command respect in London.

  8. Brian Tomkinson
    Posted December 27, 2011 at 9:31 am | Permalink

    The problem is that the majority of politicians think they know how to spend our money better than we do (including Conservatives). Nothing much will change while that attitude prevails. Do they ever consider why we are moving consistently down the league table of wealthy countries? The problem is that if they do they would no doubt conclude that they needed to spend more taxpayers’ money not less. Keep plugging away but I fear you are in the minority within parliament not to mention the pernicious EU.

    • uanime5
      Posted December 27, 2011 at 4:24 pm | Permalink

      Do you have any evidence to support your claims?

      • Richard
        Posted December 27, 2011 at 7:07 pm | Permalink

        As a new years resolution, why don’t you just try to develop and write your own arguments instead of just challenging everyone on this site to prove theirs.
        Or is that too much like hard work for you?

        • uanime5
          Posted December 28, 2011 at 4:47 pm | Permalink

          My argument is that your idea won’t work, which is why you don’t have any evidence to back it up. Until you actually produce some evidence don’t expect to be taken seriously.

          I challenge people to help them realise just how unworkable their ideas are. Sadly there are a lot of bad ideas mainly because no one does any research.

          • Bob
            Posted December 29, 2011 at 11:28 am | Permalink

            “..no one does any research.”

            Where is your evidence?

  9. alan jutson
    Posted December 27, 2011 at 9:38 am | Permalink

    The problem John, as you quite rightly say is the high level of taxes in the UK on almost everything.

    The simple fact is our government has got far too big, is far too involved in almost every part of our lives, when the government spends/wastes near to 50% of GDP we are in a socalist/almost communist dream world.

    We need to free our WORKERS and our BUSINESSES of the huge tax burden.

    We need to reduce all of our taxes to very competitive levels, and then set government spending to 80% of that tax take.

    No Government should be able to spend more than 80% of the tax take of the previous year other than in dire emergencies (war, flood etc)
    We then start to get our businesses competitive, to expand and trade with the rest of the World.
    We then encourage people to work to be self sufficient and to improve their lot.

    The greatest asset every country has is its people, the power of the body and human mind is huge, but not if they are encouraged and rewarded to do absolutely nothing, as they then become an expensive liability.

    Set the people free, lower taxes by a massive amount, to very competitve levels and then see our balance of trade improve, inward investment grow, and jobs created.

    Warning: Let the State grow even bigger, let taxes rise, and you end up like Greece, out of financial control, with a flourishing and growing alternative economy.

    Oh and the EU, we need to dump it in its present form, because it limits by legislation and regulation, how we can best control our own Country, in our own interests.

    • uanime5
      Posted December 27, 2011 at 4:27 pm | Permalink

      Define ‘competitive levels’? Should we be competing with Western Europe or should we also compete with developing countries?

      We can’t encourage trade unless our manufacturing industry dramatically improves. As this is due to a cultural problem low taxes won’t fix this.

      • libertarian
        Posted December 27, 2011 at 8:08 pm | Permalink

        In what way should our manufacturing improve? Do you have any evidence for this?

        The UK is now the 7th largest manufacturing nation in the world ( up from 8th) Manufacturing has grown for the past six quarters and we are currently suffering massive skills shortages in manufacturing , engineering and electronics.

        The UK is at the forefront of manufacturing mobile phone technology, advanced medical devices, high end engineering products , microelectronics and biotechnology

        • uanime5
          Posted December 28, 2011 at 4:57 pm | Permalink

          There are two ways to increase trade: more imports or more exports. Unless we want the trade deficit to increase we need to increase our exports.

          Most of the UK’s exports are from manufacturing, so to increase the number of our exports we need to manufacture more products that other countries will be willing to purchase.

          As you mentioned there is currently massive skills shortages that are holding back manufacture and these need to be addressed. Were the Government to agree to pay most of the training costs if companies hire an unemployed person we could reduce the skills shortages and reduce unemployment. Sadly paying to retrain people to have the skills that the economy needs has never been part of the Government’s policy.

          • Bob
            Posted December 29, 2011 at 7:29 pm | Permalink

            The skills shortage is just a symptom of the attitude problem that exists among people who prefer to live off of the earnings of others, it’s known as the path of least resistance.

            Take away that prop and watch the skills shortage disappear as if by magic. It’s quite amazing what people can do when and if they need to.

  10. English Pensioner
    Posted December 27, 2011 at 9:55 am | Permalink

    I have never been jealous of the rich, after all to enjoy their money they have to spend it, and spending creates jobs or provides investment. We need a taxation system which encourages the wealthy to live here and spend, preferably on British goods and services. As long as those from abroad don’t actually cost the country anything, why worry? We should be far more concerned about all the immigrants coming in who are a drain on our resources and cost far, far more than any tax we might get from the super-rich.
    Time to stop the politics of jealousy and do what is best for the country, not what is necessary to appease some pressure group.

    • backofanenvelope
      Posted December 27, 2011 at 10:30 am | Permalink

      Spot on! I wonder if Mr Cameron has heard of supply and demand. If you import a million people every 4 years and most of them want to live in London you have created a problem. I might also point out that the English that leave London are arriving down here in Cornwall, in spite of the county being full. Well, we think it is.

    • uanime5
      Posted December 27, 2011 at 4:31 pm | Permalink

      The problems with pandering to super-rich foreigners is it alienates the locals who are unable to purchase any of the goods they make or sell. What best for the country is producing good that the people of the country can afford, not pandering to the wealthy.

      Also the number of jobs they create are generally low as there are only a small number of the super-rich.

      • electro-kevin
        Posted December 28, 2011 at 3:16 pm | Permalink

        Do you have any evidence for this, Uanime5 ?

    • Tedgo
      Posted December 27, 2011 at 5:19 pm | Permalink

      The downside of the current system is that a foreign non Dom Entrepreneur can live in the UK all the year and enjoy low taxation whereas a UK born Entrepreneur has to leave the UK for 6 months of the year to limit their tax liabilities.

  11. figurewizard
    Posted December 27, 2011 at 10:12 am | Permalink

    One way of lowering taxes on enterprise would be to restore the 0% rate for taxable profits up to £10K (although £25K might make more sense) and marginal relief for profits between £50K and £300K, which were abolished by Gordon Brown during yet another of his barrel – scraping budgets in 2005.

    The smaller the business the greater the damage it has suffered from this. It has sucked out cash flow that could have been used for investment or expansion, with all that implies for jobs and economic activity in general.

    Small and medium sized businesses are the most likely to respond to incentive and impetus. Given George Osborne’s wholly correct desire to ‘re – balance’ our economy it is puzzling that this avenue remains unaddressed so far.

    • alan jutson
      Posted December 27, 2011 at 12:40 pm | Permalink

      figurewizard

      Totally agree.

  12. Tedgo
    Posted December 27, 2011 at 10:22 am | Permalink

    I believe we should have a common system of taxation available to all rather than the rigged system favourable to foreigners.

