Growing the economy faster – cutting taxes on incomes

Government try to persuade us that they tax us to stop us doing things they think get in the way of a good life or damage the environment . So they single out smoking, drinking, driving and other conducts they do not like for taxes in the hope it will deter or reduce our activity in the penalised area. Those same governments claim to support work, and think work is good for us and for our neighbours who benefit from the work we do. So why then do they tax work so much?

They say they do not mean to deter us from working, but point out they need the money. They have to tax good things as well as bad things. They then claim to want to tax them in a way which wont be too damaging – unless they take a socialist position that high paid work is immoral or wrong. I agree that work is generally a good thing, providing incomes for people and interest to their lives. Many people get a sense of achievement  out of producing goods and services others want, and enjoy some of the social contact that the workplace provides.

Under the Coalition the government recognised the need to make work  more worthwhile, and did so by concentrating on taking more low income earners  out of Income tax altogether. Today the Conservative government has choices. It could do more of that, or it could cut the rates. There is something to be said for rate cutting. If the marginal rate comes down working more is more worthwhile. Well done it might even  bring in more revenue. Cutting the 45% top rate to 40% would tax the rich more – the cut from 50% to 45% as predicted here did bring in considerably more revenue. Cutting the 20% rate in stages to say 17.5% would provide a boost to most incomes in the country, increasing spending and activity. It too might boost revenue overall, when taking into account the extra revenue from VAT and other duties placed on transactions.

The USA, Italy and France are all going for tax rate cuts. The US economy is growing faster as a result, and the French economy is also doing a  bit better. We need to catch up with tax cutting, so we do not become uncompetitive.

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158 Comments

  1. Mick
    Posted July 26, 2018 at 5:38 am | Permalink

    https://www.express.co.uk/news/politics/994289/brexit-news-uk-world-trade-organisation-tariffs-no-deal-eu-theresa-may-latest
    What is needed is the truth, getting a little bit fed up with all these stories is she staying in the custom union or not, is she leaving the single market or not, are we talking back control of our laws or not, it’s all bloody confusing to the man on the street , let’s just have the truth with no politicians fork tongue talk

    • Denis Cooper
      Posted July 26, 2018 at 6:50 am | Permalink

      According to that article Chairman May said nothing about taking back control of our laws, comrade, and in fact I do not recollect anybody ever saying that we would do that. You must be mistaken, because how could we continue to follow the Common Rule Book published by the EU but also take back control of our laws? That would make no sense at all. And beware that this is dangerous talk, comrade Mick.

    • oldtimer
      Posted July 26, 2018 at 6:51 am | Permalink

      You ask for too much. With the evidence of The Underhand Remain Documents (TURD) – otherwise known as the Chequers Agreement and its accompanying White Paper – it should be clear beyond doubt that you should not rely on statements made by May.

    • Turboterrier.
      Posted July 26, 2018 at 7:12 am | Permalink

      Mick

      let’s just have the truth

      You won’t get it from this PM and her selected few

    • Sir Joe Soap
      Posted July 26, 2018 at 7:29 am | Permalink

      I’m becoming convinced that the Tories and establishment backers looked round for the obvious person with no nous, business experience or negotiating skills or success in anything except a geography degree, before “selecting” their leader. The purpose was to show how difficult negotiating our way through Brexit would be. It’s the obvious thing to do when you don’t want something done – put someone incapable in charge.

      • Sir Joe Soap
        Posted July 26, 2018 at 10:43 am | Permalink

        Perhaps we should indeed put this whole Brexit thing on ice until the other side of a GE in which we strategically campaign to elect only known Brexiteers into Parliament, no matter from which party. Each candidate being obliged to swear on oath their commitment to the principles voted for in the referendum.
        No more incompetens or sycophants like May, Raab and co.

    • Stred
      Posted July 26, 2018 at 7:43 am | Permalink

      May is getting tough by threatening WTO, while offering to capitulate with her rabbit out of the hat Chequersmate. If only it wasn’t funny or true. She is either very confused or thinks the British are daft.

    • Bob
      Posted July 26, 2018 at 7:59 am | Permalink

      Oh for a leader like Trump. He’s got the EU over a barrel and the BBC in turmoil.

    • Roy Grainger
      Posted July 26, 2018 at 8:08 am | Permalink

      For the last year the Guido Fawkes website kept reassuring us that despite evidence to the contrary May was going to deliver Brexit. Right up to the moment at Chequers when it became clear she wasn’t. No 10 have been very good at briefing the pro-Brexit media with misleading information to avoid negative reporting from them while behind the scenes they just get on with their Remain project. The Express story you link should be seen in that context – May has no intention whatsoever of accepting a WTO outcome, but by the time that is clear it will be too late.

    • alan jutson
      Posted July 26, 2018 at 8:19 am | Permalink

      Mick

      I see Trump has made a start with trying to get some sort of trade agreement with the EU, seems like he started off on the right foot, and very early indications, if reports are to be believed, is that its moving in the right direction for him.

      I wait and see with interest how his rather more direct approach works, compared to Mrs May’s lengthy, complicated and convalouted efforts.

      • Hope
        Posted July 27, 2018 at 8:50 am | Permalink

        Trump achieved more in a day than May in two years, discuss.

        • alan jutson
          Posted July 27, 2018 at 3:53 pm | Permalink

          Hope

          No need to discuss, its fact.

        • Gary C
          Posted July 27, 2018 at 6:41 pm | Permalink

          Trump is strong……… TM is weak…….. Discussion over!

    • Mitchel
      Posted July 26, 2018 at 10:24 am | Permalink

      A bit off topic but there was a discussion here yesterday about the effect of sanctions on Russia.Well I’ve just noticed on the Rus embassy twitter feed,export performance figures in $ terms for the first five months of 2018:-

      China +42.8%
      Turkey +44.6%
      Belgium +38.2%
      India +35.7%
      Finland +35.1%
      Poland +34.9%
      UK +32.0%
      Egypt +32.3%
      Japan +31.8%
      Germany +29.2%
      Netherlands +15.9%
      France +10.3%
      USA +7.8%

      Now some of that will be higher energy prices…but aren’t sanctions a wonderful thing!

      • Prigger
        Posted July 26, 2018 at 1:32 pm | Permalink

        Michel
        I cannot corroborate those figures by external sources to Russia except that China, Turkey., India, Egypt, have much increased percentage trade with Russia. Surprisingly US companies were first in with investment as they saw cheap opportunities caused by the sanctions. As American investors moved out, more American investors moved in outside the framework of sanctions. A few south European countries have also increased trade via circuitous routes to avoid breaking EU rules. They know the future. The future in not EU

        • Mitchel
          Posted July 27, 2018 at 9:34 am | Permalink

          Likewise Russia has just announced a $50 billion investment programme in the Iranian energy sector-they’ll be taking over assets relinquished at forced seller prices by western energy cos frightened of US sanctions.It will make Iran effectively an economic vassal of Russia but they seem relaxed about that-only last week the Ayatollah was crowing about the deal and the strength of the Iran-Russia partnership.

          Do you think Mr Putin ever gets tired of winning?!

  2. Mark B
    Posted July 26, 2018 at 5:45 am | Permalink

    Good morning

    Why don’t we abolish the tax benefit on private health insurance ? And come to think of it other benefits too.

    We should cut the rate of Corporation Tax for SME’s . This would help to create jobs and investment. We should also let SME’s keep some of their profits before tax so that they can roll-over some cash for next year. Over time they could build up finds which will help them during leaner times.

    We should also require companies that import foreign workers to pay for any healthcare and other social costs. This would provide a more level playing field and make employers choose people based on need rather than cheapness.

    • Lifelogic
      Posted July 26, 2018 at 6:28 am | Permalink

      There are no longer and tax benefits for health insurance (a mistake). You pay Tax and NI for others, then Tax and NI on the money for your insurance premium, then thanks to the appalling P Hammond you pay 12% IPT on top. So most are stuck with the dire NHS state monopoly and rationing system.

      • Lifelogic
        Posted July 26, 2018 at 9:00 am | Permalink

        There should be tax benefits for those who insure as it lightens the load on the NHS. Why should the people who go privately pay up to four times over? Similarly this is true for education. It means less money in health care and education and less choice or efficiency.

        • Lifelogic
          Posted July 26, 2018 at 9:02 am | Permalink

          And far less sensible innovation.

    • Narrow Shoulders
      Posted July 26, 2018 at 7:17 am | Permalink

      We should also require companies that import foreign workers to pay for any healthcare and other social costs. This would provide a more level playing field and make employers choose people based on need rather than cheapness.

