How do we raise more tax revenue?

Some of you will be pleased and others unhappy to learn that today’s question is one of the most common in the modern media and even amongst some MPs.

There are two easy answers. The best way to get more tax revenue is to grow the economy.
The best way to get more money from companies and the rich is to lower the rates of tax they pay.

As I have often argued, cutting the Corporation Tax rate from 28% in 2010 to 19% today has taken place against a background of a substantial increase in company tax revenue. We collected 55% more last year at 19% than they did at 28% in 2009-10. Some say this is the Laffer effect – lower rates lead to more tax. Some say it is a coincidence. No-one can say cutting the rates has led to a decline in tax revenue in the way Treasury models and others suggest.

Cutting the top rate of Income tax from 50% to 45% has also led to an increase in revenue from the higher paid. In the early 2010s we collected £2bn less in self assessed income tax with a top rate of 50% than the government collected at 40% before. Revenue rose by 15% with a cut in the rate to 45%. When in the 1980s the then Conservative government cut the rate from 83% to 40% in two steps, there was a surge in extra money from the better off. They paid more in cash terms, they paid more in real terms, and they paid a bigger proportion of the Income Tax total.

The reason all this works? Entrepreneurs, rich savers and companies are footloose. They only need come, or only need stay, if tax rates are competitive. They need only invest and spend in places where the rates make sense to them. When the UK had 83% tax there was a Brain drain. Many talented people from pop stars to businessmen went abroad to avoid the tax rates.

Capital Gains tax collected 23% less than forecast when the rate was hiked to 28% from 18%. There was a loss of revenue in 2012-13 and 2013-14 with the higher rate, contrary to Treasury model predictions.

So to raise more revenue we need to change the Treasury model to make it more accurate, by accepting that some taxes are at rates above their revenue maximising levels.

The Treasury have a very poor forecasting record on revenues. Remember they had to hike their forecast for 2016-17 tax receipts by £10.5bn between the November forecast and the March forecast in the year in question!

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135 Comments

  1. Narrow Shoulders
    Posted July 5, 2017 at 5:12 am | Permalink

    80% cuts: 20% tax rises

    When we will see the cuts? When will government get involved less.

    When this parliament was hung, I was hopeful for a new era of “nothing can be done” rather than “something must be done”. Government does best when it does least. Obama had a period of over 70 months of jobs growth when he could not legislate much as he had not majority in the senate and house.

    Today’s question is the wrong question Mr Redwood

    • Lifelogic
      Posted July 5, 2017 at 9:31 am | Permalink

      Not under T May, she even wants gender pay reporting by law, prices and national wages controls and workers on company boards. She is a socialist dope at heart. I assume she joined the Tories only as she had more chance of a seat than as a Libdim.

      • Hope
        Posted July 5, 2017 at 9:13 pm | Permalink

        JR, could moves be made to sack taxing Hammond he is becoming far too troublesome and replace with Leadsom. Hammond still ranting about staying in customs union and a long transition. He is again using revisited scaremongering language about what he consider we voted for in the referendum. He and Osborne lost. No. Us toms union, no transition. We voted leave, what part does not Hammond not understand in his limited ability? Perhaps he ought to understand we voted for leave ministers to bring this about not remainers with less than half hearts attempts to make a success of our departure. It is getting boring and tiresome to listen to likes of him.

        • Lifelogic
          Posted July 6, 2017 at 8:15 am | Permalink

          Why not Jr, Reese Mogg or other sensible numerate person?

        • Chris
          Posted July 6, 2017 at 8:26 am | Permalink

          It is blindingly obvious, I feel, what Hammond’s agenda is, and yet he is tolerated and supported by our so called Brexit government. What on earth can that achieve for Brexit? What message does it send out to the electorate other than that there is dithering in a team that should instead be utterly committed and focused, that there is not a firm commitment to Brexit, that Brexit can be changed to mean something else. This all feeds into the Remainers’ agitation and destabilisation agenda, which Cameron has now joined by apparently ringing up Remainers to apparently undermine May (that is if reports in the Press are to be believed):
          http://www.express.co.uk/news/politics/825225/David-Cameron-Brexit-deal-MPs-Norway-Theresa-May
          Cameron’s secret Brexit SABOTAGE: Ex-PM ‘calling MPs to urge them to oppose May’s plans’

          “DAVID Cameron has risked widening the Tory rift over Europe by privately pressing MPs to support a watered-down Brexit deal that would keep Britain firmly tied to Brussels, party sources revealed last night…..”

    • Hope
      Posted July 5, 2017 at 12:19 pm | Permalink

      Agree. Bonfire of quangos, cut vanity projects like HS2, cuts overseas aid to humanitarian needs and bribes for business only, only use UK companies for any overseas aid project.

      Public service employees have benefitted from the tax threshold rise as well as the 1 percent. This must be pointed out. They also have benefitted from unpresidented low interest rates to buy homes. All could be paid better if bureaucracy was cut in each, non managerial and diversity posts slashed and PFI abandoned even if that meant a law change. Most of this waste brought to us by Labour. Labour ought to be reminded who was in charge of banks when they crashed and who had Sir Fred on their board of advisors!

      No more tax hikes. 0.2 percent cut over 7 years over three hundred tax rises.

      When is the govt going to make us safe before Corbyn uses it as another reason to bash non existent austerity? Hammer Labour on their economic record and what it will mean in real terms to us. Show some metal FFS.

  2. Bernard from Bucks.
    Posted July 5, 2017 at 5:19 am | Permalink

    I voted conservative believing it was the party of low taxation.
    Have I been misinformed?

    • Lifelogic
      Posted July 5, 2017 at 9:36 am | Permalink

      “Low tax at heart” they keep saying, but never alas in practise. Far too addicted to pissing money down the drain.

    • Hope
      Posted July 5, 2017 at 12:22 pm | Permalink

      Yes, outrageously so by one Gideon Osborne. He spun a narrative that is coming back to haunt Tories because it did not happen as JR pointed in the early years of the coalition.

      • Lifelogic
        Posted July 5, 2017 at 7:23 pm | Permalink

        About eight years back he promised a £1 million IHT threshold each too. Where is it?

    • bigneil
      Posted July 5, 2017 at 1:33 pm | Permalink

      And a certain Mr Cameron repeatedly said “immigration down to tens of thousands”.

  3. Mark B
    Posted July 5, 2017 at 5:20 am | Permalink

    Good morning.

    The first question should be. Why are we taxing this or that ?

    Most taxes are needed to pay for things that politicians promise in order to get elected. buying us with our own, or more importantly, other peoples money. We need to move away from this Magic Monet Tree politics.

    • Hope
      Posted July 5, 2017 at 12:26 pm | Permalink

      JR, todaybwe read the EU annoying nice its army which we are apparently providing troops for, secondly, the UK must take more refugees as Italy cannot cope. Point one, we should be advocating NATO and not support anything that detracts from that. Point two, no we should not accept any more refugees or provide our navy as a ferrying service, Merkel created the problem let her solve during her election. We cannot afford either of these tax wasting notions brought about by the EU. I hope you and others will be very vocal about this at times of jibber jabber about taxation and austerity. Our country and citizens first. Our o bloc services a,d military cannot cope as it is!

  4. Lifelogic
    Posted July 5, 2017 at 5:32 am | Permalink

    Exactly but more than that you need to encourage people to provide for themself. Give them top up vouchers or tax breaks for private medical insurance or for private schools. Instead of as now making them pay for everyone else, plus tax, plus their fees, plus IPT (on medical insurance) and VAT on school fees too if Corbyn and socialist Gove get their way.

    Get rid of the TV licence tax and let people decided how they want to spend their money. Kill inheritance tax so the rich do not have to leave the country and there are some real incentives and fair competition (between the state and the private sector) in housing, medicine and education.

    Alas non of these sensible things are likely to be possible with the dire socialist, punishment manifesto and zero vision T May & without even a majority.

    Labour MPs will it seems back Nicky Morgan for the chair of the Treasury select committee over the very sensible Jacob Reece-Mogg. It seem too that (vat on school fees) socialist Gove has joined them according to The Standard. Hard to think of many less suitable or capable of the job than Nicky Morgan – John McDonnall, Lammy or Corbyn I suppose.

    VAT on school fees is exactly the wrong way to go, as this would raise nothing net and tighten further the dire state monopoly on education yet further. More people would just be forced to use the state sector and many good private schools would close or contract.

    Freedom for consumers to choose would reduce yet again.

    • Lifelogic
      Posted July 5, 2017 at 5:35 am | Permalink

      Plus kill the expensive energy greencrap religion, cut red tape and cut the bloated inept state sector down to a sensible size (about half of current).