    This would mean a flat rate income tax of about 32% and both UK citizens and foreigners being taxed on their UK incomes only. If they don’t like that arrangement they can leave.

    The current system is based on residence, domicile and country of birth, a UK born person can never become a non Dom. Importance is attached to your main residence, though you can only declare one at a time, not several. Being in the country less than 183 days has importance. Its laid out in the following document,

    http://www.hmrc.gov.uk/cnr/hmrc6.pdf

    That a government department would put its name to such poorly written and ambiguous document is beyond me, it has no legal force, nor has it been approved by Parliament.

    I think all tax authorities should understand that their taxing abilities finish at the 12 mile limit. If I have income in a foreign country and that income is taxed in that foreign country then what I do with the after tax balance is of no concern to HMRC. If I transfer some of it to the UK to spend, HMRC should not tax it again as income.

    Lower taxes for all is my message.

    • figurewizard
      Posted December 27, 2011 at 1:06 pm | Permalink

      For decades the Labour party has nailed ‘fair’ taxation to their manifestos. This concept of fairness has resulted in the wealthy using high powered advisors to trawl through the back alleys of our tax law to ensure that they often end up paying a lower proportion of their income to the Treasury than the average worker.

      A flat tax would not only stop this, it would be a genuinely sustainable boost to our economy with the added bonus that even more wealth and investment would be attracted to these shores. Nor would it have to be set at 32% to work. It would take both vision and courage though, something that does not seem possible while the Conservatives are shackled to the Lib – Dems.

      It probably wouldn’t go down well with the EU either, so one or other of us might have to consider their position if this were to be put to our people.

      • A.Sedgwick
        Posted December 27, 2011 at 2:00 pm | Permalink

        In George Osborne’s early days as Shadow Chancellor he ruled out a flat tax system. From that point on anyone would have been wildly optimistic to expect any serious addressing of our endemic economic problems.

      • uanime5
        Posted December 27, 2011 at 4:34 pm | Permalink

        Don’t expect a flat tax to work. The rich can always buy support for tax exemptions that only benefit them.

        • libertarian
          Posted December 27, 2011 at 8:13 pm | Permalink

          Don’t be ridiculous , every where a flat tax has been implemented it has worked.

          You seem to get very confused between rich people and corporations.

          Individuals can only minimise their tax liabilities within the existing rules. Corporations however do negotiate with HMRC normally by threat of taking their jobs elsewhere.

          These are two totally separate issues. A flat tax is the fairest and most likely to motivate investment and growth whilst maximising tax revenue

          • uanime5
            Posted December 28, 2011 at 4:59 pm | Permalink

            Can you name some countries that have a flat tax, I’m interested to see how well they work.

            Also the rich tend to benefit from the exceptions their corporations can purchase.

  13. Alan Radford
    Posted December 27, 2011 at 10:49 am | Permalink

    Lower taxes?? Oh, I don’t think so!! Part of the fun of being in power is spending that huge revenue stream that is gushing in, funding all sorts of crack-pot state intervention schemes and making those who wield power feel important. If the economy ends up being sclerotic, and people can’t afford much, well that’s the price of ‘fairness’!

  14. forthurst
    Posted December 27, 2011 at 10:53 am | Permalink

    “At least we can go and look at how such a society lives.” Only those of us who like to live vicariously. Living in upmarket property does not guarantee upmarket sensibilites or tastes.

    Here is a list of pleasant places to live:

    http://www.mercer.com/qualityoflivingpr#City-Rankings

    I suspect that London at 38 is more vibrant than most of the cities it beats; it’s just not very safe (68) or pleasant.

    The Swiss at 2, 8 and 9 cheat by affording their own citizens privileges in property ownership; they also don’t dispense citizenship like confetti.

    There seems little point in allowing foreigners to buy our property unless they pay us for the privilege; otherwise, it is absurd that they should be able to use our property simply for parking their wealth.

    Many of those investing in property from abroad come from countries that do not raise taxes in order to facilitate asylum seekers and others who choose not work, enjoying a standard of living beyond that achievable by English working people on modest incomes. They may also come from countries where tax payers are not required to bail out banksters when they run out of cash. To be a low tax country requires its politicians not thinking they know best how other peoples’ money should be spent; hardly likely in the UK when the electoral system prevents newer parties which want to repair the damage being done to us breaking into the political arena.

    • StevenL
      Posted December 27, 2011 at 9:50 pm | Permalink

      A lot of them actually come from oppressive dictatorships. They have either taken their money and fled revolutions (like wealthy Persians did in ’79) or are the oppressors – like Mr Gaddafi Jnr, who had a big house in North London.

  15. sm
    Posted December 27, 2011 at 11:08 am | Permalink

    London is cosmopolitan? Well with 500k arrivals everyyear what gives?
    The population density in areas of Central London would i suspect surprise most. Just imagine if for example supermarkets only opened restricted hours, shopping for essentials would be a nightmare. A road accident or blockage or a defective signal for 30min can cause transport chaos.

    Therefore London’s fixed costs are spread over a much larger population which gives it a momentum of its own.

    Why allow UK residents or citizens (long or short term) special tax breaks if their father was born abroad.This is no longer just a tax issue since the advent of mass uncontrolled migration. It is potentially divisive across political dangerous lines.

    Why do rich people wish to come to the UK? The rule of law,stability reasonable climate and probably relatively more secure London life.Begin to lose that and the attraction dissipates.

    Tax should be charged where the economic substance of the transaction arises. With offshore secrecy this is hard to tell (never mind legality). If some overseas countries had an effective regulated state then probably a lot of oversees aid would not be required.

    I cant see how taxing worldwide income and allowing tax credits from functioning states is wrong. I dont want their tax money if its at the price of someones who has less protections than us. Those that come here then truly would be respected.

    That said a state taking 50% in taxes is too large.A broken fractional reserve banking and political power model.Lack of direct democracy a la Suisse. I know we are told we risk losing to Switzerland but really its not true if you tighten up with a general anti avoidance principal and move away from flawed divisive domicile concepts and go with Citizen and longterm residents. The US and Australia seem to manage it.

  16. andrew
    Posted December 27, 2011 at 11:13 am | Permalink

    London has become a tax haven for the super rich. I also object to high taxes and want a smaller state. I do not think however that we should take in greek , russian and middle eastern money, fleeing from corrupt and mis-managed economies elsewhere, without taxing it heavily. It really is time for a swingeing mansion tax

    • A different Simon
      Posted December 27, 2011 at 10:47 pm | Permalink

      Andrew ,

      The super-rich foreigners you talk about coming to London are not looking to escape corruption and mismanaged economies .

      They are looking to escape justice and retribution .

      Whilst I sympathise with your call for a mansion tax far better to have a land value tax paid for by everybody – Londoners would end up paying the most anyway .