      And pay for and tax credits or housing benefits workers from abroad (including the EU after March 2019) receive.

    • acorn
      Posted July 26, 2018 at 4:48 pm | Permalink

      Corporation Tax should be abolished globally, it is the wrong tax in the wrong place. Other taxes are perfectly capable of taxing sales revenue going into a corporation; and taxing its earnings when they come out of a corporation. All corporations are ultimately owned by individuals in households.

  3. Peter VAN LEEUWEN
    Posted July 26, 2018 at 5:45 am | Permalink

    Nordic countries with their high taxes compare favourably to the UK in terms of wealth, service provision and well being. Maybe something to strive for in the UK?

    • matthu
      Posted July 26, 2018 at 6:59 am | Permalink

      Consider the following (accurately reported) headline:

      “Plan to Build British Warships in Peril After Ministry of Defence Runs Out of Money”

      Now ask yourself whether you think the problem has likely been caused by insufficiently high taxes or injudicious spending.

      (Apply the same though process to other areas of spending too.)

    • Know-Dice
      Posted July 26, 2018 at 7:03 am | Permalink

      PvL, that may be true for the Nordic countries, unfortunately in the UK the Government, councils etc. have a record of spend and waste 🙁

      Has any of our NI (National Insurance) been put away for the future…simple answer No…

    • Anonymous
      Posted July 26, 2018 at 7:07 am | Permalink

      Yes mismanagement of those taxes is the problem in the UK.

    • Cortona
      Posted July 26, 2018 at 7:40 am | Permalink

      Mr Redwood, I have long wanted you to address this point as Scandinavia is often socialists’ example of the utopia we can all seek and a counter to the Venezuela disaster. I would be interested to hear your thoughts on how they thrive with such high taxes? I am guessing Nowegian oil subsidies help them but it does warrant further exploration I believe and I never see anything on this topic really. Here’s hoping…

    • Richard1
      Posted July 26, 2018 at 8:04 am | Permalink

      They have no inheritance tax and capital taxes are often lower. At least they run balanced budgets also

    • Jagman84
      Posted July 26, 2018 at 8:46 am | Permalink

      Look at the relative size of populations. I suspect that it has a lot more bearing on that statistic. Large natural resources are shared between far fewer people. Taking in swathes of the third world is not a recipe for prosperity. Well, not for the average citizen but wonderful for globalists!

    • Peter Martin
      Posted July 26, 2018 at 10:07 am | Permalink

      There’s no reason for higher taxes in the UK unless and until the economy starts to do so well that it overheats and an inflation problem looms.

      Even then taxes need to be applied much more selectively throughout the UK than Govts have been inclined to do. Taxes are like a coolant used to damped down the hotspots. So if the SE of England is overheating that’s where taxes need to be raised and/or Govt spending reduced. It’s unlikely that the NE of England, for example, will have the same problem at the same time.

      • getahead
        Posted July 26, 2018 at 7:29 pm | Permalink

        Doesn’t the Chancellor raise interest rates to combat overheating in the economy?

        • Peter Martin
          Posted July 28, 2018 at 7:06 am | Permalink

          That’s the problem.

          It’s usually the other way around, though. Interest rates have been continually reduced to try to stimulate the economy which is why they are now so low. Each time this happens the levels of debt in the wider economy have increased.

          So what is stopping the economy overheating now? It’s not the levels of interest rates which have never before been so low.

    • libertarian
      Posted July 26, 2018 at 3:27 pm | Permalink

      PvL

      Er Nordic countries have been LOWERING their taxes because high taxes weren’t working

      Norway lowered CT from 34.26% down to 24% last year

      Denmark lowered CT from a high of 50% down to 22% last year

      Sweden lowered CT from a high of 60% down to 22% last year

      Anything else you want to suggest?

      • Richard1
        Posted July 27, 2018 at 7:46 am | Permalink

        Also dividends are taxed as capital taxes not income, inheritance tax was abolished (by the social Democrats) in Sweden and doesn’t exist in Norway.

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 8:49 am | Permalink

        @libertarian: As you know Norway, Sweden and Denmark do not live on an island, so they are not impervious to competitive lowering of company taxes elsewhere. It doesn’t follow that lowering company taxes are inherently better for societies as a whole as you risk handing too much power from society to companies. A good balance has to be fould for each country.
        The balance found in Nordic countries is IMHO quite superior to that in the UK, which is what I pointed out in my post.

  4. Fedupsoutherner
    Posted July 26, 2018 at 5:47 am | Permalink

    If they made us feel better off at the moment that would be at odds with their plan to thwart Brexit. Much better that we all feel Brexit is to blame for feeling poorer. Who are they that feel they know what is good or bad for us? It seems we are all penalized when a proportion of the population are irresponsible. We are all slowly being taxed for enjoying and choices we make. One has to ask what pleasures we can enjoy anymore without being charged to do so or be made to feel guilty about it in some way. Hammond seems intent on going the same way as Labour so perhaps Corbyn won’t feel so bad when elections come around again because I’m not voting for a Conservative government again that has ignored democracy.

    • Gary C
      Posted July 26, 2018 at 6:30 am | Permalink

      @ Fedupsoutherner

      Re: “Corbyn won’t feel so bad when elections come around again because I’m not voting for a Conservative government again that has ignored democracy.”

      +1

      TM & her band of remainers should take note as we are not alone.
      If Labour do get in next time they (being the Conservative party) will be wondering why and ‘they’ should be looking in a mirror for the answer.

    • Lifelogic
      Posted July 26, 2018 at 6:39 am | Permalink

      “One has to ask what pleasures we can enjoy anymore without being charged to do so“

      Leave the country perhaps until we get a sensible low tax, real Brexit government instead of appalling, disingenuous, socialist idiots like May, Hammond or Corbyn/SNP.

    • Know-Dice
      Posted July 26, 2018 at 7:05 am | Permalink

      For sure at the next General Election it will not be Labour that wins, but the Conservatives that lose.

      • Lifelogic
        Posted July 27, 2018 at 6:23 am | Permalink

        May has already thrown one election through gross incompetence. She is a huge electoral robotic liability a la John Major.

    • Turboterrier.
      Posted July 26, 2018 at 7:09 am | Permalink

      FUS

      We are all slowly being taxed for enjoying and choices we make.

      Nothing slow about it. Try working hard to achieve a dream and buy a British car over the value of £45k and see how much you are expected to pay in the envy tax that has been levied on it.

      Why is it that everything that is suspect in performance and efficiency in this country are always screaming out for more subsidies and seem to get them? Off shore wind, electric cars and other green crap projects. What has happened to the days when you had an idea set up a business borrowed from the bank and set out to be successful with no help from the tax and energy bill payers?

    • Anonymous
      Posted July 26, 2018 at 7:11 am | Permalink

      Gary Lineker’s dedicating his time to Remain. Isn’t he a paid up BBC representative ?

      On tax. Being taxed on my commuting car repairs grates.

    • Newmania
      Posted July 26, 2018 at 7:27 am | Permalink

      So thanks to Brexit we have already had to extend borrowing by about £200bn debauched monetary Policy and flung god knows how much money at the process itself
      ( try getting that information !!).
      Former Fiscal conservative John Redwood talks about nothing but more spending more ,borrowing more and taxing less .The supposed nest of remainers ( aka the treasury ) assure is that , unsurprisingly , erecting trade barriers with our major markets will cost the country huge sums in lost growth.
      We have already taken a hit form Brexit induced inflation ( which Redwood explained away with Oil Prices .. half the story ) ..I could go on

      Reply I am proposing a substantial saving on spendin on EU payments which more than covers my donestic spending proposals. Why do yo7 want to give so much of our money away to the EU after next March?

    • Stephen Priest
      Posted July 26, 2018 at 10:42 am | Permalink

      We seem to be run by bureaucrats in or out of the EU. Virtually every quango and large charity seem to be run by a left winger. Ollie Robbins has more power than Mr Raab.

      Democracy is dying and the so-call political centre is just fine with that.

      • hefner
        Posted July 26, 2018 at 3:39 pm | Permalink

        Do you include these as run by a left-winger:
        the Adam Smith Institute, the Bow Group, the Centre for Policy Studies, the European Research Group, the Global Warming Policy Forum, the Institute of Economic Affairs, the Legatum Institute, the Tax Payers’Alliance, … for the UK, and our beloved politicians also participate as guests in some US ones.