  5. Duncan
    Posted July 5, 2017 at 5:44 am | Permalink

    A more pertinent question would be, how do we cut Govt spending?

    You know, for a fiscal conservative Mr Redwood you display an alarming tendency for Keynesian solutions to problems that can only be solved by direct reform.

    Of course reforms across all areas of Govt (the political state) will always invoke discontent and produce damaging headlines in the media, something which all politicians are keen to avoid. It is this fundamental, political concern that will guarantee our eventual bankruptcy as a nation.

    Unprincipled politicians using other peoples money (the taxpayer) to finance spending that (hopefully) generates a set of circumstances that are politically beneficial. It is this gutless and contemptible trait in all politicians that will bankrupt the treasury

    Keynes was an unprincipled charlatan but one who provided all politicians with a set of ideas that they could dip into to justify their political spending. They are both welcome to each other

    • Timaction
      Posted July 5, 2017 at 7:06 pm | Permalink

      How about a cull of the Lords, MP’s, Mayors, Councillors and scores of managers in Local Authority and other public services who sit and navel gaze. I know I used to do jobs for them. A real bonfire of the quango’s and get a grip on provision of free health, education and housing to anyone who just chips up. We see, hear and experience on a daily basis the consequences of the legacies mass migration policies.
      The young male economic migrant problem from Africa/middle est and elsewhere will only be sorted when they are either prevented or immediately returned from where they came from. Not ferried across to Italy by our Navies and other alleged charities.
      If Merkel wants to do more then she should fly them from their source Country directly to Germany. Not at our expense and against our express wishes.
      Why are our politicos lacking in any judgement, skills or strategic thinking?? Enough is enough. Not just a soundbite!!

    • rose
      Posted July 5, 2017 at 7:10 pm | Permalink

      Actually, the biographer of Lord Keynes, Lord Skidelsky, advises asking what Keynes would do now, not what he did then. Keynes has been much misunderstood and misrepresented by the Left.

  6. eeyore
    Posted July 5, 2017 at 5:45 am | Permalink

    Monopoly government is as damaging as any other monopoly. Governments should be competitive, and it turns out that when they compete on tax rates everyone benefits. What is a rich country, after all, but one with as many prosperous people and as few poor as possible?

    Alas, these deeply interesting figures won’t make Labour happy. A race to the bottom, they call it. In the overwhelming tenderness of their hearts they dearly love the poor, and want to see as many of them as they can manufacture.

    • Mitchel
      Posted July 5, 2017 at 9:34 am | Permalink

      “…as many of them as they can manufacture”

      or,as we don’t do manufacturing much anymore, import a la Blair-Mandelson.

      • anon
        Posted July 5, 2017 at 9:45 pm | Permalink

        That is reality. Labour is a race to the bottom, except for those in charge.

    • Lifelogic
      Posted July 5, 2017 at 9:42 am | Permalink

      The only way government can compete is by sloping the pitch through taxation and then undercutting the competition. As with the NHS, education, some subsidised housing etc Then we get dire state monopolies.

      • Lifelogic
        Posted July 5, 2017 at 10:04 am | Permalink

        Ones that kill thousands every year through rationing delays and general incompetence.

    • Lifelogic
      Posted July 5, 2017 at 2:06 pm | Permalink

      “Monopoly government is as damaging as any other monopoly”. No monopolies run by the government are usually even worse.

      They are not even trying to make a profit nor to serve the public. They care not what they spend nor what value they get, nor what value they give to the public. The “customer” has no control at all apart from complaining to their MPs about their high taxes and poor service, which is, in effect, vertually zero control as they are so distant from the provider.

      Many MPs simply do not care anyway if they did they would not have set up a tax system that ensure vitual state monopolies in health, education, passports and similar.

  7. APL
    Posted July 5, 2017 at 6:07 am | Permalink

    JR: “The best way to get more tax revenue is to grow the economy.”

    The best way to conceal our incessant spendthrift nature, is to grow the economy.

    But here is an idea. Why don’t you privatise things? If you move something from being funded by the government, to being funded by customers, you turn a net deficit into a potential tax revenue stream.

    You no longer have to raise taxes to pay for that organisation, and all the tax revenue generated by the organisation would be NEW and ADDITIONAL income for the government.

    But that would be a conservative policy, something the administration you support actively avoids these days.

    • Lifelogic
      Posted July 5, 2017 at 10:16 am | Permalink

      Indeed, about 70% of Tory MPs are clearly socialist. Evidence of endless waste is everywhere. I just past a large field full of solar cells near Milton Keynes. Clearly only there due to absurd tax payer subsidies, as without them they make no sense at all especially in the cloudy UK.

      • Lifelogic
        Posted July 5, 2017 at 2:11 pm | Permalink

        All the energy comes in the summer around midday just when demand (and thus its value is very low indeed. What idiots we have running our energy policy (and indeed much else).

        • anon
          Posted July 5, 2017 at 9:54 pm | Permalink

          peak demand is and has been for a long while around 13:00hrs

          Please check https://www.bmreports.com/bmrs/?q=eds/main

          • fedupsoutherner
            Posted July 6, 2017 at 6:52 am | Permalink

            Anon. I would imagine demand is high in the winter around 6pm too!! No sun then! LL is right. a waste of time especially in Scotland.

          • Lifelogic
            Posted July 6, 2017 at 8:21 am | Permalink

            There is clearly a short peak at lunch time as people cook and boil kettles plus some Aircon in offices, but demand is largely in winter and for lighting and some heating when it goes dark early.

          • Lifelogic
            Posted July 6, 2017 at 8:39 am | Permalink

            This link seems to agree with me and show peak demand at around 9.00 am and 6 pm and clearly more in dark & cold winters than the summer. Almost exactly the opposite of when the solar cells tend to produce their small & totally inflexible output.

          • APL
            Posted July 6, 2017 at 10:09 pm | Permalink

            Lifelogic: “Almost exactly the opposite of when the solar cells tend to produce their small & totally inflexible output.”

            The amount of available solar energy that reaches the earth’s surface is about two watts per square meter. That’s the best you can expect from solar power.

            Then take into account that solar cells are only about 20% efficient. Deduct the amount of energy you need to actually convert that into useful electrical energy and you are not left with very much, at all.

            Now if, as in the UK there is significant cloud cover, generating electrical energy from solar power isn’t a very attractive proposition at all.

            Finally, since we are at a fairly high latitude, the angle of incidence means that the UK is pretty much a dead loss when it comes to solar generated electrical energy.

            Arizona, the Sahara, those are possibly viable. But the UK? No chance.

        • APL
          Posted July 6, 2017 at 7:21 am | Permalink

          Lifelogic: “I just past a large field full of solar cells near Milton Keynes. ”

          So, that’s useless solar cells in Milton Keynes ( of all places ), Arizona desert, OK. The Empty quarter in Arabia, makes a bit of sense, but Milton Keynes !??

          But don’t forget too, the windmills at the coldest time of year in the depth of winter, without a breath of wind, that have to have power fed INTO them to keep the bearings lubricated.

          At periods of maximum demand when the UK is entirely covered by a atmospheric depression – thus no wind, and the GREEN ENERGY sources are an energy sink.

          Genius!

    • APL
      Posted July 5, 2017 at 12:17 pm | Permalink

      JR: “How do we raise more tax revenue?”

      Or,

      How can we squeeze more blood out of this stone?

  8. Richard1
    Posted July 5, 2017 at 6:09 am | Permalink

    Excellent points which defy denial by leftists. But when are we going to hear these kind of robust arguments for free enterprise policies as the route to stability and better prosperity from government ministers? David Cameron is right to accuse these various ministers calling for lifting of public sector pay restraint of virtue signaling. We need to get the budget back to balance so debt/gdp starts to fall as the economy grows – and set tax and other policy with a relentless focus on making the UK attractive and competitive for investment and entrepreneurship. This is the only answer to Corbyn’s prospectus of a spending binge paid for by huge increases in tax and borrowing, which can only lead to a crash as has always happened under labour governments in the past.

  9. formula57
    Posted July 5, 2017 at 6:15 am | Permalink

    So reduced tax rates are in prospect then? I will standby for Mrs. May and Mr. Hammond to mishandle the announcement so it becomes bad news and adds to the feeling that this government has lost its way. It has lost the confidence of the people in my experience and its putative replacement will not likely oblige us with reduced taxes.