      • andrew
        Posted January 3, 2012 at 3:33 pm | Permalink

        Well, your’e right about a land value tax, but politically it seems to me a mansion tax is easier to get through the Commons. I do not understand why we tax incomes so heavily and property so little. A fair land value tax could lead to reductions in income tax and long term caital gains in wealth producing assets.

  17. Paul Danon
    Posted December 27, 2011 at 11:19 am | Permalink

    I suppose it comes down to whether you think that a nation which protects its borders is just exercising a right or spoiling the free market. Although enterprise is a good motivating-force for individuals to get out of bed, it can lead to a cosmopolitanism which makes people feel strangers in their own land.

  18. electro-kevin
    Posted December 27, 2011 at 11:51 am | Permalink

    We cannot afford to have much more of the disorder that we experienced last year if stability is a key attraction to London.

    Those blue plaques you mention date to a time when London was crammed with slums and nor could most Londoners afford to shop in expensive boutiques – there’s nothing new under the Sun. On a material level things are better for all everywhere in Britain if we’re honest about it.

    High taxes don’t help and the 40% bracket and inheritance tax are in need of a serious re-think in terms of what middle earners are unable to afford.

    Much is being made of the London Tube driver’s strike and their ‘greed’ over an audacious claim for tripple time on bank holidays. One needs to look at what £42k brings to a London worker.

    A £200k mortgage if lucky ? A tiny flat in not too safe a part of town perhaps ?

    Double time for bank holidays brings a worker on this wage into the 40% tax bracket and may cause loss of benefit entitlements – there has to be tripple time to incentivise workers to take the loss.

    The problem with your proposition of lower taxes everywhere, Mr Redwood, is that the present disconnection incentiveses British people to relocate from the provinces to the Metropolis and suffer the higher costs. Equalise everything and we would see an exodus of workers looking for a better quality of life outside London as did I.

    Was I right to move away from London ? In terms of personal wealth and job opportunities I most certainly wasn’t. I couldn’t afford to respond to the recent Eurostar advert despite them offering £57k pa to drive their trains.

    I’d have to quadruple my mortgage to live anywhere near St Pancras !

    • electro-kevin
      Posted December 27, 2011 at 12:28 pm | Permalink

      I need to qualify why I made my decision to move away from London so that my comment doesn’t appear contradictory:

      The best parts of London can’t be bettered. The worst parts can’t be worst-ed (for want of another word) and my exposure was most often to the latter. Let’s not wax lyrical too much about the place – it has some underlying problems and I wouldn’t want to raise a family there.

      About the only reason for moving there and not to another of our beautiful cities is for the money and I fully understand why people do it.

      This is a decision I may yet live to regret but it felt right at the time.

    • Realist
      Posted December 28, 2011 at 5:20 pm | Permalink

      I am led to believe that Train/Tube drivers get free Train travel, often I notice sitting in First Class! Some travel in from Newark, Grantham and lots from P/boro so you areguement sadly does not stack up!!!

  19. Nick
    Posted December 27, 2011 at 11:58 am | Permalink

    If Central London can enjoy some benefits from non dom tax status, why not try lower tax rates on income and enterprise for UK citizens living anywhere in the UK as well?

    =============

    Very simple. Government has 7,000 bn of debts. Most of which are still hidden off the books. [So much for election promises to publish them all]

    With tax revenues of 550 bn, you can’t afford any tax cuts because you have to service the debts. [Plus give all those civil servants millions in pensions]
    Reply: You could raise m ore revenue if you had lower rates

  20. Bazman
    Posted December 27, 2011 at 12:03 pm | Permalink

    I live in a town about 50 miles from London and since 1999 have seen this town expand London being the driving force and the face of the crowd change from white guys with tight T-shirts, skinheads and dogs. To a more cosmopolitan place with Indian looking and black faces. Every week there is new people in the discount supermarket from different areas and countries. A shock to the local carrot crunchers for sure. Who often sent me back up north, but were mortally offended when sent back to their villages. On the whole this a good thing, but I am sure most people would agree the infrastructure such as schools and transport, though very good in this area have failed to keep pace and the new developments a mix of respectable locals and foreigners are often a dumping ground for undesirables. Some of the people I meet have been pushed out of London by high prices. The areas where they where born being gentrified, pushing them into slum areas of London which they claim are populated by foreigners who do not want to live to the same standards as the British. It’s a bit rich for the British wealthy to complain about rich foreigners buying all the best property in London a system that they themselves benefit most from and one they created.

  21. REPay
    Posted December 27, 2011 at 1:26 pm | Permalink

    London will become even more welcoming to the international super rich or double-income jobs-for-life, high earners such as Balls and Cooper, if we get Vince Cable’s mansion tax. Many of us will be forced to sell up and move out. Still as someone who has regularly voted conservative, paid nearly 50% of my salary for years to an ungrateful public sector, it is doubtless no more than I deserve.

  22. Do we need the BBC?
    Posted December 27, 2011 at 1:39 pm | Permalink

    Problem:
    -Uber-wealthy using the political stability of the United Kingdom to safe-haven their money.
    -Paying little income tax but using services, such as police to guard their houses and allow them to shop on Bond Street (as long as they don’t want to buy trainers).

    Solution?

    -Plan to shift tax burden from work and income generation to consumption, once the immediate crisis is over. Can’t be done now as consumer demand is the principal route out of trouble for our manufacturing-lite economy. However, a ten year plan to create the following tax model:

    -Gradually abolition of employer’s NI contributions over a fifteen year period
    -Abolition of employee NI contributions and inclusion of that tax burden within the income tax rate (many spin-off benefits, particularly red tape and perception of tax burden, which will help drive it down)
    -Increasing VAT to 28% over a fifteen year period (40-50 billion shift)

    This largely revenue neutral shift would have the following welcome knock on effects:

    -attacking the concept of ‘consumerism’, which leads to stabbings in Oxford Street over a pair of trainers.
    -capturing more taxes from those hiding income
    -reducing unemployment in the long-term, through at least four mechanisms I can think of
    -incentivising job creation
    -stimulating manufacturing (lower unit costs per employee) so that the lost jobs the VAT rate would create in Foot Locker would be recycled into employment by JCB and such like.

    Unwelcome shifts, such as rise in inflation and damage to the services industry, could be offset with appropriate planning and slow phasing-in. Reduced labour costs should keep companies in the game whilst the slow shift occurs.

    I would also look to shift the balance of stamp duty and eliminate loopholes for apparent use – no stamp duty up to 350000, 2% up to 500000, 4% up to a million and 6% over a million.

    It galls me to say it, because I think most of them should be in jail, but you need the labour party to agree on a long-term tax plan with the Tories. There are very few people in that party who care about anything other than power, or who are bright enough to understand the concepts, but perhaps a few can be found to begin negotiations – a ‘Coalition of Coalitions’ on long-term tax solutions….