        • libertarian
          Posted July 27, 2018 at 2:42 pm | Permalink

          hefner

          Please supply a breakdown of the amount of taxpayer funding each of your mentioned think tanks receive. Oh and not one of them is a Quango and I dont know if any of them qualify as a large charity either

          • hefner
            Posted July 28, 2018 at 8:30 pm | Permalink

            You’re quite a comic genius as I’m pretty sure you know most of these “think tanks” organize their financing in as opaque a way as possible. But thanks anyway. It’s clear you don’t mind being taken for a fool.

  5. Lifelogic
    Posted July 26, 2018 at 6:17 am | Permalink

    We have the highest taxes for well over 40 years. The chancellor is still ratting on the IHT threashold promise. Indeed he is still increasing IHT each year. He has increase IPT insurance tax by 20% this year, he has absurd taxes on moving house and he clearly hates landlords and tenants taxing them on profits they have not made and making them pay an extra 3% on purchase. Thus slowly killing the whole important industry, limiting supply for tenants and pushing up rents.

    Yet still public services are dire and declining. We need to cut government expenditure hugely. The state sector are remunerated with pensions at 50% more than the private sector who pay for them, why? Much of the state sector do little of any value at all and many do positive harm to the economy. The state should only be doing the rather few thing it can actually do better. Law and order, defence and not that much more.

    The real austerity is in the private sector where 80% of people work. May and Hammond just regard these people as cash cows and rob their pensions and their companies.

    The average private sector pension (in addition to the small state pension) is only about 1/10 of those in the state sector. Brown, Osborne and Hammond have robbed them blind. Needless to say MPs have on of the most generous (with other people’s money that is) schemes going.

    Yet EUphile Hammond still pretends he is a Tax cutter. He fools no one.

  6. Kenneth
    Posted July 26, 2018 at 6:40 am | Permalink

    This socialist government appears to prefer to raise taxes and a good deal of the taxes raised are still being sent abroad to Brussels despite the fact that we voted against this practice.

  7. alan jutson
    Posted July 26, 2018 at 6:47 am | Permalink

    Its all about balance really, Tax people enough to give them the protection only the State can sensibly provide, but encourage self funding of many other services, with tax allowances for those who do not choose to use any of the the additional State services on offer.

    One could argue all day/week/year about what should constitute the core State provided services, but clearly Security, National defence, a fair justice system, and policing are an absolute given.

    Then we get to the sensible to have services with guaranteed minimum standards for education, health, welfare, pension.

    Then the nice to have, and finally, the wouldn’t it be nice to have choices.

    Then the real debate starts with standards, compliance, alternatives, add on’s, etc etc, etc.

    One thing for sure, Government should keep out of Social engineering, and allow people a free choice within reason.

  8. Lifelogic
    Posted July 26, 2018 at 6:55 am | Permalink

    “A betrayal on Brexit would push UK politics to the extremes
    Leaving the EU was meant to save us from a Europe-style descent 
into authoritarianism” says Allister Heath today in the Telegraph today. He is quite right, but we are clearly going to get a total betrayal from May and Hammond unless they are stopped.

    N Soames wants to blow Brexit up it seems, according to his local paper. So we won the last war only to become regions of the Socialist, anti-democratic EU did we Nicholas?

  9. sm
    Posted July 26, 2018 at 6:57 am | Permalink

    Taxing us to stop doing ‘bad’ things AND taxing us when we do ‘good’ things – that’s a paradox I hadn’t thought of, but how true!

    And of course, when the State starts interfering in the (relatively) small matters, such as one’s consumption of sugar, or the days when a shop can be open to sell it to you (one can think of many other examples), it then wonders why, as a consequence, its citizens start to lose their sense of personal responsibility.

    I would love to think of a Party that would say: if we form a Government, we will stop taking so much from you, but in return you must play an active role in caring for yourselves, which we will encourage. In return, when you encounter unforeseeable calamity, we will assist and if necessary support you.

  10. Turboterrier.
    Posted July 26, 2018 at 6:58 am | Permalink

    We need to catch up with tax cutting, so we do not become uncompetitive.

    Alas all too late for Scotland.

    This is what we can expect after the next elections as this government will have handed the country over to a Labour led coalition with the SNP and Greens due to the totally incompetent way they have handled the whole Brexit process due entirely to the lack of leadership, vision and determination to honour the voice of the electorate.

  11. Narrow Shoulders
    Posted July 26, 2018 at 7:11 am | Permalink

    Interesting that you did not float the idea of cutting the 40% tax rate or making the entry point more realistic.

    Are those striving middle earners less important than high and low earners or just easier to tax? The hike in NI upper earnings limits to offset any gains a higher rate payer received when the threshold increased slightly suggests they are just easier to fleece and there is no political downside of doing so.

    I hate working (I get my sense of achievement in other areas, arbeiten does not make me free) and only do so to provide for my family (note my family not net recipients of government largesse).

    I would like to keep as much of my wage as I can seeing as your government’s housing and immigration policy cost me so much.

  12. Old Albion
    Posted July 26, 2018 at 7:11 am | Permalink

    The most insidious tax we pay is the EU created VAT. Currently 20% this tax should be reduced substantially and removed altogether from energy.

    • margaret howard
      Posted July 28, 2018 at 4:02 pm | Permalink

      Lets just have a look what it was before we joined the EU.

      “Between October 1940 and 1973 the UK had a consumption tax called Purchase Tax, which was levied at different rates depending on goods’ luxuriousness.
      Purchase Tax was applied to the wholesale price, initially at a rate of 331⁄3%. This was doubled in April 1942 to 662⁄3%, and further increased in April 1943 to a rate of 100%, before reverting in April 1946 to 331⁄3% again. Unlike VAT, Purchase Tax was applied at the point of manufacture and distribution, not at the point of sale. The rate of Purchase Tax at the start of 1973, when it gave way to VAT, was 25%”

      Those were the days!

  13. Glenn Vaughan
    Posted July 26, 2018 at 7:20 am | Permalink

    John

    There will be no tax cutting measures proposed in the next November budget.

    Hammond might raise the personal allowance to £12k but not much more than that. The basic tax rate will remain unchanged and the rest of the budget will involve increases e.g. fuel duty, national insurance contributions blah blah.

    This country needs another Nigel Lawson as chancellor – urgently!

  14. Christine
    Posted July 26, 2018 at 7:26 am | Permalink

    I feel totally fed up with your Government. It has lost its way and I have no idea what it stands for any more. Until May and Hammond go I won’t be voting Tory again. We need someone with optimism in charge. Someone to grasp the benefits of Brexit. Give us something to look forward to. Announce zero tariffs on imports of things we don’t produce. Just do something positive.

    • Anonymous
      Posted July 27, 2018 at 8:20 am | Permalink

      They’re plotting a second referendum.

    • Nicholas Murphy
      Posted July 27, 2018 at 10:22 am | Permalink

      ‘Someone to grasp the benefits of Brexit.’ You are so right. Programme management best practise emphasises the importance of benefits realisation. The May-Hammond Brino combo has always viewed Brexit benefits as something to trade away in their surrender talks with Barnier. To hell with them! Against tough competition, May has show herself to be the worst Conservative leader in a century.

  15. Ian wragg
    Posted July 26, 2018 at 7:30 am | Permalink

    With a socialist Prime Minister and Chancellor there is no way we will be cutting taxes.
    The way they are spraying money at Brussels for ever and a day and signing up to EU social environmental welfare and taxation policy, you won’t be able to cut taxes even after we have supposedly left the EU.

  16. Andy
    Posted July 26, 2018 at 7:35 am | Permalink

    Tax is such a Tory obsession. Really – the amounts you are talking about are negligible for 99.9% of the population.

    The real game changer would be getting your party’s rich donors and big businesses to pay their share. Which they currently don’t. And also getting all those Brexit voting tradespeople to stop doing most of their work cash in hand.

    Incidentally – despite being branded a traitor by an elected Tory MEP who wants people like me tried for treason (really) – I have decided to do my bit for Brexit Britain.

    When I come back from France this weekend I’ll be filling the car full of wine, chocolates, and plenty of other products as I understand that Brexit is going so well we all need to stockpile! They didn’t put that gem on a bus.

    Still, me and my family will be okay – any of you lot need anything?

    • Edward2
      Posted July 27, 2018 at 6:41 am | Permalink

      Can you bring back some sandwiches Andy, because the BBC says after brexit there will be shortages of them.
      I’m very worried.

    • fedupsoutherner
      Posted July 27, 2018 at 7:48 am | Permalink

      @Andy. There are plenty of good quality products to buy in the UK thanks Andy. You can shove your French rubbish where the sun doesn’t shine. I can’t think why you are coming back unless it’s to sell your second property before the state takes it.