  10. fedupsoutherner
    Posted July 5, 2017 at 6:23 am | Permalink

    Slightly off topic but still to do with tax as this is what would be needed for more social housing to be provided. I am incensed listening to the BBc this morning going on about the residents of Grenfell Tower still living in temporary accommodation. They interviewed one man and his daughter who have been offered a two bedroomed flat one mile away and they have turned it down because it is too small and too far away from school. How many homeless people would jump at the chance of such an offer? Where on earth do they think the council can just come up with homes that will be ‘suitable’ for these people? Out of 139 families only 9 have taken up the offer of other accommodation. When you consider how many people are living in overcrowded conditions and who have been on the waiting list for years this is unacceptable. Just what are the council and the government to do? The situation is being made worse by the families rejection of a roof over their heads.

    • Hope
      Posted July 5, 2017 at 12:29 pm | Permalink

      Sadly these people are trying to take advantage. Secondly, they know Labour will try to make a political point about it. Of course they should be housed, no they should not have luxury apartments or increased living standards as a consequence of a disaster.

    • stred
      Posted July 5, 2017 at 12:33 pm | Permalink

      It is possible that some of the tenants on the council’s books were not actually living there and had sub-let to others, whose remains may never be found. A young Italian architect was living there and died after telling his father that it was dangerous. These sub-letters pay higher rents and cannot complain to the management. The managing tenants association had tenants and the new MP on the board. Why did they not check who was living there and stop tenants removing fire doors and closers? How do we know that the new flats being offered will not be sub-let? Now the policewoman investigating and the female CPS chief have decided to have an amnesty for those subletting in order to find how many perished. Is it up to civil servants to decide whether to prosecute law breakers?

      The MP, who was on the board and the planning committee that approved the design, is now saying that the judge is not to her liking. It is hardly surprising that she wants someone less likely to ask difficult questions.

      I wonder what they have in common.

    • Lifelogic
      Posted July 5, 2017 at 4:21 pm | Permalink

      Indeed, while some have suffer appallingly through losing children & close relatives others have had little more than a narrow escape and a loss of possessions. Had they been in their own house they would just have claimed on their own insurance and rented somewhere else in short term, with no help from anyone.

      The more I hear from the sort of person they had on the radio this morning the more unsympathetic I become. Why should others pay taxes to give some people subsidised housing in Kensington for life? Many of the people paying the taxes to fund these subsidies could never afford a property there themselves. Offer them a suitable flat for 12 month, take it or make your own arrangements mate.

      • stred
        Posted July 6, 2017 at 7:28 am | Permalink

        Young professionals working in London are having to pay £700 or more pcm for shared accommodation in ex council or sub let flats and converted commercial premises. The landlord, either the council or the tenants management associations, will have a list of tenants they originally let to and the owners of flats sold off. The police should be finding these people and questioning where they are at present. If they were on the tenants list but not on the list of people who escaped, then they may be sub-let fraudsters.

        Imagine what would be done if it had been a private landlord who had let a block and not checked who was living there, not checked whether fire doors were working, left mattresses in escape routes and carried out work putting sub standard insulation fixed from the window frames below to those above, resulting in a huge fire. The local authority would have dropped on them like a ton of bricks.

    • Gary C
      Posted July 6, 2017 at 7:09 am | Permalink

      “The more I hear from the sort of person they had on the radio this morning the more unsympathetic I become. Why should others pay taxes to give some people subsidised housing in Kensington for life? Many of the people paying the taxes to fund these subsidies could never afford a property there themselves. Offer them a suitable flat for 12 month, take it or make your own arrangements mate.”

      Agreed, housing the unemployed in such expensive areas is giving them a passport to stay on benefits for life.

  11. Old Albion
    Posted July 5, 2017 at 6:27 am | Permalink

    Of all the things that are taxed, I have never understood why gambling escapes the treasury’s clutches.
    Introduce a (say) 20% tax on every bet laid by all punters.

    • Roy Grainger
      Posted July 5, 2017 at 10:27 am | Permalink

      There IS effectively a tax on gambling but Gordon Brown switched it from the punters paying to the bookmakers themselves paying a levy.

      • Bob
        Posted July 6, 2017 at 9:59 am | Permalink

        @Roy Grainger
        Because punters have more votes than bookmakers.

  12. Andy Marlot
    Posted July 5, 2017 at 6:46 am | Permalink

    Here’s a better idea. Raise less tax. Shrink the bloated and unproductive public sector. Get rid of at least some of the parasitic jobs that do nothing for the economy except hamstring it. I know this is a revolutionary idea for politicians these days, in fact I can’t remember any politician even suggesting it for decades but it was quite successful when it last tired. It would at least be entertaining to see all the cultural Marxists running around screaming at the least whiff of freedom.

  13. Lifelogic
    Posted July 5, 2017 at 6:54 am | Permalink

    Actually we raise quite enough tax revenue anyway, far too much in fact. Much of it is pissed down the drain on bonkers things like renewable subsidies, hs2, Hinkley c, corrupt overseas aid, far too many state funded lawyers, the dire NHS who waste 70 million just on paracetamol (at least 100 times what it should cost them), aircraft carrier without aircraft and countless overpaid pen pushers many doing positive harm, as we saw with the appalling fire and their flammable green rap insulation. Perhaps the main saving to be found are the subsidies they pay to augment further the many ” healthy but can’t be bothered to work” feckless. The people who think other taxpayers should carry them all their life.

  14. agricola
    Posted July 5, 2017 at 6:54 am | Permalink

    Be more efficient in production which leads to selling more and possibly employing more. A growing economy should produce more tax than a shrinking one. Have a long overdue simplification of the tax system. It must be an expensive burden to operate.

    Stop spending on things deemed vanity projects. Projects that the private sector would not invest in. Drastically trim down overseas aid. End the tax take that is used to subsidise so called green energy, it is a job exporter. Get out of the EU so ending our annual subscription of a net £10 Billion. Sort out RBS, it has been swallowing up taxpayers money for far too long.

  15. Ian Wragg
    Posted July 5, 2017 at 7:07 am | Permalink

    Don’t you think the government has enough money to waste. Your already spend 45% GDP much of it wasted.
    Taxes have distorted the housing market and APD has driven long haul passengers to Ireland and Europe.
    Your like druggies addicted to more and more money

  16. Posted July 5, 2017 at 7:07 am | Permalink

    You miss one other factor, Sir. Reduce the endless pressure of demand and force those not prepared to work in the fields and services to do so. Mass immigration and youths’ attitude to the something for nothing, Corbynista approach serve to throttle wealth. Has done since the early sixties.

  17. Turboterrier.
    Posted July 5, 2017 at 7:10 am | Permalink

    It has been said many times on this site about taxing those that are earning large sums of money off of the green crap policies adopted by this country which has such a draconian effect on both business, industry and the millions forced into fuel debt and poverty.

    As I write in the SW corner of Scotland there are over 300 turbines in the surrounding area sitting idle hopefully not collecting their constraint payments. The land owners of where these turbines are erected are on an average of £25k per annum for the “inconvenience” of putting up with each turbine. As this payment is considered to be unearned income they pay 40% higher rate tax which is £10k. Well I am sure that all your readers would like to have £15k for just watching the blades go round. If these installations were taxed at 80% to leave the land owner 20% net profit the exchequer would gain another £10k and the land owner would still receive £5k. Nice little earner when you have 10 turbines turning. How many turbines on land and sea throughout the UK? Are the people of the UK going to rebel on the streets because of such a decision? I think not.

    Then start with the taxation on the developers and power companies being paid billions on constraint payments as they knowingly entered into a scheme that did not have an infrastructure to support what they were producing. Many windfarm developments are earning more from the constraint payments than they do from the power they produce. As most of the power companies are in foreign ownership it might be a tad painful but shares go up, they go down. The energy sector within the UK is the tail wagging the dog and the gravy train has got to be stopped. It is totally unsustainable.

    The same rethink can be applied on the solar, bio mass markets, as a very large retailer slogan says ” Every Little helps”

    • stred
      Posted July 6, 2017 at 7:44 am | Permalink

      They could call it a windfail tax. The Crown Estate gets the rent for offshore turbines and the queen gets a small cut while HMG gets the rest. We pay a higher strike price than other countries, while the profits go to foreign companies and Hammond and Osbo have another stealth tax.

      How about a windfall tax on foreign companies making 12% return on PFI schools and hospitals. Hammond has no qualms about retro taxes on people who worked abroad under tax rules at the time, or screwing BTL investors with new taxes on profits not earned at all.

      But these are owned by companies with banking connections and ex ministers on the board, so don’t even think it.

  18. Iain Gill
    Posted July 5, 2017 at 7:19 am | Permalink

    Stop forcing people to take a day off work for simple stuff like blood tests.

    Simple way to raise tax receipts.