    High VAT rates will get more money from the wealthy than anything that targets income and it has the moral superiority of being a voluntary tax, over and above a core level of consumption. As long as we don’t allow any loopholes at all (overseas residence etc, etc) it could work. Currently our economy doesn’t work, so we should consider radical changes. The uber-wealthy may be tempted to spend more money abroad on big ticket prices, but they pay so little on income tax that they would eventually cough up more than they do now.

    This would be an intermittent measure designed to re-balance the economy. When you include workfare, raising the level at which income tax begins and the abolition of 90% of the regulations that affect the workplace (and the harridans who enforce them) the overall tax burden will drop considerably allowing some relief.

    The ‘regressive tax’ argument no longer holds water. This country subsidises the poor to an extraordinary level when compared to our new economic competitors around the world, such as Brazil. If someone want more money for luxuries, such as cars, mobile phones etc, then take one of the 500, 000 job vacancies on offer locally or move to places where there are jobs.

    The people of this country are beginning to realise that hundreds of years of unrivalled prosperity are coming to an end. Major shifts are occurring in the mindset of the average person as they understand that there isn’t much that we do better than our emerging rivals and we are more expensive. We have to work harder as a country to maintain our QOL and high-tax, high-benefit economies are dropping like a stone down world rankings.

    • uanime5
      Posted December 27, 2011 at 4:45 pm | Permalink

      “When you include workfare, raising the level at which income tax begins and the abolition of 90% of the regulations that affect the workplace”

      So along with forcing people to work you want to remove all health and safety laws, and give them no employment rights. Don’t expect this to be anything other than a complete disaster.

      “This country subsidises the poor to an extraordinary level when compared to our new economic competitors around the world, such as Brazil. If someone want more money for luxuries, such as cars, mobile phones etc, then take one of the 500, 000 job vacancies on offer locally or move to places where there are jobs.”

      The poor are subsidised because they don’t get paid enough to live on. This is why the lowest paid 50% of the population only have 7% of the wealth.

      Given the high levels of crime in Brazil we shouldn’t be following their welfare examples unless we want similar levels of crime.

      Finally there are currently only 455,000 jobs available and there’s no guarantee that you will get a job even if you can afford to move.

      • Do we need the BBC?
        Posted December 27, 2011 at 7:29 pm | Permalink

        ‘Dont expect this to be anything other than a complete disaster’.

        The thing about champagne socialists, is that they wouldn’t notice a complete disaster if it crept up and bit them on the a**e. Until the Guardian stops being printed and we run out of recycled cardboard for their lattes, the ‘fairness’ industry will just keep on rolling on oblivious to the coming precipice.

        The country is IN a disaster right now. We are effectively bankrupt and require emergency measures. Personally, I would preserve some health and safety legislation in industrial environments and abolish just about everything else. I was being conservative when I quoted 500000 vacancies. In reality there are many more, but the education system is so appalling that employers are waiting to come across someone who can speak and walk at the same time (someone educated in another country?)

        And what’s wrong with forcing the able bodied to work? A lifetime on benefits should not be a choice. And before you make Hampstead judgements matey, I know more about living in poverty than you do, I guarantee it.

        The Chinese are vastly poorer per head than we are and have lower crime rates. Champagne socialists always believe poverty leads to crime, but it never did in this country until left wing hand wringers like the church of england allowed it to be an excuse.

        • uanime5
          Posted December 28, 2011 at 5:06 pm | Permalink

          So you’re fine with removing things that prevent people being maimed or killed as long as it costs companies less money. Expect the number of people on long term disability benefits to dramatically increase.

          Given that employers are unwilling to hire able bodied people if they lack enough education how do you plan to force able bodied people to work?

          As China has the second highest prison population in the world it seems to have a much higher crime rate than the UK.

          While poverty doesn’t always lead to crime it is a major factor. Most criminals do come from poorer backgrounds.

        • Bazman
          Posted December 29, 2011 at 5:47 pm | Permalink

          Cham-pag-nee capitalism where the race to the bottom is the answer to everything. If the employers are so desperate for qualified workers they need to train some and stop relying on the state and poaching each other staff, then using cheap foreign labour to fill the gaps. The rates in my trade are now less than 1996 levels so I will not be taking a pay cut.
          So everyone is to live like a Chinese rural peasant? As if anyone could. Certain things in this country are entitlements no matter what your social status like healthcare, clean water, availability of food and accommodation. I suppose next you will be telling us we are better off than the 15th century. People are to live in rags on the streets whilst the rich have wealth beyond belief? So much for democracy. How do you hold down your job I you can’t see this? I mean would you stand for this? Poverty does not lead to crime? It does in the main. People have expectations in an advanced society like Britain and quite rightly so.
          Do we need the BBC? This is a strange name and like the upper and middle class fascination with Nazi’s is a common idea with this type of person. White middle aged middle class males.
          The alternative is another SKY or mindless satellite, the same in my opinion. The Sky monopoly is a choice you will say. People volunteer to pay a hundred quid plus a month? Smoking is also not addictive too I bet. If the BBC was a pro government right wing organisation would you be concerned by bias? I think not. When the BBC is dealt with how will you deal with the other TV channels that say the same thing?
          The problem is that people like me who would otherwise have limited access to information and limited education, now have the internet and access to various sources which can then be used to find other sources. John Redwood’s blog being a prime example. I can say for sure that reading this site has educated me in many ways especially in the area of dealing with the thought processes of middle class right wing smart Alec’s who believe that there is stupid kids, thick working classes and daft old gits.

      • libertarian
        Posted December 27, 2011 at 8:15 pm | Permalink

        Then create your own job, just like the poor working people did who eventually became the rich you so heartily despise

        • uanime5
          Posted December 28, 2011 at 5:07 pm | Permalink

          Most rich people were born into wealthy families, went to private schools, and got high paying jobs due to their connections. Very few started poor and became wealthy.

          • Bob
            Posted December 29, 2011 at 10:32 pm | Permalink

            “Most rich people were born into wealthy families, went to private schools, and got high paying jobs due to their connections. Very few started poor and became wealthy.”

            Do you have any evidence to support this assertion?

      • Nash Point
        Posted December 27, 2011 at 11:48 pm | Permalink

        “There are only 455,000 jobs available”. That’s strange. I worked in the public sector, then the private sector and then, sick of the idiots I had to work for, eventually set up my own business. It’s not much of a business, but it keeps me going. I don’t remember ever seeing the job advertised. So, maybe it’s 455,001 jobs available… or any figure you can think of

        • alan jutson
          Posted December 28, 2011 at 9:25 am | Permalink

          Nash Point.

          Exactly, there are no job adverts for starting your own business, you just see a gap, and after due deliberation, choose to do it or not.

          It is my view that most business people start off being self employed for a while, to test the water, before jumping in with two feet.

          The problem is, the government and inlnd revenue, seem to want to make it difficult for the self employed by giving them all sorts of hoops to jump through.

    • Bazman
      Posted December 27, 2011 at 8:55 pm | Permalink

      Interesting to know what ‘work’ this person doe,s if any. Desk jockey at least.
      Vat is a regressive tax easily avoided by the rich. If you cannot see this then you are stupid.