    • Anonymous
      Posted July 27, 2018 at 8:22 am | Permalink

      I’ve always stockpiled.

    • Mitchel
      Posted July 27, 2018 at 9:48 am | Permalink

      Who was milking your cow whilst you were away?!

    • libertarian
      Posted July 27, 2018 at 2:52 pm | Permalink

      Andy

      Episode 98/200 Of Why Andy is ignorant

      1) The UK tax gap is the lowest in the world at 5.7%

      2) 1% of people pay 27% of all income tax received

      3) another 9% paid 34% of all income tax

      4) so basically you are going to France to buy products to evade paying UK taxes .. interesting

      As per YOUR OWN suggestion Andy when you arrive back from France your house will have been compulsorily confiscated , oh and as a self proclaimed millionaire please let us know why you aren’t paying your full share of income & corporation tax

  17. Nicholas Murphy
    Posted July 26, 2018 at 7:40 am | Permalink

    Better to cut tax rates than take people ‘out of tax altogether’. Voters need to be connected to the issues of taxation and expenditure – otherwise they will have no interest in the latter. Increasing use of hypothecated taxes would also encourage responsbile voting.

  18. A different Simon
    Posted July 26, 2018 at 7:49 am | Permalink

    Cuts to taxes on labour (and industry) are a good idea but only if taxes on land and property are increased correspondingly at the same time .

    Otherwise as Ricardo pointed out all that happens is that the extra income will be absorbed by house price /land price / rent inflation as banks see it as an opportunity to lend even more ridiculous multiples .

    The banks surely do not have a moral claim on the economic rental value of every location yet they are the ones who harvest it by interest on mortgages . Allowing them to do so is in effect a pure subsidy to the banks .

    Banks should only be able to derive interest from the man made improvements to a plot , not the value of the location which is created by society and God/nature .

    Imagine how low taxes on income could become if people had to pay society an annual fee for exclusive use of a location (Adam Smiths annual ground rent proposal) instead of letting the banks extract the economic rental value of the location .

  19. William Long
    Posted July 26, 2018 at 8:04 am | Permalink

    Living off immoral earnings is well known to be illegal, but that is just what the Government is doing when it taxes things it does not like. If the Government thinks something is so harmful as to be undesireable, it should legislate to stop it, not allow it to continue to swell its coffers. Taxation is to raise revenue to keep the country afloat; it should not be used for social engineering.
    We badly need a Chancellor who has the character to stand up to the Tax and Spend ethos in the Treasury and that is clearly not Mr Hammond. Even Osborne had some quite sensible ideas until he became the Heir to Browne in Number Eleven.
    Just as you are saying, the reduction in Tax rates und Mrs Thatcher had a dramatic effect both on the amount of work people became prepared to do when they were rewarded for it, and for the tax take. I remember it well and it certainly applied to me and my then partners.
    We will need different people in charge before there is any chance of this being done again though.

  20. Richard1
    Posted July 26, 2018 at 8:09 am | Permalink

    Fully agreed. The UK needs to be super competitive vs the EU on income tax and capital taxes post Brexit, especially if, as expected, there is no trade deal covering financial services.

    On that subject, President Trump again proposed yesterday to Juncker that the US and the EU abolish all tariffs and non tariff barriers. Obviously Juncker hasn’t got the gumption to leap at this but why doesn’t our govt? We are still members of the EU after all, and such a move would pretty much solve at a stroke the issue of the EU-UK free trade arrangement post Brexit.

    Perhaps smug M Barnier will warn President Trump that the US cannot expect to “access the single market a la carte”. The ensuing tweet would provide amusement for a day or so.

  21. Ex Tory Votee
    Posted July 26, 2018 at 8:10 am | Permalink

    Tories out !

  22. margaret
    Posted July 26, 2018 at 8:36 am | Permalink

    I prefer to read about growth . Whilst I agree the very top earners should not be penalised (apart from the fact it is demotivating ) it must be the same for all down the tax line.
    I love the prospect of growth and investment or if brave investment and growth .

  23. Adam
    Posted July 26, 2018 at 8:42 am | Permalink

    There are plenty of negative actions tax can be applied to, simultaneously to discourage & generate funds. We have previously opined that taxing good work is a crazy way of raising Govt money.

  24. Prigger
    Posted July 26, 2018 at 8:45 am | Permalink

    Do please try to stop MPs who wish extra and expensive provisions for “making sure places are up to standard on protecting people from “heat waves”. These are the same MPs who cost the nation a fortune insulating homes against cold.

    I know the Met Office has statistics. But I remember standpipes in the streets over half a century ago. I personally recall the grass going brown for months in the 1970s. Today I see more green grass than I have previously witnessed in such heat waves. It seems we are having an Indian Summer again. About time!!!!!And the last winter wasn’t “Terribly cold” as our media state. It was mild by my experience several times over but was rather wet.

  25. David Price
    Posted July 26, 2018 at 8:46 am | Permalink

    Cut taxes across the board to encourage commerce, employers to employ and people to work whether self-employed or as employees. If it makes us more competitive than the EU then so much the better.

    But you must also stop wasting money, focus on priorities which means what is important to the plebs not just what looks good for politicians (HS2) or strokes the noisy “liberals” (destroying our conventional power stations). Fix the roads and infrastructure, deal with waste in the NHS and MOD.

    Government must be more mindful about who is allowed to come here to settle and do business. Be more mindful of what foreign “investment” is made and what it is really trying to achieve and what benefit it might actually be to the people in this country.

  26. ChasE
    Posted July 26, 2018 at 9:00 am | Permalink

    Trump has flip flopped again and is now on the side of Junker- I wonder what piece of incriminating material was hinted at by Junker to get him to change his stance from a couple of weeks ago? and as part of their agreement they are going to look at revising the WTO rules? meanwhile Mrs May is flapping in the breeze, hung out to dry, nobody knows where we are headed with all of this?

    • Chris
      Posted July 27, 2018 at 7:37 am | Permalink

      President Trump is totally in control of the negotiation with Juncker. For some detailed and sound analysis of P Trump’s economic and trade policy go to Conservative Tree House website. P Trump is transforming the US economy and is winning big in trade deal, bringing employment and prosperity back to the USA. Philip Hammond could learn a vast amount from him, and also Theresa May on negotiating deals.

  27. a-tracy
    Posted July 26, 2018 at 9:04 am | Permalink

    When the UK tax rates are discussed we rarely hear now about fiscal drag on the earnings levels before higher rates start and the 60% income tax between £100,000 and £123,000pa incomes plus 9% graduate tax for those graduates who incurred student loans, so 69% (around one million people now) how many other Countries in the EU pay so high a rate as that in England without other benefits (such as increased maternity/paternity pay and provisions, enhanced sick pay from the State, free university for their children, or free prescriptions)?

  28. Posted July 26, 2018 at 9:10 am | Permalink

    Mr Redwood,

    You said: “the US economy is growing faster as a result”. Pse show the causality mentioned here and also compared to what is the US growing faster. Economics and facts, not ideology dressed up as fact..

    • libertarian
      Posted July 27, 2018 at 2:55 pm | Permalink

      Rien Huizer

      Cant you just google it? Its not difficult The US economy grew since they cut taxes 4.1%

      https://www.bloomberg.com/news/articles/2018-07-27/u-s-gdp-growth-hits-4-1-fastest-since-2014-in-win-for-trump

      • Posted July 29, 2018 at 10:35 am | Permalink

        My quastion was about the “faster” and the “as a result of”. The number is fine though probably boosted temporarily because $5 per annum is above the US’ current ptotential non-inflationary growth rate. Of course some of the Trump measures cosntitute fiscal stimulus and some boost efficiency (for instance scrapping of environmental rules) Others (trade protection might reduce growth. Anyway, this does not look like “growth” but more like a cyclical upswing. It would have been nice if Mr Redwood would prove causality rather than state it. Carefully worded politician-speak..

        Replytaxes down, growth up looks like causality to me

  29. hans christian ivers
    Posted July 26, 2018 at 9:14 am | Permalink

    JR,

    Interesting article with an underlying philosophy of cutting taxes to create more income later on.

    Hoever, France has cut some taxes Taxe d’habitation and increased at the same time for retired people , so overall till now no. Italy has a 130% deficit on the government budget and cannot afford any significant tax cuts, which are being discussed but have not been implemtne to the tune of Euro 20 billion. The US has cut taxes but we still do not know, if, it will increase the government deficit or not.

    So, no your economic theory has not yet been proven as you state?