    • Lifelogic
      Posted July 5, 2017 at 4:25 pm | Permalink

      Indeed or just to get a doctors appointment. Also do operations without such incompetence and such long delays so that people can get back to work.

  19. sm
    Posted July 5, 2017 at 7:19 am | Permalink

    I’m sure there will be many other comments like this:

    simplify the tax regime therefore making ‘creative accounting’ far less appealing, and stop using taxation as a form of punishment or social manipulation.

    • Lifelogic
      Posted July 5, 2017 at 4:26 pm | Permalink

      Indeed release all these lawyers and tax. accountants to get a productive job instead.

  20. Iain Gill
    Posted July 5, 2017 at 7:22 am | Permalink

    Indeed why retire in England with the risk that the state will confiscate your house, when you can move to Scotland and that will never happen.

    • Lifelogic
      Posted July 5, 2017 at 4:28 pm | Permalink

      Don’t fancy Scotland much too cold, too many midges, too many lefties with a chip on their shoulder and they still have inheritance tax at 40% anyway.

      • Lifelogic
        Posted July 5, 2017 at 7:36 pm | Permalink

        A bit dodgy on food too, despite having such wonderful local produce to hand. Game, fish, seafood, beef, venison, soft fruits. lamb…. yet they still often to murder it preferring their deep fried Mars bars and the likes.

  21. Turboterrier.
    Posted July 5, 2017 at 7:26 am | Permalink

    As an afterthought to my previous post.

    To add insult to injury the vast majority of land owners and farmers also qualify for their CAP payments and other land improvement incentives.

    Is it not time to ask a very basic question?

    Are you a farmer or a power station?

    For the developers and speculators it has to be time to stop completely the trading of the Renewable Energy Obligation Certificates (ROCs).

    For our country to survive and increase productivity and competitiveness the energy market has got to become a totally level playing field and this will be a major player in helping to grow the economy .

    • Lifelogic
      Posted July 5, 2017 at 7:37 pm | Permalink

      Indeed and kill farming subsidies too.

  22. Nig l
    Posted July 5, 2017 at 7:33 am | Permalink

    Both the OBR and the IFS suggest that the tax take is up to £15 billion less because of the tax cuts. How much does the bank levy contribute and in an economy that is growing the tax take will increase anyway.

    The profits of large corporates established in the U.K are not going to magically increase because of less tax and they are not going to relocate if the rate increases by a modest amount.

    Surely you are looking to attract new companies? If there is evidence that is working, retain the policy, if not, put the rate up.

    In any event, once again lamentably, the debate is all about tax and spend. If I went into a business to sort it out, taking out cost in almost every case would be the first and easiest option. Angus Maude who was very successful at this recently write a piece on how much more could be achieved. Why don’t we hear anything about that?

  23. Ian Wragg
    Posted July 5, 2017 at 7:34 am | Permalink

    O/T why is Hammond desperately trying to keep us in the EU protectionist racket which is the customs union.
    What advantages are there to having tariffs on goods not produced in Britain.
    Why when 80% of the money raised goes to Brussels is he so keen to participate.
    Has he another agenda.

    • Chris
      Posted July 5, 2017 at 3:43 pm | Permalink

      He should be dispensed with forthwith.

    • Lifelogic
      Posted July 5, 2017 at 4:35 pm | Permalink

      Because he is an economically illiterate, a would be gig economy mugger, who likes 15% stamp duty, is ratting on the £1 million IHT promise and even wanted to take people fuel allowance off them and reduce their state pensions. He even thinks HS2 makes sense and Hinkley!

      In short he is a lefty plonker like Corbyn but not quite as bad.

  24. BCL
    Posted July 5, 2017 at 7:34 am | Permalink

    I work in the accountancy world and speak to many higher rate tax payers. I know that the psychological threshold is 50%. As soon as someone thinks “if I go out and earn more the government gets more than I do” the incentive to earn it evaporates. Many either don’t bother or they do but they lie about their income. When the rate is under 50% and they know they keep more from their effort than they give to the treasury, the balance shifts and the effort feels worthwhile. Whatever the moral, economic or other arguments, I know this to be how it works in practice and it is one of the reasons, no doubt, why higher taxes lead to lower revenues.

    • Nig l
      Posted July 5, 2017 at 10:45 am | Permalink

      Spot on. HMG likes to invoke moral blackmail about large corporate tax avoidance whereas further down the chain both legally and illegally vast amount of tax is not paid. As an Accountant you will understand this, namely having worked with over a thousand SMEs and the occasional mid corporate, when analysing the financials, I was regularly told with a knowing look, that they had been prepared ‘for the tax man’, as an aside one of the reasons Banks struggle to lend into this sector is often that the financials prepared like this, do not support the facilities requested. You then need to factor in the cash only deals and the very tight communities with English as a second language whose financials I found almost impenetrable, and a vast amount of tax is avoided and, frankly, evaded. All difficult to prove, resource intensive to catch and politically, let’s not go there. Easier to bash the big boys and if they are a Bank, even better.

    • Lifelogic
      Posted July 5, 2017 at 7:39 pm | Permalink

      I am happy with 20% no more and certainly no 40% on death too.

  25. oldtimer
    Posted July 5, 2017 at 7:37 am | Permalink

    The tax regime is grossly inefficient for at least two reasons. You mention one – the fact that the established rates do not maximise the amount that is or can be raised as history clearly demonstrates. The other reason is the complexity of the regime which leads, sometimes deliberately and sometime accidentally, to the poor allocation of effort and/or investment into particular activities.

    Political posturing is usually the cause of this inefficiency. It would help this government’s revenues and reputation if reason triumphed over posturing.

    • Mitchel
      Posted July 5, 2017 at 9:43 am | Permalink

      A couple of press commentators have suggested that Establishment tories are soft pedalling on Brexit because,as per one of the original reasons for joining,being under EU control would stop a Labour government(which they may now be resigned to) introducing hard left economic policies-you can’t do “Socialism in one country” and be part of the EU.

  26. Peter
    Posted July 5, 2017 at 7:42 am | Permalink

    How about collecting all corporation tax owed from big companies like Vodafone, rather than HMRC doing deals that allow them to reduce their payments?

  27. Dave Andrews
    Posted July 5, 2017 at 7:47 am | Permalink

    I’m quite relaxed about the Corporation Tax rate, in fact 20% would suit me fine. If anything, concentrate on employer’s NI rate, which is a barrier to employment.
    Can we not shrink the state rather than increase the tax take? The welfare system seems quite ineffective in tackling poverty, with a sizable chunk wasted on bogus claims. Not only that, the provision of welfare creates its own need. Better for government to support the work of charities, who identify the genuine need better.

    • behindthefrogs
      Posted July 5, 2017 at 9:47 am | Permalink

      Employers’ NICs should be considerably reduced with the tax take moved to corporation tax. This has the advantage of improving the cash flow particularly of small companies and also giving a slight advantage to home production exports over imports

  28. Posted July 5, 2017 at 7:48 am | Permalink

    Mr Redwood you are right.
    We need to cut taxes and reapportion them quickly.
    The tax code, I understand, runs to 1000 pages and is far too complex. It badly needs reform.
    The Welfare State needs cutting back hard. Why are all children forced to stay on in education until their 18th birthday for heaven;s sake? Have you talked to any of them? They seem to go to “College” a couple of days a week.
    Why are there 1.2 MILLION people in the NHS?
    Why are there 1 MILLION Civil Servants?
    Why are so many young men living without work?
    Meanwhile, the people who we need – the teachers, nurses, firemen and women, doctors – are going abroad or giving up because the demands made on them by “management” are so ridiculous, nit picking and dangerous to disobey.
    Mr Redwood, you are saying the right thing – say it louder please!

  29. James Neill
    Posted July 5, 2017 at 7:54 am | Permalink

    If government was seen to be not wasting money in the way it does like giving increased handouts to politicians in Northern Ireland as way of a bribe and then all of that money to corrupt foreign governments in Africa and other foreign places to quote just a few examples, then people might feel just a little better about paying taxes.

    • Roy Grainger
      Posted July 5, 2017 at 10:31 am | Permalink

      Personally I am fine paying for infrastructure improvements, broadband etc, in Northern Ireland.

    • Leslie Singleton
      Posted July 5, 2017 at 4:24 pm | Permalink

      Dear James–Let’s not exaggerate the NI thinggie, meaning I like to think, or at least hope, that the bung goes towards hospitals roads etc and in fact not to politicians

      • James Matthews
        Posted July 5, 2017 at 7:47 pm | Permalink

        Quite hard to exaggerate. The same per capita increase in spending applied to England would come to about £28 Billion. A serious bung (from the English to the Northern Irish, not to the DUP), even by politicians standards

        That is not to say it won’t be worth it if it gets us out of the EU with all our red lines met, but a bribe it is.