      • Do we need the BBC?
        Posted December 28, 2011 at 9:02 pm | Permalink

        This is classic socialist thinking – attack the man not the idea.

        Why is 28% VAT impossible and yet 20% possible? Of course there will be a limit where it becomes counter-productive, but I don’t hear these same people acknowledging the same regarding upper rate income tax. The VAT income would be used to make job creation cheaper.

        Does Roman Abramovich’s empire currently pay more income tax or VAT in this country? Do all the oligarchs who reside their trillion dollar wealth in this country as non-doms pay more income tax or VAT? How much do they spend per year on things sold in the UK, even if those things are not manufactured in the UK or those sales organisation are exporting their profits from the UK?

        Is this how we can exist without actually making anything? We obtain some of our wealth by taxing the sale of other people’s stuff through our shiny shops in our (relatively) safe and stable country??? Like an admission charge to a fairground, perhaps.

        What does this mindless statement ‘VAT is regressive’ actually mean? VAT is not charged on food or children’s clothes amongst many other things. Is it unethical for those earning little, or choosing not to earn, to be charged VAT on luxury goods, whilst those who work incredibly hard for medium incomes are taxed on their income for doing so? This VAT is not a punishment, it is paying for benefits and tax credits, along with the income tax of people who choose to work and employers who create jobs.

        Is it ethical to allow 1.5 million people to choose not to work (the ‘structural unemployment’ level, for want of a better term)? Gordon’s debt boom showed that the country could accommodate, within just 7 years, an extra million people who actually wanted to work, whilst 1.5 million people continued to put their feet up and claim there was no work. There are currently a lot of people who really want any job, but those jobs may not be available in their area; however, there are also many who do not want any job and instead want to be songwriters, or advertising executives, whilst the Poles and Latvians man our shops and clean our houses. This is immoral. Work used to be good for the soul, until the Church of England got involved.

        Is there, and has there been, any excuse for an English speaking person to be unemployed in London within the last 15 years?

        How would the wealthy avoid VAT? Given that non-doms, for example, are only paying £30000 or so in income tax, are you saying that they would less overall tax by increasing the VAT rate ? Of course they could buy things abroad, but would they really bother to the point where revenue is negative and they are bound to pay duty anyway?

        You say I am stupid and a desk jockey. You say my ‘work’ is likely to be useless. If you look up a list of the most respected jobs in the country you will find me, pretty much at the top. And believe me, when the time comes, you will need me more than I will ever need you. Champagne socialists are the worst sort of left wingers. They claim to understand poverty having never been there. I have been there. More than any of you lot, I guarantee it. I do not hate poor people – that is the corrupt language of the left, demonising anyone who does not think like them.

        The welfare state is like a lifebelt thrown to a drowning man who cannot swim. If he gets out of the water, the lifebelt is an incredible thing that we should all applaud. If he chooses to stay in the water, should we pay for a lifeguard to watch over him whilst he paddles and bemoans how cold the water is?

        Wouldn’t it be better to teach him to swim in the first place and if he can’t learn to swim, he should stay away from the bloody water at all costs.

        • Bazman
          Posted December 29, 2011 at 12:04 pm | Permalink

          Attack the man not the idea? You need your legs hacking out from under you and here’s why. I will not be living my life and working under conditions that you would find unacceptable. Work is good for the soul? You have obviously never had a factory job….Ho hum..
          Vat not on food and only on luxury goods? Oh really? Get real. Apart from that now the under classes are not even allowed to own a phone or other ‘luxury’ goods. The British peasant living of the land is not possible. Have nothing and be happy with it is what you are saying. Not acceptable for any British person.
          Anyone one the dole is just a song writer who does not want to work? LOL! I love it. Keep going.
          I have explained many times why the East Europeans work here. In short they are young, fast footed and looking for sex and adventure. Or just desperate. They often live five to room and five to a car sharing communal food. The ones that come here are often the smart motivated ones and often of a middle class type. The rest just rot in Eastern Europe like they do here. How a middle aged man with three children in an isolated northern town is supposed to compete with them is unthinkable. Should he leave his family and live the same doing a minimum wage job? How much would be left after living expenses?
          Many cannot be employed as anything this is true. A real problem, and starving them will not help. There are many jobs available, but most require specific skills and a certain attitude even if they are not rocket science. Often they are in different areas of the country and moving away from a family and other social ties is not feasible, besides how easy do you think it is to get a job in a supermarket of which the numbers are limited. They would not employ you or I for instance for different reasons. One of which would be lack of experience.
          Circumstances dear boy. Circumstances that both of us had little control of. I cannot say what is going to happen, but I can say what is not going to happen and living like a tramp and working in bad, unsafe conditions for six quid an hour whilst you pontificate about tax and poverty that will never affect you, in your drawing room is not going to happen. I stand by the statement that you are a stupid desk jockey. Ram it.

          • Bob
            Posted December 29, 2011 at 11:01 pm | Permalink

            Birds do not just sit around and wait for God to drop food into their mouths, but rather, they busily search for and gather their food. …

          • Bazman
            Posted December 30, 2011 at 4:15 pm | Permalink

            Wise words Bob. I think I know one about water and horses or is it dogs and food? Anyway, your point is that bubbles go upwards?

          • Bazman
            Posted December 30, 2011 at 5:38 pm | Permalink

            Like Mr BBC above. Birds are not poor and never have been Bob.

  23. Bernard Otway
    Posted December 27, 2011 at 1:54 pm | Permalink

    Sorry not on this topic but put here for an answer ? from Uanime5 ????.
    In the previous topic in response to my comment re Brazil replacing us as No 6 in GDP,you spouted some drivel about GDP per head,I will not stoop to debate you despite my economics
    degree and speciality in statistics,yet have you thought of what a small increase in GDP per head will do to hugely populated countries like China and India,IF China increases GDP by
    $10 a head that sum is $10 X 1.4 Billion =$14 billion SMALL increases will further SWAMP
    us.But GDP in total is the one measure that gives the BEST information.Read also what I said in other posts in the last week on the subject about the Portugosphere [my word] and Portugal [Brazil,Angola,Mozambique as natural trading partners,and the Hispanophere
    for Spain [all spanish speaking countries starting with Mexico and ending at Cape Horn]
    EVEN the Francosphere especially in Africa.

    • uanime5
      Posted December 27, 2011 at 4:56 pm | Permalink

      GDP per capita is more useful than total GDP as it takes into account the purchasing power of the people of a country. This is very useful when determining what level of exports they will be able to afford. Odd that they didn’t teach you this when you studied economics.

      As China’s total GDP is $5.9 trillion a $14 billion increase in the GDP will only increase it by 0.24%. A very minor increase.

      There are far more useful things than GDP to determine how useful a country is such as literacy levels, average wages, infrastructure, and regulations.

      Also what’s the point in trading with countries that can only afford to buy a small amount of our imports.