    • libertarian
      Posted July 27, 2018 at 2:57 pm | Permalink

      hans

      You left out the Nordic states reducing corporation tax. The US growth figure came out today , US GDP grew 4.1%

      • hans christian ivers
        Posted July 29, 2018 at 3:32 pm | Permalink

        Libertarian,

        Interesting perspective but growth of 4.1%, in one quarter does not make an annual growth rate, the point is whether the growth in the US will compensate in sufficiently higher taxes to cover the growing deficit and that is still to be seen

  30. acorn
    Posted July 26, 2018 at 9:14 am | Permalink

    Taxes drive the currency. Taxes are needed to create a demand for the currency. If there were no UK government taxes, why would the non-government private sector, bother getting any of the government’s own unique currency, by selling stuff to the government sector to get government money? We would all be using Bitcoins instead.

    Taxes are not needed to “pay for” government spending. Further, the logic is reversed: government must spend (or lend) the currency into the economy before taxpayers can pay taxes in the form of the currency. Spend first, tax later is the logical sequence.

    Taxes reduce aggregate demand and stablise inflation, much better than BoE interest rate monetary policy. They can be sector specific to stop things happening; Tobaco and Alcohol tax for instance (I won’t mention the Laffer Curve here). Taxes can divert private sector output into the public sector for common good.

    Tax rates should be set so that the government’s budgetary outcome (whether in deficit, balanced, or in surplus) is consistent with full employment. A country like the US [and the Uk] (with large current account deficits at near full employment), will probably have a budget deficit at full employment (equal to the current account deficit PLUS the domestic private sector surplus / savings).

    A country like Japan [and Germany] (with a current account surplus at full employment) will have a relatively smaller budget deficit at full employment (equal to the domestic private sector surplus LESS the current account surplus). (HT: L Randall Wray)

  31. Edwardm
    Posted July 26, 2018 at 9:14 am | Permalink

    Agreed, except the top rate should be lower, say 35% (I say that with no personal benefit).

    O/T Mrs “concessions” May continues to worry Brexiteers, I don’t know the game plan or whether the EU will rescue us in the end by not agreeing; but by taking the chance of leaving her in place it seems the Conservative party as a whole has no desire to appear credible.

  32. Ken Moore
    Posted July 26, 2018 at 9:34 am | Permalink

    Cutting taxes..more spending. If the economy really was growing rather than recycling borrowed money this would be possible. GDP is not the same as prosperity!.
    Shops, pubs and restaurants are in melt-down. Consumer credit has been rising dangerously, and arguably is now ‘maxed out’. Car sales, having been sustained by easy credit, have now turned down. There is a general shabbiness about the Uk.
    I don’t know how, with faltering prosperity, any economy can support a banking system which, measured by total assets (i.e. loans) is 11x GDP.

    The UK “dodged a bullet” in 2008. It will require more than luck to dodge the next one.

    What more proof does John Redwood need that the REAL economy of goods and services isn’t really growing and that prosperity is in decline ?

    Britain has long had trade deficits but, until the mid-2000s, usually balanced this pretty well with inward income flows. (Trade + income flows = current account).

    For a long time, though, Britain has been a big net seller of assets, and a big net borrower from abroad. Initially, this means an inflow of capital, balancing out the outflow on the current account.

    However, each asset sold sets up future streams of outflows of profits and dividends to overseas investors, and each new debt creates forward interest outflows. This is why there has been such a slump in the current account. Living on borrowing, and the sale of assets, is short-sighted, of course.

    Greatly simplified, but that’s the gist of it.

    Questions – the “kindness of strangers” issue – now include:

    – Will investors leave their profits in the UK, or repatriate them?

    – Will they carry on buying UK assets, and lending to the UK?

    A lot of this comes down to confidence. With lots of shops, pubs etc closing, the implication is that the UK consumer is hard-up – so what’s the point in investing in business that need to sell to that consumer?

  33. old salt
    Posted July 26, 2018 at 9:49 am | Permalink

    How about cutting taxes on spending e.g. the EU contribution component of VAT for starters.

    • Ian wragg
      Posted July 26, 2018 at 4:20 pm | Permalink

      It appears we owe the ERG a vote of thanks. Barnier says that the 4 ammendments voted into the trade bill restrict Mays negotiating options.
      What he really means is they stop her surrendering completely.
      Three cheers for JRM and his gang.

  34. behindthefrogs
    Posted July 26, 2018 at 9:50 am | Permalink

    The priority should be to raise the starting level for NI contributions rather than changing income tax rates

    • Addanc Monster
      Posted July 26, 2018 at 7:09 pm | Permalink

      No, there should be a simple flat rate tax.

  35. Peter Martin
    Posted July 26, 2018 at 9:52 am | Permalink

    The GDP of the UK is about £2 trillion. This means that all the spending in the UK, including all exports and Government spending, totals up to this amount.

    If you want, say, 3% real growth over the next year and have an inflation target of 2% this has to become £2.1 trillion. In other words we are looking for another £100 billion of spending. This can be a mixture of tax cuts and additional Govt spending, or an increase in exports, or the Govt can encourage everyone to borrow more.

    The last option is limited, to say the least, because interest rates are so low they can’t go any lower. An increase in exports will require a lower pound. That’s probably not an option either. Additional Government spending isn’t an option for ideological reasons.

    So that leaves £100 billion of additional spending to be supported or encouraged by tax cuts!

    Good luck with that!

    • Ken Moore
      Posted July 27, 2018 at 10:25 am | Permalink

      Why is it desirable to strive for 3% growth in GDP?. If £1 of growth is bought by spending £3 of borrowed money that is the logic of the madhouse. But that is what we have been doing since the turn of the millennium to mask the gap between the real economy of goods and services and the financial economy of debt, borrowing and monetary manipulation.

      GDP isn’t the same as prosperity. GDP has been going up despite prosperity peaking over a decade ago.
      Trump..Brexit…populism are all reactions to the unpopulists that are driving globalisation and falling living standards.

      • Peter Martin
        Posted July 28, 2018 at 10:28 pm | Permalink

        @ Ken,

        “Why is it desirable to strive for 3% growth in GDP?”

        For one thing people are generally good at finding better and more productive ways to do the same thing so if GDP growth stalls there tends to be upward pressure on rates of unemployment and underemployment.

        So the trick is to get the growth without the inflation. That’s easier said than done but assuming we can do it, with the figures I mentioned, 3% and 2% then the money supply or the rate of spending has to increase by 5%.

        So where can that money come from? Its exports, more Govt borrowing, or more private borrowing. There aren’t any other choices. And we can’t all be Germany running a large export surplus.

  36. DUNCAN
    Posted July 26, 2018 at 10:00 am | Permalink

    I now genuinely couldn’t care less what happens to the UK now that this political class, including you John who backed this lying, devious PM have betrayed our trust, abused our faith and incited fear to force us to vote in a particular direction

    Let’s hope people adjust their behaviour to limit the constant claims made upon us by a grasping, centralising vested interest that is the British State

    You lie to us and then you expect our loyalty

    Why should we pay more tax only for those taxes to be used to finance political spending?

    Get real.

  37. Toasty
    Posted July 26, 2018 at 10:12 am | Permalink

    Sorry JR for so many comments on Mythical climate change but living in the north of England and not the coldest extremes in Scotland, current discussion on weather ignores the first 15 years of our experience and 35 years and more of people older than myself and all experience of our now deceased mothers and fathers. It’s as though we and they never existed at the time.

    • fedupsoutherner
      Posted July 26, 2018 at 3:01 pm | Permalink

      @Toasty. Yes agree. Totally bonkers reaction to a hot summer. Anyone would think we had never had one. Last year was dismal and we get one good summer and we’re all going to die of heat exhaustion etc. Everything gets dramatized these days. We can all remember hot years but all this climate change crap is taking over everything now. I am glad to see the government is not renewing subsidies for small renewables such as solar and small wind turbines. About time all subsidies were removed for everything. Stand on your own two feet or go under like the rest of business. Subsidies are just another form of taxation for everyone.

  38. Iain Gill
    Posted July 26, 2018 at 10:40 am | Permalink

    Attention should be paid to the way PAYE is applied to temporary workers.

    If you get a short term employment with high rate of pay for whatever reason, the tax office immediately slaps a punitive tax code on the assumption that you will continue on that high rate for the rest of the tax year, which would put you above 100 k and remove your tax allowance. They simply cannot cope with the reality that you will only be on that high pay for a few weeks or months. So you end up being owed a significant overpaid amount of tax, which you will not be able to get back until your next tax return is completed and processed.