    • rose
      Posted July 5, 2017 at 7:23 pm | Permalink

      I would not bracket Northern Ireland, which is part of our country, with the rest of the world. After what they went through with the IRA – thirty years of murder and maiming, resulting in over 3,000 deaths – I do not begrudge it them and nor should you. They need more help than the rest of the British Isles.

      As for the political benefits of stabilising the government and bringing sensible influences to bear on it, those are surely cheap at the price compared with what a Corbyn administration would cost us.

      The BBC blacked out the Northern Irish during the election, giving all the presence on platforms to Mrs Lucas with her one seat at Westminster and Mrs Wood with no seat at Westminster, and Mrs Sturgeon likewise, so it is good to see them being taken notice of now. The galling thing is just how biased the BBC still is in favour of the IRA.

  30. Bert Young
    Posted July 5, 2017 at 7:56 am | Permalink

    It’s the final result that counts and reducing taxes has always produced more revenue . If businesses and entrepreneurs are not given the sort of stimulus to develop and grow , opportunities to exploit skills and innovation are put on the back burner .

    The Government are the decision makers on this issue and they must get it right . When making plans it is entirely false of them to believe that raising taxes will produce . Public indignation was felt when Hammond announced the withdrawal of Winter fuel grants and the imposition on taxing the elderly ; the “gains” that were expected could easily have been off-set from Foreign Aid and the popularity of the Conservatives continued . As it is , they have suffered in the election results and now have to scramble around to maintain their position .

    I don’t have faith in Hammond as Chancellor ; I don’t think he is a “numbers” man . The Treasury is the most influential department and it must be lead by someone who has the capability to direct and run it from the top . Above all – at this stage of the Brexit game , the Chancellor has to be a key supporter ; Hammond is not of this ilk .

  31. JoolsB
    Posted July 5, 2017 at 7:58 am | Permalink

    How about maybe try spending less instead of thinking of ever more ways to take money out of our pockets. This Government like Cameron’s before it and the Labour one before that are big spending & wasteful. Cut the foreign aid budget, get the money back off the banks, cut welfare and sort out tax credits which are a disincentive to work whatever our out of touch politicians think. Oh and whilst you’re at it, cut the number of politicians. How many millions/billions does it cost to keep a parliament at Holyrood, Cardiff & Stormont going whilst still paying out millions to send their extra armies of part time politicians to Westminster who have very little to do except meddle in English only matters and don’t get me started on 850 Lords and Ladies milking the system on their £300 a day plus expenses. Scrap the Barnett Formula and don’t forget we will be £10 billion a year quids in when we leave the EU.

    Stop wasting our money and spend it on creating a level playing field for England’s young, sick and elderly instead.

  32. Know-dice
    Posted July 5, 2017 at 7:59 am | Permalink

    “How do we raise more tax revenue?”

    Shouldn’t the question be “Are we spending the current tax revenue efficiently and effectively?!”

    And the answer to both of those is NO 🙁

  33. Anonymous
    Posted July 5, 2017 at 8:02 am | Permalink

    How do we raise more tax revenue ?

    Anyone who purports to be a socialist or support Mr Corbyn can pay a voluntary rate of 60%.

    They should be happy to do so from this moment.

    And if they don’t they should face censure for using any socialist platform ie Question Time, Any Questions, standing for government office or from standing as a member of any socialist party or organisation.

    They want us to do greenism unilateraly because they think it will be effective in influencing other nations to do the same. OK. They can do socialism unilaterally too then.

    Why are these people never called out for their hypocrisy – particularly on second homes and private schooling ?

    Why are they allowed any credibility by interviewers and on panel shows ?

    Why don’t they apply socialism to themselves ???

    The reason is that they know it does not work.

    Unilateralism would at least raise more tax – or reduce the numbers of socialists.

  34. JimS
    Posted July 5, 2017 at 8:15 am | Permalink

    More taxes? What about the bonfire of Quangos? How many more imported ‘Big Issue’ sellers and ‘Car Washers’ do we need? All of this ‘enrichment’ cares not for paying taxes but is a dab hand at claiming benefits, even for people who don’t live here.

    We truly are ruled by mad women, (there are no men left in government).

    • Lifelogic
      Posted July 5, 2017 at 4:36 pm | Permalink

      Indeed.

  35. bigneil
    Posted July 5, 2017 at 8:47 am | Permalink

    Whatever the amount you raise – it also depends on what you do with it. Currently, throwing billions away in “foreign aid” seems to be a popular choice. Another popular choice with the elite is supplying hundreds of thousands of immigrants, many more than we are told about, who will probably never contribute a penny all their lives, completely free lives for coming here, sitting in their taxpayer funded housing and then . . occasionally some of them running round the streets of Sheffield with knives and guns fighting other new arrivals. Clearly they must all be bored at not being put straight into , scientists, engineers and brain surgeon jobs which we were all told they all were.
    I won’t mention HS2 or the rise in cost and delay of Hinkley Point.

  36. Cliff. Wokingham.
    Posted July 5, 2017 at 8:47 am | Permalink

    Of course John, you’ve missed the other option…..Cut back on the amount the state spends and thus how much it needs.

    Let’s have a sensible debate about just what we want the state to do and to provide for us.
    To me, it seems that the state already takes far more from it’s people than it should, given the large number of taxes we already pay. Then there are the ” fines” which always have to be record fines, which are imposed on successful businesses for some trumped up, minor wrong.
    As a starter, I would like to see the end of one publically funded body, investigating another publically funded body, then prosecuting them through another publically funded body which eventually fines the first body….eg, when the ‘Elf’n’safety executive use the police to investigate an NHS trust who then is prosecuted by the CPS in the courts and the courts issue fines and costs against the trust. We the taxpayers loose out at every stage in such an example.

    I would like to see a government policy where the state has to live within it’s current means, just as the people have to.

    • cornishstu
      Posted July 6, 2017 at 12:15 am | Permalink

      My sentiments exactly, It seems Government be it local or central think they can just keep demanding money with menaces instead of addressing the waste and parasitic organisations and grand schemes. The front line should come first and if those at the top of the various organisations will not or cannot do what is required then get shot of them and keep doing it until they get the message. They get want and get big salaries and pensions like the private sector top dogs then perform accordingly or get the boot.

  37. NickC
    Posted July 5, 2017 at 8:57 am | Permalink

    Tax and spend (and borrowing) are 2 (3?) sides of the same coin. You would find that the government needs to raise less tax revenue if DfID, Hinckley C, HS2, prioritising renewables, and excessive managerialism in the NHS, were all scrapped.

    I suspect the waste in government, local authority and the NHS is staggering. Certainly any time I’ve come into contact with them professionally the profligacy, managerialism, and bureaucracy beggars belief.

    But politicians accept what they are told (eg that junior doctors comply with the WTD) rather than really finding out what’s going on by rolling up their sleeves.

  38. Prigger
    Posted July 5, 2017 at 9:08 am | Permalink

    Sajid Javid is said to be sending in a “specialist team” into the Kensigton and Chelsea Council governing Grenfell Tower to “take over key services”. I shall listen to what he says in Parliament today.
    My first question at the moment is “A specialist team to do what?”
    It would take a week and more for anyone to get their head round the particular computer system. Passwords will take a while to arrange too. Then they will not get phone calls or emails from anyone as no-one knows who they are and what they do. They themselveswill not know with whom to communicate on what and why?Nor basics of how to park their car and for how long and where anything is located.
    It will be like having teenagers suddenly marching in for work experience and not knowing even where the toilets are located.
    It’ll be okay. We the tax-payers will finance it.
    Incidentally the number of families needing rehousing is a small propottion of the 4,700 (? ) on the housing waiting list and an even lesser proportion of the size of the waiting list if people thought it was worth getting on it.
    Only 14 out of 139 offers made to the displaced people to go to temporary accommodation have been accepted. Normally, in most authorities, those temporary accommodations which were refused would allocated to other people who would be very grateful indeed.

    The hotel payments should be stopped altogether in a month or so if there are continual refusals. This is Central London not an empty housing development…which, of course, exists nowhere in the UK.

  39. stred
    Posted July 5, 2017 at 9:11 am | Permalink

    Recently, I have been following the fortunes of a British entrepreneur in his mid 20s. He has started a successful internet agency business, which he runs from various other persons homes, as he moves around between countries. His competitors run their business from Hong Kong and part of the US because they do not have to charge VAT and have low business tax. And so he was forced to find another far eastern country to base his business.