  24. Bernard Otway
    Posted December 27, 2011 at 2:24 pm | Permalink

    I have always and will for ever think that Tax is LEGALISED THEFT,under the threat of dire consequences,and as for the Bolshevik licensing fee I won’t print what I think John will definitely Ed. me. As for Equality it is impossible ,we are all different and definitely not equal
    and NEVER can be,all that the lib left fascists do is FORCE square pegs into round holes and create enormous anger which is building all the time, sometime in the next few years it is going to explode,mark my words.

    • Bazman
      Posted December 30, 2011 at 5:43 pm | Permalink

      Having a roof over your head, a car and a mobile phone is not wealth in this country. Comparisons with China/Russia/ and India are laughable.
      This will occur, if it does, due to the opposite. The massive inequalities that exist in Britain being the driving force. Making the poor have less will not make the rich have more. An argument of ten used in reverse by the rich.

  25. StevenL
    Posted December 27, 2011 at 3:07 pm | Permalink

    So the wealthy Arabs you see quaffing cognac and throwing tens of thousands of pounds down the hole in the roulette table in West London got rich by ‘favourable tax arrangements’?

    Is that not implying that they work for their money over there, as opposed to paying Westerners to dig it out the ground for them, while (low wage-ed) slave labour from Bangladesh, Pakistan and Nigeria to build vast palaces and impressive skylines?

    I suspect that many of them are (unpleasant people he wishes to avoid-ed)
    I can see why so many ordinary Arabs are fed up with their ruling classes, if I was an ordinary Arab I’d hate them too.

    • Bazman
      Posted December 30, 2011 at 5:47 pm | Permalink

      Should Haji not be happy with his lot and not be having ruinous Socialist ideas. Kings castles and dirty rascals etc?

  26. Kenneth
    Posted December 27, 2011 at 3:07 pm | Permalink

    I have no problem with anybody buying property anywhere.

    The only stipulation I have is that a bond of $50,000 should be paid to the UK government for each person coming into the country who is not a UK citizen. This would be fully refundable when they leave the UK after a short stay (e.g. tourists/students) OR (if they choose to stay) when the tax yield from the person minus benefits reaches the $50,000.

    Tourist bonds can be paid for through collective industry schemes.

    I also think that a low tax regime for all UK citizens and businesses and all visitors/immigrants should be our target.

  27. Alan Wheatley
    Posted December 27, 2011 at 3:31 pm | Permalink

    London has an inherent commercial advantage because it is the capital. So, for instance, because some things that have to be done can only be done in London (e.g. Parliament, the Royal Courts of Justice and the Olympics) people have to go there, and while there spend money. This attracts businesses and the arts, and more people. London becomes ever more attractive.

    By the same token, everywhere else is disadvantaged.

    I do not think there is anything that could be done, or indeed should be done, to eliminate the “London advantage”, but there is no need to pander to it. The rest of the country wants its far whack, and this is so often not the case.

    One thing I would do is to abolish “London weighting”. If people living in expensive places want the their houses cleaned then they will have to pay a commensurate rate. If public services cost more then local taxes should be proportionally higher.

  28. Bob
    Posted December 27, 2011 at 3:51 pm | Permalink

    @Mr. Redwood
    Your conclusion is logical and I believe correct.
    The huge burden of taxation acts like a brake on our economy.

  29. uanime5
    Posted December 27, 2011 at 4:15 pm | Permalink

    “The truth is very few UK citizens paying high UK taxes can now afford to buy a property in the centre of our capital city.”

    Rest assured John that most of the people who don’t pay high levels of UK taxes can’t afford to buy property in London or shop in the most expensive stores. Hopefully the shops will get the message and start selling things that most people can afford to buy.

    Also the more people who buy houses in London the higher the property prices are pushed up. This increases the amount it costs the Government to house people.

    “Maybe the moral of the story is that lower taxes work and help create and stimulate wealth and income.”

    No it isn’t. The moral is that if you pay yourself a huge salary you can afford to purchase overpriced brand name items in another country. Once China starts producing it’s own luxury items expect the number of rich people who come to London to sharply fall.

    “If Central London can enjoy some benefits from non dom tax status, why not try lower tax rates on income and enterprise for UK citizens living anywhere in the UK as well?”

    Given that the rich tend to save their money rather than spend it all these tax cuts will achieve is reducing the tax revenue. Tax rates shouldn’t be lowered while the Government still has high levels of borrowing.

    Speaking of taxes the government is planning to greatly cut tax credits for families where the parents work and increase them for families where the parents don’t work. Expect far fewer people to work for low wages as a result.

    http://www.independent.co.uk/news/uk/politics/britains-poorest-hit-by-25bn-stealth-tax-6281832.html

  30. Michael Read
    Posted December 27, 2011 at 4:25 pm | Permalink

    Has Conservatism really been reduced to this?

    I reckon you’ve been gargling too much of that fizzy stuffy, and probably inhaled too.

    Let me see. The argument runs: low taxes attracts rich people which is a good thing because this ensures property prices remain high, spreading goodwill and cheer across about 500 acres of west London.

    This is an economic policy? An industrial strategy? The product of years of tortuous deliberation and angst at Central Office?

    As a point of fact, I understand this low-tax regime is apparently already in place. If evidence given to the public accounts committee is to be believed, HMRC’s chief Mr Hartnet is a soft touch for close to forgiving £27bn’s worth of tax liability if you are prepared to offer a £500 nose-bag job at Caprice whatever (akin to rich people in the Middle Ages obtaining absolution from their sins if they were prepared to punt an indulgence or two towards Rome).

    As a point of further fact, some rich people appear to have achieved the ultimate fiscal inducement of getting paid to be here. Think banker, bonus and £244bn worth of our taxes propping up the sorry mess.

    Reply: I seem to remember Labour encouraging all this with an open doors policy on migration and a statement that they were relaxed about people being mega rich, if you wish to turn it into a party issue. I was asking what attitude should we adopt in a free society to this. Are you suggesting banning rich migrants, or do you have some tax proposals you would like to share with us?

  31. david englehart
    Posted December 27, 2011 at 4:39 pm | Permalink

    you have today hit on one of my favourite themes namely the fact that we are a safe haven and by encouraging the rich to invest we help our economy.
    however we should beware our coalition partners and their obsession with a so called mansion house tax.
    this is pure short sighted politics of envy and the sooner the silly idea is dropped the better.
    a tax of this sort is ok for a foreign owner who comes from a low tax country.
    however what it does for a hard working job creator in this country is price them out of the market for those properties affected and means our heritage will become foreign owned.
    what is galling is that british job creators are normally too busy and cautious to indulge in stamp duty saving schemes especially as it is likely these may be retrospectively closed.
    quite rightly too.
    as to the schemes which save tax i put a simple solution to the treasury which was dismissed out of hand.
    it would be to follow the habit in certain countries whereby any potential capital gains or similar tax is collected by the selling lawyers.
    as a property orientated solicitor i would have no problem with the concept given the propensity for companies and individuals when the go bust to owe the revenue a small fortune.
    however a new wealth tax on property based on the politics of envy epitomised by vince cable and the like in his party would be a retrogade step.