    PAYE simply does not work for lots of modern working patterns.

    • Iain Gill
      Posted July 26, 2018 at 9:34 pm | Permalink

      Its also interesting being in the 100 K plus bracket being paid daily, as the difference in take home pay for working 4 or 5 days is marginal, working a full 5 day week pays hardly any more than working 4 after tax. The system actively discourages people from bothering to create as much wealth as they could.

  39. Trimperley
    Posted July 26, 2018 at 10:42 am | Permalink

    You are missing the real problem which is the creeping levys and taxes on the necessities of trade and business. Insurance premium tax of 12% takes a big chunk of income when an insurance premium is in the tens of thousands. Is it any wonder that high street chains are struggling when you add up all the extra tax burdens that have been levied on them, insurance premium tax and auto enrolement. Add to that the cost of petrol/diesel and the tax on that eating up people’s disposable income. 20% vat on goods and services also deters expenditure. We are frogs slowly being boiled by Government stealth taxation.

  40. Posted July 26, 2018 at 11:25 am | Permalink

    What is needed is an economic model that shows us….

    If we cut taxes and increase the government budget deficit

    If we increase government spending and increase the government budget deficit

    Will it cause inflation ?

    Because if it causes inflation then you have to cut government spending or raise VAT, raise taxes, raise council tax, raise national insurance anything that will suck £’s out of the economy to stop inflation.

    Unfortunately, we don’t have such a model that will tell us if we cut taxes or increase government spending if it will cause inflation. Too much money chasing too few goods.

    What economic model we have instead is insane

    a) It says we are at full employment at all times the quantity theory of money.

    b) We treat budget deficits as bad things as if they operate like our own household budgets.

    The government budget deficit is just the private sector surplus

    The government budget deficit is private sector savings and the national debt are just those savings moved into gilts.

    • Edward2
      Posted July 27, 2018 at 7:01 am | Permalink

      We already have inflation.
      It is a few percent per year.

      You say government deficits are “not a bad thing”.
      That attitude over decades has resulted in the UK currently holding a debt of £1.78 trillion or 87% of GDP
      The cost of paying the interest on that debt is even at low interest rates is a billion a week.

      • Edward2
        Posted July 27, 2018 at 7:09 am | Permalink

        Since 2000 inflation has averaged 2.75% despite the 2008 crash/recession.

  41. Helen Smith
    Posted July 26, 2018 at 11:39 am | Permalink

    I have the utmost respect for you Mr Redwood but there is no point in talking about tax rates when the Tory party is going to spend 20 years on the opposition benches unless it gets rid of May, elects Boris, tells Soubry et al to button it and respects the referendum result.

    • Anonymous
      Posted July 26, 2018 at 12:53 pm | Permalink

      +1

    • Lifelogic
      Posted July 26, 2018 at 1:31 pm | Permalink

      Indeed.

      And why is the establishment willing to gamble everything for its irrational love of a failing super-state? Asks Allister Heath today?

      Especially the Tories when it will clearly lead to a revival of UKIP, a massive gdp between MPs and their members and electoral suicide a la John Major?

    • Mole
      Posted July 26, 2018 at 1:37 pm | Permalink

      It may not feature even on Opposition benches with or without May except at the present level of the LibDems unless it changes its tune pretty sharpish.

    • Timaction
      Posted July 26, 2018 at 3:53 pm | Permalink

      She won’t change Olly’s Chequers paper. Therefore the Tory MPs have a choice. May’s way or Corbyn and his pals at the next election. Everyone out here knows of Mays betrayal. No good waiting for more capitulation or Treaty signing as we will only vote for party’s to deliver true Brexit not the vassel state EU rule book with no say! No state aid or competitive advantage. We know she’s batting for the other side and MUST go before it’s too late! What part of taking back control does she not understand.

    • Chris
      Posted July 26, 2018 at 7:29 pm | Permalink

      I am afraid this is what I feel, Helen. It’s all a bit hypothetical (tax rates) when seismic events are happening round us and Tory Brexiters will not take action. We are being sold down the river by May, and she is able to continue her downstream journey without so much as a ripple from Tory Brexiters.

    • GreesT
      Posted July 26, 2018 at 7:46 pm | Permalink

      Too late ..looks like we are going for a ‘half in- half out deal’- according to the Barnier Raab press conference today and reading between the lines..

      mind you the Tory party is still going to spend 20 years in opposition..all because of their own party infighting lies and spin but also because of way they have negotiated our brexit position away- as usual they put personal ambition before party and then party before country and now heaven help us all if McDonnell gets into no.11

    • Posted July 26, 2018 at 11:04 pm | Permalink

      Helen, there are so many of us who feel as you do.

      It’s like talk of improving the armed forces – who will do it, and what’s the point if there is nothing left of our own to defend?

  42. Posted July 26, 2018 at 11:44 am | Permalink

    All we need to know is if we cut all taxes and get rid of some of them on small and medium sized businesses.

    Will it cause inflation. That’s all we need to know.

    If we increase the budget deficit by say 3% by cutting taxes will it cause inflation ?

    We need to know that answer to that question.

    If we can get full employment that is an unemployent rate of 2% the budget deficit will take care of itself.

    The only time the government should be running a budget surplus is when we reach full employment. The reason for that is very simple.

    At full employment the economy is heating up which will create inflationary pressures everywhere.

    The government budget surplus is the private sector deficit.

    The government budget surplus removes £’s from the private sector thus it helps to control inflation. Which is what is needed when we hit full employment.

    It cools the economy down and keeps a lid on the inflationary pressures. A government budget surplus when it takes more out of the economy than it puts in keeps the engine runing and stops it from over heating.

    • Edward2
      Posted July 27, 2018 at 6:53 am | Permalink

      So you share saying the more the state borrows the wealthier we will be.
      Interesting economic theory.
      Does Corbyn know?

      • Edward2
        Posted July 27, 2018 at 7:10 am | Permalink

        Share…should say “are”

  43. Peter VAN LEEUWEN
    Posted July 26, 2018 at 11:50 am | Permalink

    Slightly off-topic: After the excellent idea on this website, to offer the EU27 a 0-tariff trade deal, Mr Trump has personally taken the idea on board: He will now negotiate a 0-tariff trade deal with our European Sir Humphrey, the elected (!) Mr Juncker, who’s civil service is charged with negotiating trade deals. In view of the unpredictable mood swings in the US, I thought it better to report this today! 🙂

    • Yorkie
      Posted July 26, 2018 at 1:15 pm | Permalink

      Then if you are going to report then report it instead accurately and not to conform to your own hopes. No negotiations have been entered into except for the result that EU to buy with immediate effect soy beans on which China has put a tariffs for the US, and to start immediately the building by USA contractors of platforms in EUland to receive liquid gas from the USA and immediately not to impose tariffs on US cars. Junker was not reported as speaking as he stood alongside Trump, only Trump, but he did!

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:02 am | Permalink

        @Yorkie: When you see the whole press conference, there is also Juncker talking. The EU side had been smart enough to insist on written joint press statement as well, which states the four points the two parties agreed and embarked upon. After all, you never know what the next twitter could be.
        The most interesting thing for me was that Juncker only promised things that were already happening or in the pipeline. You may see it as a PR excercise, which would serve Trump, but I think it is a bit more than that.

        • Yorkie
          Posted July 29, 2018 at 4:41 pm | Permalink

          My dad’s stronger than your dad you’re saying.

    • Ian wragg
      Posted July 26, 2018 at 1:42 pm | Permalink

      Yes and no mention of a common rule book or annual payment and certainly no freedom of movement.
      He doesn’t have to sign up to keeping EU rules on environmental taxation energy or social.
      How can that be.

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:04 am | Permalink

        @Ian wragg: Chose the Canada FTA (called CETA) and you can have it all! Chose WTO and you can have it all!

    • Richard1
      Posted July 26, 2018 at 2:42 pm | Permalink

      Let’s see what Comes of it. Trump offered this at the G7 as well. EU leaders, especially Mrs May, should jump at it. It would make the great ructions over the EU-UK trade deal largely irrelevant (if it actually happened).

      Meanwhile the ECJ has produced a couple of disguised protectionist rulings – one protecting competitors to Dyson from having to report the actual performance of their products, and the other extending the totally unscientific protectionism against GM crops to CRISPR-edited corn. Regualtion is the great new protectionist weapon. In this regard the EUs behaviour is worse for free trade than Trumps tariffs.