    While flying out to set up accounts he made it a holiday and went with a friend, another British man of the same age.He is now a very successful author and part owner of the proceeds of a business which was sold to a foreign company. He also is going to set up a company abroad.

    When they left the airport for the hotel they called a cab share and found themselves with another young British man who also had a successful internet company and was also paying his taxes abroad.

    When will the Treasury learn that taxation is driving successful people abroad and that they are missing all of the tax they pay, income tax, corporation tax and VAT?

  40. Epikouros
    Posted July 5, 2017 at 9:17 am | Permalink

    Taxes and government two of the most pernicious acts and actors in society. Yet neither attract the disapprobation that they deserve. The former is taken by coercion by the latter that is an institution that has unintentionally(in a democracy at least) malignant intent. Our culture has been conditioned to believe that both are necessary for our well being and the more of both the better off we will become. The discerning note that in fact the more taxes and government we have the more impoverished we come. As in concert corruption. incompetence, waste, inefficiency, authoritarianism and the delight of the progressives and socialists grow.

    The discerning also know that taxes and government are necessary under certain limited circumstance as society has not yet advanced enough that a more equitable system can replace them. They also know and as you point out the less taxes we have and they know the less government we have the greater is the return. Although the evidence to this rather obvious fact is there in abundance most do not agree. If they did there would not be any promoters or supporters of socialists and progressive dogma. Social justice or equal rights or any of those things do not stem from taxes and government they stem from the interaction, cooperation and laws (not legislation) that people construct layer upon layer themselves by consensus, interaction and from trial, error and experience.

  41. Kenneth
    Posted July 5, 2017 at 9:30 am | Permalink

    I’d prefer to ask “how can we reduce tax revenue”

  42. Prigger
    Posted July 5, 2017 at 9:35 am | Permalink

    Making the UK a place to get rich and impotantly stay rich is the best idea.

    At one time you could migrate to many US states simply if you were setting up a business. But Obama made it impossible in many cases with medical insurance liabilities for small employers and minimum wage legislation which in the US environment does not work and decreases employment. No one is going to migrate there and face such a wall in starting a business and employing people.
    So we should dismantle the walls to businesses coming here. Being a low tax oasis for firms such as Facebook, Google, Microsoft, Apple and Twitter would be good.

  43. Richard Butler
    Posted July 5, 2017 at 9:41 am | Permalink

    Middle class progressives tell me they are desperate to pay higher contributions to State coffers, and yet they don’t seem to want to pay a contribution towards higher education costs once they become sufficiently high earners.

    Classic sign of the charlatan progressive, it’s all about banal virtue signalling rather than real world sacrifice.

  44. frank salmon
    Posted July 5, 2017 at 9:50 am | Permalink

    My view is that the government seem to think that they can pay for debt through inflation, and maintain inefficient expenditure through economic growth. We are not getting much of either at the moment and wages are stagnant or falling in real terms.
    It’s time to get real and make real cuts in poor spending, real productivity increases, especially in the public sector, and real economic growth. The Taxpayers Alliance seem to be pretty good on this.

    • anon
      Posted July 5, 2017 at 10:19 pm | Permalink

      My view is that the government seem to think that they can pay for debt through inflation,

      Yep.

  45. Posted July 5, 2017 at 10:03 am | Permalink

    So all pretence of making cuts is to go with the end of so-called austerity! Whilst I’m not suggesting that the state should cut back on any significant activities, I am questioning whether they could they do them more efficiently. So many tasks have apparently been computerised and if this is not making any saving in staff costs, why bother in the first place? Apparently the Department for International Development which dishes out foreign aid had one of the biggest staff increases last year, this is not part of the aid figure but comes from some other kitty. Why? (Whether we need to give all the aid is a subject for discussion in its own right).
    I’m convinced that there could be significant savings in Civil Service staff costs, along with the overheads in accommodation, etc. I’m sure the old rule still seems to apply, “The amount of work expands to occupy the available staff”.

    Similarly, all the Quangos need to be examined. On problem with each Quango, Government Agency or Authority, is that there has to also be some civil servants to oversee it in the ‘sponsoring department’, and, of course, each on has a board with chairman and all the rest, none of which would be needed were they part of the civil service. On balance they would seem to cost us more as Quangos than as a direct part of the civil service.
    Looking at staffing costs and efficiency is not austerity, it is simple prudence and is carried out on a continuous basis by most companies of any significant size. The government should be doing the same.

  46. graham1946
    Posted July 5, 2017 at 10:03 am | Permalink

    What do you actually mean by ‘growing the economy’. Do you mean GDP? That is increased automatically if you keep importing people without limit – it says nothing about the wealth of the country. Perhaps that is why governments are not keen on controlling immigration it, as it produces a figure they can say is rising along with ‘record employment’, although this ‘record employment with most being good jobs’ does not seem to produce enough in taxes and we always have a shortfall. GDP tell us how fast the wheels are spinning but not whether we are getting anywhere.

    Next your higher tax take from corporations and the rich, which with reduced tax rates must mean more money being made by those sectors, yet in the previous thread many were complaining they had not had a pay rise for years. Tells me someone is being exploited. Some people should take their own advice that they give to nurses and find better jobs. Much easier to do in most jobs than in nursing.

  47. Alastair Harris
    Posted July 5, 2017 at 10:06 am | Permalink

    I do think it would be helpful to use the economics term for this. Laffer curve. The behavioural reasons are complex; there are many reasons why people change what they do in response to tax changes, and that has to include the unintended consequences of how the various taxes interact, in what is a fantastically complex set of laws. I also think it is important to keep making the point that the unfunded element of public spending is more tax on future generations.

  48. Bryan Harris
    Posted July 5, 2017 at 10:09 am | Permalink

    If you want more income then:
    raise the VAT level on luxury goods only to 23%

    There is always two sides to this kind of argument, and my personal view is why do we want to increase tax revenue when there are so many things government shouldn’t be involved in and spending money on unnecessarily, including so many quangos.

    To reduce the strain on money avalable to government:

    encourage large companies to provide healthcare and medicines for their employees and families so that they do not need the NHS

    find ways to cut the NHS drugs bill – drugs all too often are dispensd without due regard

    JR – A QUESTION – How much do we pay drug companies each year for drugs?

    • Edward2
      Posted July 5, 2017 at 7:24 pm | Permalink

      Why not reduce VAT to 15%
      We were promised when the complex multi rates of purchse tax was replaced that VAT would be simpler and a low single figure percentage rate.
      Leave the people with more of their gross pay to spenď.

      • Bryan Harris
        Posted July 6, 2017 at 5:47 am | Permalink

        I can agree with that – basic living is far too expensive and made worse with tax added… My point is that anyone who can afford £50,000, for a car say, would not miss an extra few percent on tax.

        Switching more taxation to VAT away from PAYE would also make taxation less painful as you only buy what you can afford, but without PAYE you’d have more in your pocket to decide what you wanted to spend your wages on.

  49. percy openshaw
    Posted July 5, 2017 at 10:15 am | Permalink

    I agree that tax cuts raise revenue – not merely because people stay and others join them; not simply because they no longer pay lawyers to dodge punitive rates but because seeing a reward in prospect they work, they invest, they invent, they raise their game. It’s quite simple. Labour, party of resentment and envy, uses relativistic notions to undermine the absolute success of the free market, redefining poverty in such a way as to make equality the only answer, even if it’s an equality of dearth – as in every feudal era from Byzantium to Bolshevism. So I’m sure that many of us endorse tax cuts and await them and would support them at the polls. What then prevents them? Is it perhaps the capture of the Tory party by big government? Why, for example, are we persisting with the obvious lunacy of HS2? How did this crummy shambles of a white elephant shuffle its unlovely way into the Queen’s Speech? I don’t expect you, Mr Redwood, to jockey the government about it – not at this unpleasant period of our history – but I sincerely hope that you and many others are making strenuous representations against it. Those ninety billions could relieve many of the political and economic problems which are responsible for the Labour surge. They could ease the health crisis, fund pensions and build houses. Tax cuts planned – instead of being reversed – could go ahead. And yet we have lily livered Mr Hammond and blinkered, hampered, hamstrung Mrs May – riding the white elephant to oblivion. For goodness’ sake, do something, oh ye Tory backbenchers.

  50. ian
    Posted July 5, 2017 at 11:19 am | Permalink

    First thing to do is to secure your government, with five year plan. I would start with mrs may to serve full five years, and leader for the next election. Cut down on tv interviews, and making statement to the press, slogans with propaganda and talking BS, disagreement are not helpful, with discipline being most in important. No tax increases on the people full stop, and no increases in pension age. Full brexit must go ahead, and be done in the time limit what ever happens, with no honey being given away. As for what to do to raise money, i have ideas, but nothing your government would like, because they have no bottle.