    • A different Simon
      Posted December 27, 2011 at 11:01 pm | Permalink

      I don’t agree with a mansion tax either .

      Why penalise transactions though ?

      Wouldn’t it be better to levy a annual land value tax on all property and pieces of land proportional to the value of an unimproved piece of the land in that location ?

      Land ownership is surely only a right of conquest ; someone fenced in some land or threw someone else off it .

      I’m concerned that youngsters are completely disenfranchised by all the land having already been grabbed .

      • sm
        Posted December 28, 2011 at 3:51 pm | Permalink

        We could restrict purchases of land and existing housing to fully resident and domiciled taxpaying residents .Thereby promoting new development or some other type of section 106 charge to directly contract the building of replacement housing.

      • Realist
        Posted December 28, 2011 at 5:26 pm | Permalink

        Nonsense it is bought out of taxed income in most cases!Tax , tax is that all you can think of, what about questioning the invasive role of the state?

        • A different Simon
          Posted December 29, 2011 at 7:06 pm | Permalink

          Churchill was a big fan of land value tax .

          Far less damaging than income tax so why not move the burden of taxation to resource usage ?

          The state is typically invasive where it needs to be less invasive eg planning laws need to be relaxed to bring down accomodation and premises costs and lassez faire where it needs to be invasive ; eg proper regulation of rents as per Germany to prevent the blatent exploitation that goes on over here by Rachmanesque land lords .

          Land Value Tax is one way of combating monopolies and ensuring the dividends of natural resources like land accrue to society as a whole , not just the few .

          It would discourage hoarding of land like a drill-or-relinquish license encourages oil and gas operators to drill .

  32. badgerbill
    Posted December 27, 2011 at 4:57 pm | Permalink

    In the Daily Mail today is an item about an asylum seeker who would not move to Coventry and instead they rent a house for him and his family from Somalia for £8000 per month. Why?

    How many from abroad are given such treatment and how much of our taxes goes to support them? Why do we have to pay such heavy taxes to keep the dross that arrives here from abroad, particularly those who have no intention to work? What percentage of our tax goes to keep them? It’s bad enough to keep our own workshy without millions from abroad

    Parliament’s duty is to our people first but anyone could be forgiven for thinking that our people come last. It is no wonder that come the election many will not vote. As for Clegg, does he think that if he shadows the Prime Minister when he goes to Europe he has the final say? If he has, it does not say much for David Cameron who should have sorted him out from the outset and not allowed him to go on as he does. As for the business secretary, business seems moribund.

    • Rebecca Hanson
      Posted December 27, 2011 at 8:30 pm | Permalink

      badgerbill I find your use of the word ‘dross’ offensive. If you mean asylum seekers could you use that term please?

      If you’ve arrived as an asylum seeker in a country with your family having been through horrors most of us cannot imagine (as are so common in Somalia) I’m sure you would choose to locate your family close to people you know rather than miles from them if you were given the choice. If we, as a country, do not wish to give asylum seekers such choice we need to create legislation which removes that choice.

      • Graham C
        Posted December 28, 2011 at 10:17 am | Permalink

        Rebecca,

        You should not be so sensitive. The definition is more correct than not and cerainly not offensive

        The world is not a fair place but these people [how do they get here anyway] do not and will not contribute to the UK. In fact they attempt to turn the UK into the very place that they wish to leave and where [according to you] they suffer horrors.

        In addition how many starving children does one need to produce before commonsense prevails – how do they get to 8 or more?

        If one adopted your approach the UK would now be sinking further under the weight of unfortunates everywhere and I, for one, am sick of paying through the nose for the privilege.

        • Rebecca Hanson
          Posted December 28, 2011 at 1:30 pm | Permalink

          Would that be my approach of working on the frontline of education our most challenging students and always going the extra mile to do my best to make sure each one has the opportunity to be a full member of adult society Graham?

          From my experience it’s not helpful for those children to feel that they are perceived to be dross by society. Why do you think it’s helpful?

          I’m not sensitive, I’m just pragmatic and look forward to your answer.

          • Realist
            Posted December 28, 2011 at 5:37 pm | Permalink

            My gosh, where do we draw the line. We have had the biggest ‘social/economic migration’ in the last 15 years in our history as a country it will have some good as well as some dire consequences, but sadly we can’t put the cork back in the bottle and we are going to face some ‘awkward’ social ramifications as tough times really start to bite, as for most though not all, we have been in a ‘phoney war’ the next 3-4 years at least will put great pressure on the social cohesiveness of those that live here and I am not sure how that is going to pan out to be honest! Tins of bully beef, and self sufficiency with maybe a wild but sensible precaution!

  33. Bruce Neeves
    Posted December 27, 2011 at 5:06 pm | Permalink

    We have to stop using terms such as: state aided, government funded, on the NHS, free at the point of delivery etc etc. It is all UK tax payer funded and we should remind everyone, both recipients and tax payers, of this single important financial truth at absolutely every opportunity!

    London? To me a foreign city, a capital in which I feel a foreigner, an outsider. Even those manning the tourist attractions are all foreigners. Do not MPs, who work there, just feel they are a bit out of place?

  34. Bernard Otway
    Posted December 27, 2011 at 5:41 pm | Permalink

    Not on topic but about GDP per capita,for uanime5 here is the Wikipedia list for 2010 from the IMF. 1]Qatar $88,222 .[2]Luxembourg $81,466.[3]Singapore $56,694. [4]Norway
    $51,959. [5]Brunei $48,333. [6]UAE $$47439. [7]USA $46,860. [8]Switzerland $41,950.
    [9]Netherlands $40,973. [10]Australia $39,764.
    Germany [19] UK [21] France [23]
    Argument DEMOLISHED
    Whether we trade with those large GDP countries OR the above list of GDP per capita makes
    NO DIFFERENCE as the EU countries are hugely outnumbered by the rest.
    AND AND AND vis a vis my continual talking of Australia, on GDP per head they are [10]
    and we are [21] WHAT will they be WHEN Australia gets to 30 million population in no more than 10 years,right now they are 10 to our 21,in 10 years time we will be nearer 30 and they will be a couple of places higher. WHO SHOULD we MAXIMISE trade with ?
    the answer is a NO BRAINER.

  35. Andrew Hunter
    Posted December 27, 2011 at 6:18 pm | Permalink

    In Switzerland only the Swiss are allowed to buy real estate. Shouldn’t we have a law like this in the UK? Otherwise we will end up with all the prime sites foreign owned. If this is against EU law, could be widened to EU citizens.