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:08 am | Permalink

        @Richard1: The ECJ has been known to rule in the favour of the UK. I don’t know the particular cases you mention, but we keep our Dyson vacume cleaner for the time being 🙂

    • Richard1
      Posted July 26, 2018 at 2:44 pm | Permalink

      Peter a question for you: in the Netherlands it’s legal to sell cannabis correct? But in Neighbouring countries like Germany it’s illegal. Both are in the single market, customs union and Schengen, so how does it work with no hard border to police it?

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:15 am | Permalink

        @Richard1: it is more complicated: The sale of canabis is NOT legal, but “condoned” as a matter of official policy (up to 5 grams a customer, I’ve heard). This practice attracts unwanted drug-tourists from abroad, causing some problems for the community. So-called “coffeeshops” have tried to curb this by introducing membership, and selling to “members” only. It is a bit of a mess I believe, but no coalition government has yet succeeded in a good way forward. The Netherlands is here not the example to follow, even though there are relatively few problems with drug use over here.

      • Prigger
        Posted July 27, 2018 at 9:19 am | Permalink

        The Netherlands has been poisoning the youth of EU nations for quite some time now and with accompanying “stuff” ( for medicinal purposes… of course ). Canada is looking to export its home produced filth too. No condemnation from the British government to either.

    • libertarian
      Posted July 26, 2018 at 3:29 pm | Permalink

      PvL

      Yup the silly old fool ( Junker) fell for it. EU back talking about signing up to TiPP again.

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:18 am | Permalink

        @libertarian: Compared to you, he could only be a silly old fool of course 🙂 🙂 , but among continentals he is regarded as quite smart and shrewed.

    • Timaction
      Posted July 26, 2018 at 3:57 pm | Permalink

      How much will that cost the EU and it’s protective tariffs? Without our annual £12 billion net as well! Let’s hope it kills the beast and frees it’s member States!

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:21 am | Permalink

        @Timaction: Are you sure you know the facts? Soybeans and LNG already have 0% tariff.

        • Timaction
          Posted July 27, 2018 at 4:38 pm | Permalink

          American cars etc. Tariffs diminishing as well as our contributions!

    • Caterpillar
      Posted July 26, 2018 at 8:18 pm | Permalink

      Peter,

      Zero tariff should not require negotiation is required fair behaviour (no subsidies, no preferences, respect of IPR…The obvious list). POTUS is consistent on free trade, he brings tariffs into play if trade is not fair. At the G7 he suggested completely free trade, in the public tiff thereafter he reminded Canada of the tariffs that the USA had to pay when quotas were reached, so much for NAFTA being free trade. POTUS sees economic development and trade as good, something he highlighted when trying to move N.Korea. I think even his playbook is predictable.

      Perhaps it is a good sign thougj, given that Barnier has rejected the Chequers white paper as the EUROPEAN doesn’t want to outsource tariff collection, Perhaps the EU will quickly realise that it should just stop its unethica, trade diversionary tariffs.

      • Caterpillar
        Posted July 26, 2018 at 8:22 pm | Permalink

        EU not EUROPEAN – autocomplete algorithms can be a bit rubbish.

      • Peter VAN LEEUWEN
        Posted July 27, 2018 at 9:34 am | Permalink

        @Caterpillar: What is “fair”? Is it unfair to protect sectors of your own society? When Norway suddenly put something like 400% import duty on Gouda cheese, it was of course with the best intentions to protect their dairy farmers.
        Trump hasn’t been talking about the 25% tariff on European-built vans and pickup trucks, only about the 2% on ordinary cars.
        In order to sort things out one needs to talk and negotiate, both in the case of Norway (which I believe was dealt with) as in the case of the US/ Trump.

  44. Posted July 26, 2018 at 11:51 am | Permalink

    I’m the monopoly issuer of the £. I don’t need to go and find £’s from anywhere I create them at will using a computer keyboard and an index finger. There is no gold coin getting hammered into the keyboard.

    I’m going to run a balanced budget with you the private sector.

    I’m going to give you £1,000 and tax you £1,000

    a) How much can you save ?

    b) How much can you spend into the economy ?

    I’m now going to run a budget surplus with you the private sector.

    I’m going to give you £1,000 and tax you £1,500

    a) How much can you save ?

    b) How much can you spend into the economy ?

    I’m now going to run a budget deficit with you the private sector.

    I’m going to give you £1,000 and tax you £200

    a) How much can you save ?

    b) How much can you spend into the economy ?

    As the monopoly issuer of the £ my surplus if your deficit and my deficit is your surplus.

    Which is why we’ve ran budget deficits for nearly 300 years.

    • Edward2
      Posted July 27, 2018 at 6:49 am | Permalink

      “Give you £1000” ?
      What are you on about?
      I can go to a cash point and get £1000 out every day.
      I don’t need you in government to send it me.

  45. Mike Wilson
    Posted July 26, 2018 at 11:56 am | Permalink

    For many years I have run my own small business. I could easily expand the business but, what’s the point. Every extra penny I earn I have 42% taken in tax and NI. If I employ someone I make a bit of money out of employing them – but I have to run PAYE, a workplace pension, pay employer’s NI, pay SSP and SMP, have workplace assessments done, have a first aid kit, get the kettle tested … it goes on and on and on. And, if I make a few pounds an hour out of employing someone, and taking all the risk and doing all the extra work – the government takes 42% for doing nothing.

    No thanks. In the circles in which I move, I know lots of small business owners. Many of them feel the same. It’s just not worth bothering to expand.

    • alan jutson
      Posted July 27, 2018 at 7:48 am | Permalink

      Mike

      Agreed far too much hassle to take on staff, which you than have to feed with work, which very often you have to bid for at unrealistic prices to get to keep them busy.

      Only ever used sub contract labour as and when needed in my business, when in business years ago, it gave me all the flexibility I needed.

      People say you cannot rely upon sub contract labour, but if you find good people, and it does take time and pay them well and on time, they always make themselves available for you.

      • Mark B
        Posted July 27, 2018 at 7:32 pm | Permalink

        +1 with you both.

    • Edward2
      Posted July 27, 2018 at 10:40 am | Permalink

      I completely agree Mike.
      I meet lots of small company owners and their attitudes are exactly the same.

  46. Denis Cooper
    Posted July 26, 2018 at 12:22 pm | Permalink

    Off-topic, I read this article:

    https://brexitcentral.com/dump-chequers-proposal-favour-deal-eu-wto-terms/

    “We should dump the Chequers proposal in favour of a deal with the EU on WTO terms”

    and I wonder how any self-respecting Conservative Prime Minister could ever be prepared to rely on the votes of eurofederalist MPs on the either side of the House to force through such as national betrayal as that agreed at Chequers.

    But then of course I remember that the archtraitor Edward Heath did exactly that.

    However more to the point this Saturday I will be joining local UKIP members for their summer lunch, as I have done in past years on a continuing social basis, but I have now come to the decision that this year I will be rejoining the party as a member.

    It is far from perfect and I don’t relish going back to traipsing around the streets of Maidenhead delivering leaflets and all that kind of thing – I THOUGHT WE HAD FOUGHT AND WON A REFERENDUM – but it seems nobody else is willing to fight against this betrayal being imposed by our hypocritical local MP who managed to fool enough of her colleagues to get herself installed as Prime Minister.

    If this episode spells the end of your party, JR, then so be it.

    After the referendum I was prepared to suspend my disbelief and trust Theresa May, in the national interest, and I was even prepared to break my longstanding habit and vote for her in the last election – that unnecessary general election she held on the advice of the President of the EU Commission, for God’s sake – but she is betraying not just me and the millions like me who voted to leave the EU, but also many who voted to stay in the EU in the naive belief that they were taking part in a genuine democratic decision.

    I fall back on the words of Edmund Burke:

    “The only thing necessary for the triumph of evil is for good men to do nothing”

    and so I will do what I can to prevent the triumph of this evil.

  47. Geoffrey Berg
    Posted July 26, 2018 at 1:10 pm | Permalink

    You , Mr. Redwood, state tax cutting ‘well done might bring in more revenue’. It might – but the government shouldn’t be taking the risk of spending more money (as you have suggested in several articles over the last few days) at the same time before we know the outcome. I think it is better so far as practicable for people to be able to spend their own money as they themselves choose rather than have their government spend (usually inefficiently) their money for them. So I say tax cutting should be the priority – therefore the government shouldn’t be spending more money overall at the moment.

  48. michael mcgrath
    Posted July 26, 2018 at 2:17 pm | Permalink

    Mrs May announces that she is arranging to stockpile food and medicines to protect the population after Brexit “as we don’t know what the outcome is going to be”
    I am sure that all readers of this diary will be immensely reassured to know this.
    Er…Why does “Corporal Jones” come to mind?