  51. lojolondon
    Posted July 5, 2017 at 11:22 am | Permalink

    Totally agreed, John, cutting our tax rates will lead to more collections, but also, our tax needs to be substantially simplified. We need a new chancellor, that is key to the UK’s economy growth and future.

  52. TIM H
    Posted July 5, 2017 at 11:27 am | Permalink

    Are you sure about CGT John?
    I thought the take had started to rise in 2015?

  53. Peter D Gardner
    Posted July 5, 2017 at 12:16 pm | Permalink

    Right answer to wrong question.
    We have far too much government, be it from Brussels or Westminster. UK should be aiming to reduce the government’s share of GDP to 35-40% from the current 48-50%.
    Mrs Thatcher got it down to about 38%, if I recall correctly. That is about the same as Australia today, which spends more per head on healthcare than UK – by about 10%.

    The government does not know best how to invest money or spend. All the UK’s great advances in the past have been done with private sector money, private sector enterprise. that is where we should be aiming now.

  54. BobE
    Posted July 5, 2017 at 12:50 pm | Permalink

    Tax turnover, then they can’t hide profits

  55. mike fowle
    Posted July 5, 2017 at 1:01 pm | Permalink

    I suspect the esteemed Mr Redwood is being a little mischievous here, I am sure he believes in less government rather than raising taxes and is provoking responses.

  56. Tom William
    Posted July 5, 2017 at 1:18 pm | Permalink

    The best and painless way to raise tax revenue is to raise productivity.

  57. Roofer
    Posted July 5, 2017 at 1:34 pm | Permalink

    The Rt Hon John Healey, Shadow Secretary of State for Housing, asked questions to the Housing Minister Alok Sharma in Parliament 5th July 2017 at 14.5 hours.

    Mr Healey suggested that the control of the Council of Kensington and Chelsea should be replaced with appointed Government Commissioners.Nonsense.
    Mr Healey obviously has no knowledge whatsoever as opposed to even a little knowledge, of just how Housing Departments in Councils and associated organisations actually work.
    Hsg Depts are not a football team awaiting a new manager, or even a new Captain. In the sutuation post Grenfell Fire, the persons now in charge of the particualr housing in the council are the ONLY ones who can deal with the problem efficiently. Anyone coming from outside will just get in the way, big style!
    It is disappointing but highly predicatable that the Labour Party just cannot stop trying to score political points on the backs of burnt corpses.

    Mr Sharma reacted to Mr Healey correctly by speaking above his head to the whole House that the whole House should work together on the issue of the Grenfell Tower fire.

    • rose
      Posted July 5, 2017 at 7:29 pm | Permalink

      If they persist in making party political points, why doesn’t someone ask what the Mayor did in the wake of the disaster? Dealing with disasters is part of his duties.

  58. Dennis
    Posted July 5, 2017 at 2:05 pm | Permalink

    JR: “The best way to get more tax revenue is to grow the economy.”

    Any idea what fundamentally/primarily pays for this? I’ve never heard any politician or economist ever even mention this because they don’t know, never having thought about it. Driving over a cliff comes to mind.

  59. ian
    Posted July 5, 2017 at 2:23 pm | Permalink

    What can be done to raise money or save money. All gov procurement to be cut by 3.5 percent year on year for three year across all department, including NHS and schools on. I do not care what it is roads, railway, defence, trident or a plastic glove or book. If the companies doing supplying moment say no, go elsewhere, and put out to tender to local business even if they only have two staff i would want quote and business plan to cut costs and start more small businesses. Staff cuts in all government and admin of 5 percent year on year for three year, but no cuts to people under 40,000 a year, i want them up the top, in including NHS admin, and quangos. Now these are all well educated, and have money or should have, they get jobs in the private sector or start their own business or retire early. With all of those procurement contracts to fill on cutting prices, if tens of business are to fill the same contract i would not care as long as the price is right or less, and the quality of work is uniform or same standard. Army needs cutting at the top, from the captain up, the same 5 percent a year for three year air force the same with navy along with the new aircraft carries sold off, i fine it amazing that the gov want to spend 30 billion on extra ship and the manpower to look after these two craft, which would last 10 min in a fight with subs. Government works pension, ex minsters, MPs in the 40% tax bracket in retirement pension cut 2.5 percent year on year for three years, the lords daily pay cut to two hundred pounds a day from three. Private sector sipps pension for people earning more than 150,000 a year to be cancelled, no benefit start this budget for next three years, till it at 135,000 pounds. All international organization which the government pay to be cut by 7% a year for three, with IMF returning 10% of money you have given them, and aid budget to be cut by 1 billion a year for three years. The age pension with heating to go a head apart from N Ireland who have a agreement with to the end of this parliament, i would set it at 45% the tax bracket to start with for people in retirement. This program or similar will put right in the people minds what been done to them at the bottom, which still going on.

  60. Sakara Gold
    Posted July 5, 2017 at 2:44 pm | Permalink

    Make big multinational companies pay a fair amount of tax on profit earned in the UK . Tax income from personal trust funds. In the short term, give tax breaks to electric vehicles and increase the tax rate on diesel and petrol vehicles. Lastly, scrap about 90% of the QUANGO’s and use some of the money to give the nurses a decent pay rise.

  61. Rob Branch
    Posted July 5, 2017 at 3:06 pm | Permalink

    So companies are footloose when it comes to taxes but not when it comes to access to the single market? Maybe you can explain the logic of this?

    Reply We will have access. Every trading country i n the world has access.

  62. The Great Ear
    Posted July 5, 2017 at 3:26 pm | Permalink

    JR. Your question to Chief Secretary to the Treasury Liz Truss (BBC Parliament ) in which you indicated that a payrise in the public sector should be in exchange for increased productivity…….
    A male MP, I do not recall his name, a little later stated somewhat sarcastically that he could not see how a firefighter could increase productivity 🙂
    Liz Truss gave a general retort that working more smartly in some areas by various people could increase productivity.
    It could reveal my identity if I were to explain in very great detail how one firefighter’s productivity could have been increased 100% whilst at work. People would be astonished. Yet many unremarkable people I know could validate what I would have to say.

    When I listen to MPs in Parliament I get the impression at least once per week that many MPs have of course their own experiences. But virtually no experience at ground level. Of course I understand they need to project a public image and cannot say certain things openly. Yet, some of them if they are street-wise and actually know what is going on in this country, are also Oscar-level actors in that they do not show it.

    • outsider
      Posted July 5, 2017 at 10:26 pm | Permalink

      Too right Great Ear. Mrs May has just sacked the only ex-fireman in her parliamentary party.

  63. a-tracy
    Posted July 5, 2017 at 4:21 pm | Permalink

    The Labour Government talk about Tory cuts but they never talk about Tory extra taxes on the wealthiest.

    Earn more than £100,000 a year, you will be the most highly taxed people in Europe.
    The Higher rate tax up to £150,000 is 40%. From 2010 the marginal tax rate over £100k = 60% as the personal allowance is gradually removed to £150k then its 45%.

    Then in 2012, you took away Child Benefit from earners over £50,000.

    So for Labour to insist we need to bash the rich much more and they can pay for everything from Student’s tuition fees to extra pay for the entire public sector because that’s what their Union paymasters are after – no bones about it, I sit and wonder why Conservative spokespeople don’t answer back, is it because they don’t want to remind this section just how much tax they’re paying now?

    Then the government capped private sector workers pension pots without capping their own public sector pension pots because for most of the public sector theirs doesn’t even exist it’s being guaranteed by our children’s generation – well they think it is – but after years of paying their graduate taxes and being told they can’t get their private sector pension till they’re 68 they might just forget their raving little socialist placards, with nasty pictures and sharp sound bites, wake up and bite back.

  64. a-tracy
    Posted July 5, 2017 at 4:26 pm | Permalink

    Another regular tweet doing the rounds today is that the Conservatives have increased debt more than the Labour party did in their entire time in office. That the Conservatives are the bad managers and poor fiscal controllers.

    Just how much did the UK have to borrow to loan to Ireland – £20bn on our books but used by an independent Country? eh

    Just how much did we have to give? borrow to hand out to Greece, Portugal and Italy and any others?

    What are our borrowings and what was the money borrowed for? How much of it was borrowed for infrastructure in England?