    • libertarian
      Posted December 27, 2011 at 8:22 pm | Permalink

      Sorry Andrew that’s not true

      Foreign nationals must apply for a permit under the Lex Koller regulations to buy a Swiss property, however citizens of EU/EFTA countries are free to purchase property in Switzerland

    • Rebecca Hanson
      Posted December 27, 2011 at 8:26 pm | Permalink

      To apply such a law retrospectively would substantially devalue property and cause personal bankruptcies Andrew. The only way something like this can be done is to make it a condition for planning permission – as is the case for the local residency clauses I’ve written about above.

    • A different Simon
      Posted December 27, 2011 at 11:07 pm | Permalink

      Absolutely we should .

      In Malaysia and Phillippines foreigners can only own expensive real estate .

      Average and cheaper real estate is reserved for citizens .

      We need to generate a surplus of housing in the UK to reduce accomodation costs drastically if people are ever to feel franchised and be able to put aside enough for their old age .

      Levy a land value tax on property and unimproved land . That would encourage people to build .

      Let house prices fall to an affordable rate of 2.8 times salary (equal to 3.5 times after 20% set aside for old age) .

  36. Barbara Stevens
    Posted December 27, 2011 at 7:13 pm | Permalink

    An interesting article, and I can understand rich people coming here, but like you say they should pay their dues, we have to. However, I have another question I should like to put to you. I own a house jointly with my husband, we bought it 34 years ago. Have modernised it and in the last five years made it a haven for our retirment. My husband worked for 44 years paying his dues, as did I. Then, we had house bought attached to ours by an immigrant, who married a girl born here, no problem there, but his property as gone down hill each year till it’s nothing more than a tip. It was reprocessed recently, the boundary between us is theirs, no fencing up, no garden done, and rubbish every where. It as now reflected on the value of our house that we have spent some £25.000 in the last five years. They are now divorced, the house sold, which will be let to tenants, hopefully good ones. To learn some can come here and not pay their dues is a stab in the back for those of us who have suffered from Labour’s open door policy. (Allegation about the former neighbour based on hearsay removed-ed) We are bitter, as we see our investment brought down, not by us but by others. There’s nothing we can do about it, we can’t force the new vendors to clear the property up, we cannot afford legal ways to bring about change. These people come here, buy properties but don’t look after them at all. My point is there should be laws for the local council to make them bring them up to standard before they are given a licence to let. This house is not fit to let, and the garden certainly is not, but we are in no doubt they will get the licence and it will be let to some unsuspecting tenant, @ £600 per month, and our misery will go on. So praising the rich is fine, but in this land there are many citizens suffering from some people’s disregard for English customs. Where is there justice for the likes of us?

    Reply: I was sorry to learn of the problems you have experienced with the neighbouring house. Bad owners or tenants in a neighbourhood can cause trouble for others as you describe. The offending anti social neighbour may be born here – there is no monopoly on this from recent migrants, and it is wrong to suggest most migrants behave in such a way. The issue for the future rests on who owns the house now, and what will their approach be to their duties as owners. There are laws affecting homeownership and maintenance to try to avoid neighbour nuisance, so if you have a continuing problem you should take it up with your own MP or local Councillor. For example, rubbish in gardens might present a health hazard, noise and other anti social nuisance can be controlled under existing laws.

  37. Luke Hutchison
    Posted December 27, 2011 at 7:23 pm | Permalink

    I agree with you Mr Redwood. Taxes need to be much lower, a flat tax rate would be the best option.
    The thing that gets my back up about being forced to pay taxes (I’m 16 but still at school so I’ve not paid any income tax yet, but I stay pay VAT on everything I buy) is that the government spends all of it and saves none of it. And it also has the cheek to borrow more money on top of that.

    • alan jutson
      Posted December 28, 2011 at 9:36 am | Permalink

      Luke

      You are learning fast.

      Spread the word to your generation.

      The Government should plan to spend no more than 80% of the tax it takes in any previous year, other than in a dire emergency (war, flood etc)

      This way it always lives within its means, and reduces its own debt, so that people like your children and grandcildren, may eventually live in a debt free country.

      Sorry but at 16 I am afraid that you will have to live and help pay off our present debt, all of your working life.

      What a legacy past politicians have left you, and our own children.

      Simply a disgrace.

  38. Matt
    Posted December 27, 2011 at 9:47 pm | Permalink

    Plenty of very rich British people live in and around London. I expect very few of them pay tax at the rate the government expect them to as it is very easy to avoid paying income tax in the UK. Even VAT is avoidable if you have a smart enough accountant. As has been proven recently it is also pretty easy for multi national companies to avoid paying corporation tax if they are prepared to wine and dine a few senior civil servants. Similarly well fed politicians don’t seem too bothered by this. I wonder if those same politicians will soon be occupying the board rooms of these same companies.

  39. A different Simon
    Posted December 27, 2011 at 10:20 pm | Permalink

    John ,

    I think what you are trying to say is that London is the money laundering capital of the World .

    You are right that it is low taxation .

    The rest of us are paying the taxation that they should be paying .

    Hardly a reason to rejoice ?

  40. Caterpillar
    Posted December 27, 2011 at 10:41 pm | Permalink

    I assume some tax & lottery monies are still being directed towards the support of the cultural institutions in London, and has accumulated historically.

    I have said it before (- OK whinged-) but London is indeed expensive and thus inaccessible to many outside, I would like to see the major galleries & museums moved to the Midlands (where the national footbal stadium should have gone!) This would make them cheaper for many nationals to access and hopefully move some of the tourist (and perhaps other) money. [The wealthy Londoners could afford the train ride out of London].

  41. Motorator
    Posted December 28, 2011 at 6:56 pm | Permalink

    I think you make a good point, London could be an interesting case study in frugality.

  42. zorro
    Posted December 28, 2011 at 11:17 pm | Permalink

    I also think that low taxes encourage wealth creation and stimulate economic activity. I think that John’s main point here is that London (some other parts of the UK also) appears to have a unique ‘pull factor’ which attracts many varied groups of people here for reasons of ‘safety’ be it political or economic.

    As the nation that excelled at entrepreneurship and good administration, we should make sure that we charge them appropriately for the ‘services’ that they receive, and ease the load on the locals where appropriate. Remember, ‘every little bit helps…’

    zorro

  43. Bazman
    Posted December 29, 2011 at 5:54 pm | Permalink

    LONDONERS benefit from 20 times more money per head on transport spending compared to people in the North West.
    A study for the Institute of Public Policy Research has revealed that transport spending is £2,731 per head in London, but only £134 per head in the North West.
    Shadow transport minister and Barrow and Furness MP John Woodcock said the findings were worrying.
    He said: “It’s clear there is a big regional disparity on transport investment, even accounting for the national benefits that come from ensuring our capital city has a world class transport system.
    “The finding that the North West receives just one-twentieth of investment per head in transport that London does is obviously worrying and shows that we need reform of how funding systems work.
    “The Tory-led government could begin to address this unfairness by ending their dithering over the proposed new high speed rail line that we proposed in government and agree to take this major driver of jobs and growth all the way to the North of England.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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