    • Denis Cooper
      Posted July 27, 2018 at 8:12 am | Permalink

      Why does she not start by making it clear that in the days and weeks and months after we have left the EU we will still let food, and everything else, come into the country on exactly the same basis as now as far as border controls are concerned, that is to say if we would not have checked it at the border before we left the EU we will not suddenly start checking it at the border after we have left the EU.

      Why should we change anything? If anybody will need to immediately change their border inspection regime it will be the EU, not us, as explained two days ago in a comment on this thread:

      http://johnredwoodsdiary.com/2018/07/25/spending-the-39-bn-the-case-for-social-care/#comments

      We are “Country A”, possibly changing its rules, while they are “Country B”, not changing its rules, so unless we think that they will start breaking their own law and sending across a load of illegal rubbish we will have no new need to check anything while they may wish to increase their checks.

      Perhaps we should ask them straight out whether they intend to start sending us rubbish after we have left the EU, indeed whether the EU treaties would permit them to do that or they would decide to break their own treaties to do it.

      • Denis Cooper
        Posted July 27, 2018 at 9:16 am | Permalink

        I don’t want to spend time trying to formally document what one might think should be the case, given the general character of the EU, that if something cannot be legally sold within the EU then nor can it be legally exported from the EU for sale within a third country.

        It would be good if legal experts could do that, but in the meantime just with respect to exports of food and drink, as that is the subject of today’s Remoaner scaremongering:

        https://www.food.gov.uk/business-guidance/exports-of-food-and-drink

        “Exporting food and drink to non-EU countries”

        Which will apply to companies within the continuing EU member states when they export produce to the UK once we are outside the EU.

        “Individual countries will have specific requirements in terms of the types of documentation needed for products being imported. The requirements will differ depending on the country and the specific type of product.”

        ” … it is your responsibility to check the restrictions and export conditions that apply before you export.”

        “The minimum required by third countries in such certification is usually confirmation that the product is:

        produced in accordance with EU hygiene rules
        fit for human consumption
        freely available for sale within the EU”.

        So if that is the EU system for controlling exports of food and drink to third countries all we have to do is inform the EU that for the foreseeable future we will require all our food and drink imports from its territory to conform to the same legal standards as now, meaning that we will no more need to inspect them at the border than we do now and we will not be needing all those huge extra lorry parks any more than we do now.

  49. michael mcgrath
    Posted July 26, 2018 at 2:28 pm | Permalink

    Mrs May wants to be nice to the EU by offering to collect import tariffs on their behalf.
    Why would we be prepared to do this ? As a sovereign nation, we collect on our own behalf according to our rates of duty.
    Any goods not intended for us but in transit to the EU will pass unhindered to the EU frontier where they will impose their own charges
    Are there any shipments where part is destined for UK and part for EU? In this case please use two boxes and invoice them separately

  50. Dennis
    Posted July 26, 2018 at 2:36 pm | Permalink

    Again Mr Redwood fail to explain where the fuel/resources for growing this economy comes from. He has never explained this. It’s the same as telling people to get richer by taking more money out of their bank accounts.

    Reply I will tell you again in a future post how we pay for growth policies

  51. Lindsay McDougall
    Posted July 26, 2018 at 3:17 pm | Permalink

    In summary, you want some increased public expenditure and you essentially believe that the Laffer curve effect applies to most taxes for most income brackets. I don’t buy it. We have empirical evidence that the tax take increases if you cut the top rate of income tax, CGT and ultra high corporation tax. It doesn’t work with other taxes.

    The UK still has an unacceptably high level of State debt, getting on for 90% of GDP, whereas the ideal is 30% to 40% of GDP. You think that you can magic away some of that debt because it arises from QE and the debt of public sector corporations. Well, Network Rail debt, which has now risen to £60 billion, is very much State debt. Network Rail has been able to borrow only because the State is backing it.

    So restraint of public expenditure is still necessary. Alternatively, payments must be made by people that use the services; free-at-the-point-of-consumption has to go (see my response to your previous blog).

  52. Empty Spaces
    Posted July 26, 2018 at 3:17 pm | Permalink

    Interstitial spaces.
    No-one told Lord Two-Jags that when he was championing housing insulation, loft, doors , windows( double glazed pvc, ) wall-thermal LINERS that interstitual spaces in buildings so cladded and modernised would also retain their heat even with open windows. Little loss of heat during colder nights. Closing windows in hot mornings would have little effect in barring heat penetration from outside; for, it was already inside from the previous day
    He used to work on Cold Sea and Warm Seas Liners. He learned alot.

    • alan jutson
      Posted July 27, 2018 at 7:56 am | Permalink

      Empty Spaces

      Agreed, once a building is warm inside, and its warm outside, you continue with the storage heater effect and effective insulation slows down any little temperature transfer to the outside which normally naturally happens with lower temperatures at hence the need to open windows.

      Hence the use of external shutters on the continent to shade the glass from heating up in the first place.

      • Empty Spaces
        Posted July 29, 2018 at 4:50 pm | Permalink

        alan jutson.

        True. A further point is that years ago many reasonably maintained homes in the UK even given the cost of periodic external paint and possible increases in energy use in extra cold spells were in fact generally better for the ups and downs of our weather over centuries and more cost-effective.

  53. Steve
    Posted July 26, 2018 at 6:01 pm | Permalink

    It’s not that the government doesn’t like us doing certain things, more the fact that our freedom to move and enjoy a few things in life are seen as an easy cash cow. Was always the case.

    Wouldn’t it be fairer if supposing we were not happy with the service we receive from government for the tax we pay, if we then had the right not to pay.

    Why should tax, and MP’s salaries have dispensation from normal practice of not paying for something you feel is not value for money ?

    As it stands they can make an absolute pigs ear of everything, commit treason, rob the expenses budget and just about any other con trick you can think of, yet, they still get paid. How is that right ?

  54. Sir Joe Soap
    Posted July 26, 2018 at 6:35 pm | Permalink

    Ha, May’s plan turned down by Barnier, Quelle surprise!
    So who had the better reception, Trump at the White House or May?
    “Stupid is as stupid does”

    • alan jutson
      Posted July 27, 2018 at 7:58 am | Permalink

      SJS

      Don’t worry, at this rate Mrs May will keep on supplying the EU with more plans of capitulation until they will agree with one of them, then its called membership !!!

  55. Ken Moore
    Posted July 27, 2018 at 9:09 am | Permalink

    Cutting taxes..more spending. If the economy really was growing rather than recycling borrowed money this would be possible. GDP is not the same as prosperity!.
    Shops, pubs and restaurants are in melt-down. Consumer credit has been rising dangerously, and arguably is now ‘maxed out’. Car sales, having been sustained by easy credit, have now turned down. There is a general shabbiness about the Uk.
    I don’t know how, with faltering prosperity, any economy can support a banking system which, measured by total assets (i.e. loans) is 11x GDP.

    The UK “dodged a bullet” in 2008. It will require more than luck to dodge the next

    The REAL economy of goods and services isn’t really growing and that prosperity is in decline ?

  56. Simon Coleman
    Posted July 27, 2018 at 8:24 pm | Permalink

    Tax cuts make very little difference to people who are on medium to low pay and in insecure work. It’s no surprise that the gig economy has mushroomed during the decade of austerity when many people haven’t seen a meaningful pay rise. A decade without a pay rise…have you ever considered how much that would cost a person on an average income? Your solution: the odd tax cut that can be reversed anytime! Your model is to create a huge pool of cheap labour with few employees’ rights.

    • Edward2
      Posted July 28, 2018 at 6:58 am | Permalink

      Quite the opposite.
      Tax cuts for people on low to medium pay have the biggest impact on their standard of living.

      It is the open borders policy of the EU that has created a “huge pool of cheap labour” which has helped to keep wage rises down.
      That is why big business and multi nationals love the EU.

      • hefner
        Posted July 29, 2018 at 8:20 am | Permalink

        Have you possibly ever thought that the desindustrialisation that has occurred in the UK over these last 40-50 years could have played a part? Replacing manufacturing by “services” is fine, but please consider that services are multiform, from sophisticated (and well paid) financial, R&D, law, … services, down to hospitality, retail and care services (usually not-so-well paid for workers lower down the scale, with minimum rights (and likely to be at the receiving end of the hire and fire policy beloved by our inenarrable LL here). In that respect I doubt that big business and multinationals are those paying the worst salaries.

  • 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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