  65. ian
    Posted July 5, 2017 at 4:32 pm | Permalink

    As for forecasting, anybody who uses growth forecasts is a fool. You should work on what you can see, and always work on no growth to live with in your means. if growth comes that a bonus, which should shared out the following year to funds projects that the public want, with money set aside for neg growth, not a lot because do not need a lot, because your living within your means, as for wages rises, think one percent is alright, but if you have a good year all gov staff should be paid in bonus on top the one percent wages rise so workers know that it can go up or down depending on uk performances, and of cos the bonus should be all at the top like they are now.

  66. forthurst
    Posted July 5, 2017 at 4:57 pm | Permalink

    Leaving aside the question of whether pop stars actually have brains to drain, it certainly true that people are more willing to pay tax if does not appear confiscatory (“making the pips squeak”), but it also true that people will pay no tax at all if they can possibly get away with it legally; therefore the solution is to both moderate the taxman’s greed and also remove the voluntary element from those whose profit and/or enjoyment comes from our country. Either, those entities profiting from our country should be incorporated in this country or registered for income tax here as individuals without being able to offshore their wealth. Alternatively, the taxman could assess an entity as if it were domiciled here but in operation offshore plus a hundred percent surcharge for making his job difficult. So no trust funds for rich Tory spivs or offshore vehicles for people who own property here but dont pay any tax whilst telling us all how to run the country.

  67. Jack
    Posted July 5, 2017 at 5:14 pm | Permalink

    Is there anyone in parliament who actually understands the monetary system and central bank monetary operations / reserve accounting? UK Government creates £GBP by spending and destroys £GBP by taxing. The funds to pay taxes must first come from the government spending the currency into existence.

    In more technical terms, in order to perform a reserve drain you must first do a reserve add!

    JR is looking at it back to front, in thinking that taxes are used to “pay for” government spending, which is totally illogical. Although he is sort of right about a growing economy meaning more tax revenue, however that’s not necessarily a good thing at all!

    For example, expanding the budget deficit to 12% of GDP, as is necessary for close to double-digit real GDP growth, would result in booming tax revenue which would easily push the public finances into surplus within a year or two. This is not desirable unless there is a genuine case of high demand-pull inflation, and so each year there must be new policies to keep the budget deficit large enough to maintain the massive GDP growth and to ensure that there is not one person unemployed in the country.

    Reply So why then did this not work in Venezuela, Argentina, Brazil etc who ran very large deficits?

    • Jack
      Posted July 5, 2017 at 7:00 pm | Permalink

      Reply to reply Argentina had headline, well-publicised fixed exchange rate policies, where they fixed the value of their currency to the $USD. This meant they were not fully monetarily sovereign, and could default on their debt. However, read about Argentina post-2002, when they broke the peg, introduced a job guarantee program, and enjoyed multiple years of solid GDP growth. The original deficit spending (+ strong exports) actually caused them to run budget surpluses, but that ultimately leads to bad things unfortunately.

      Venezuela relied on export-led growth for GDP, a terrible idea. When the oil price collapsed, so did Venezuela’s entire economy.

      As for Brazil, that’s a crystal clear example of what austerity and high interest rates can do to an economy. Higher interest rates actually cause higher inflation, not lower.

      China on the other hand is often reported to base their economy on an export-led growth strategy, but their domestic economy is actually far, far stronger than is perceived. They took a much better route to prosperity and for over two decades now have always maintained high aggregate demand by forcing state banks to lend and also spending huge amounts from the central government on investment.

      Frequently the Chinese government has run deficits of over 20% of GDP, sometimes over 25%, if you include state bank lending (bank lending creates new money just as government spending does), most notably in 2008/09 when the Communist party forced state banks to lend at unprecedented rates of over 30% YoY, resulting in 12%+ real GDP per capita growth.

      Reply China gas a low level of date debt and deficit. Brazil spent and borrowed too much and were forced to austerity by markets etc

  68. ian
    Posted July 5, 2017 at 5:31 pm | Permalink

    Nick more tax off of overseas companies, i have put all this crap out today because i know that once i have put ideas on the net they will not happen, and will be voided at all costs by your party even you print them or not, just cutting out some option for you. Three parties down one to go.

  69. outsider
    Posted July 5, 2017 at 10:39 pm | Permalink

    Dear Mr Redwood,
    As so often, you make some important points well. When you write that “the best way to get more tax revenue is to grow the economy”, however, you unwittingly expose one of the great divides between politicians and ordinary people. Politicians of all hues want to maximise growth in crude GDP because that maximises the amount of money they have to spend under any given tax regime.
    The rest of us are not interested in crude GDP. We are interested in maximising GDP per head (or even per hour worked) because that ultimately determines our incomes and money living standards.
    These two aims have been in serious conflict for at least 20 years.

    Reply I agree GDP per head is the better aim

  70. Anonymous
    Posted July 5, 2017 at 11:29 pm | Permalink

    Meanwhile – in the real Universe, not the parallel one where we plan things as though they are normal and predictable… ignoring elephants in rooms…

    …the country (Europe) is being invaded with the tacit approval of the Government and our civilisation is ending.

    It matters not whether we raise more tax – there won’t be enough and so what if there isn’t ?

    We don’t need a military or government if it cannot recognise and enforce borders.

  71. Lindsay McDougall
    Posted July 6, 2017 at 12:27 am | Permalink

    Excellent! So ask Mr Hammond, in a Commons question, when he is going to revise the Treasury’s revenue forecasting models to reflect reality.

  72. Thames Trader
    Posted July 6, 2017 at 6:33 am | Permalink

    How does the government raise more tax revenue ? Easy. Cut stamp duty by at least a half and make it more favourable from a tax perspective to trade down in the market. Transactions will go up and other tax revenues will be generated by the activity involved in moving house. Income tax and VAT especially as a result of all the extra economic activity and jobs will be maintained and created.

  73. Terry
    Posted July 6, 2017 at 9:45 am | Permalink

    Perhaps the question should be, “Why do we need to raise more taxes”?
    Government already spends too much.

    The GE last month proved beyond doubt that cutting Government expenditure is not the way to win elections.
    However, it demonstates the dire situation this has country placed itself.
    Crazy long-term ultra low interest rates and massive borrowings in both the Public Sector and with the Consumers have driven debt to £1.7T and £1.54T respectively.
    People have been enyoying their care-free high lives for too long and refuse to let them go.

    Personal debt has soared all the while loan rates have fallen. It is a false economy and when those low rates rise, disposable income will fall and everyone will have to stop their spending. Governments included.
    To increase taxes is to ensure less productivity and less tax revenues so the Government MUST adopt the principles forced upon indivuals. Cut expenditure, pay down debt.
    It will be very unpopular and there will be job losses but it will only be the same medicine the Private Sector has to swallow.

    It’s either that or the Country goes into default and that would do even more damage to the future credibility of Great Britain.

  74. Tony Sharp
    Posted July 6, 2017 at 10:26 am | Permalink

    Treasury ‘projections’ raise their incompetent baileful head again – I note a leek to The Sun that there is an argument over the Leaving of the Customs Union between the Treasury and the Dept For International Trade. As surely the only reasoning the Treasury can advance on this (‘soft’ Remain) is that somehow Tariff Revenues are of benefit to the Treasury and more Free Trade with non-EU countries is a deficit then what figures are there?
    In fact if there is No Deal and we go to WTO then the Treasury ought to support that as it would lead to an increase in Tarrif Revenues from the EU imports.
    I note also that the idea of a dislocation at the ports is raising its head as an argument for ‘soft’ remain in CU or at least a ‘taper’, as if there was still a 1950s system of paper inplace and not the seemless current e-systems.
    Still, Remainers will clutch at every straw to keep everything as it is.

  75. Peter Martin
    Posted July 6, 2017 at 11:15 pm | Permalink

    If you want an accurate model of how the economy works you might want to think about helping out Prof Steve Keen with his Minsky program. It’s all been done on a shoestring so far but his results are much better than the Treasury’s.

    It helps of course that he does have a good understanding of how the economy works. When everyone else was, and still is to a large extent, blind to the dangers of too much private debt he was , and still is, sounding the warnings

  76. Brian Gregory
    Posted July 7, 2017 at 2:43 am | Permalink

    So JR, you don’t care that increasing the gap between the wealthy and the poor is bad for the mental health of the country as a whole?

    Reply Income inequality has reduced since 2010

  77. REPay
    Posted July 7, 2017 at 7:39 pm | Permalink

    “No-one can say cutting the rates has led to a decline in tax revenue in the way Treasury models and others suggest…”

    Is there any reason why the Treasury does not change its model? It has been really bad at predicting tax take for some time…what needs to change to either the model or the mindsets behind it?

    Perhaps a topic for the recess…

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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