This week the Chancellor made an important speech about energy policy. He was able to point to a surge of new investment and large projects to find and deliver offshore oil and gas,following his tax incentives in the Budget.
His own experience of oil and gas taxation should be an endorsement for the proposition that you raise more tax and get more success if you charge rates that companies are prepared to pay. His first chosen level of oil taxation, to get the industry to make a bigger contribution to cutting the deficit, was a turn off. New offshore activity fell sharply, as oil companies ran the numbers and decided at those tax rates it made little sense to undertake risky marginal projects in the UK. The Chancellor’s change of heart got them to re-run the sums. With the new more favourable tax trateament there will be much more activity, and more oil and gas produced. That in turn will of course yield more revenue, from the extra production and the extra jobs it creates.
Seeing this work with oil taxes, the government should now ask how can they pull off this feat of cutting rates or making allowances more generous in a way which produces more revenue? Fortunately, UK tax rates on enterprises and personal endeavour are now uncompetitive, so more or less any reduction in rate is going to yield more revenue and more activity. The CGT rate is too high, so the yield is falling. The top rate of Income Tax is too high, so revenues have plunged. The government has grasped this point with Corporation tax, and is rightly cutting the rate. Their own forecasts expect Corporation Tax to be buoyant as a result. It’s time to do the same with Income Tax and CGT.
They need to carry on taking people out of Income Tax, to avoid the expensive overlap of distributing means tested benefits with one hand and removing money in Income Tax with another. They also need to look at the growing numbers of people on middle incomes being dragged into 40% tax rates when they need the cash to pay the family bills. The threshold for higher rate tax is now too low.
August 10, 2012
All true, but it won’t happen without a massive reduction in spending – or the chancellor taking some economics classes.
Or how about simply chucking the existing tax code in the bin and starting again, with a 15-20% flat rate that everyone pays – it’s fair and encourages people to earn more.
Also, reduce Corporation tax to something very low and get more companies to move here…
August 10, 2012
I do so agree with these thoughts.
August 10, 2012
Indeed – The rates for IHT, Income tax, NI, VAT, IHT, Stamp duty, Fuel Duty, corporation tax and the rest are all well above the rates for maximum revenue (perhaps just 35% of GDP). Absurdly complex too which cost even more to the payer.
We should however be heading for rates that are best for most people, and these are well below these maximum revenue levels. More like 20-25% of GDP spent rather than nearly 50% as now.
Spending control is the key and a sense of, small government, direction, which is clearly lacking at the “morally repugnant” top level. Perhaps start with the IHT threshold up to £1M as was (cast iron?) promised years ago by Osborne.
Still they elected a happiness index, socialist, government so that is what you get.
It is over tax, over borrow and over waste that is actually “morally repugnant” Osborne.
August 10, 2012
And today we hear that the UK is now involved itself in another Middle East war- the Syrian conflict- by providing assistance to the rebels- what business it is of ours and how can the UK afford it???? This is at the same time when it is reported the BoE might have to drop interest rates and provide more QE.
Russia and China are correct to veto involvement. It is not for the west to dictate how the rest of the world should live.
August 10, 2012
Or follow the US personal tax model.
John, spot on with the last paragraph on personal taxation, although there are better ways. It is far better graduated in the US than here even with a socialist president. Janet Daley wrote a good article on this a few months ago. As for Offshore exploration, how about on shore exploration of shale gas. Reports suggest the US has halved its energy costs and about 50% self sufficient. Obama was green jerk before he was elected and has now saw the economic reality and did a quiet U turn.
The Government’s energy policy is a complete disgrace and in a complete shambles. The winter fuel allowance is in a similar incompetent place.
The main concern, on this topic and many others that you write about, must be that all the associated policies that link to the economy are damaging the economy and in total contrast to the direction the economy is required to go.
Surely all MPs of every colour must now realise that the Coalition is finished as it has failed on every main policy issue. Instead of making each policy and department work towards a common goal of improving the economy it has done the exact opposite. Some might call it politics, most of us in the real world call it a complete mess run by idiots.
August 10, 2012
They don’t have a free hand in this because of the EU.
August 10, 2012
I know numerous friends, family and aquaintances who will not take on new employees because of all the meddling and red tape. If your a young woman forget it they simply can’t afford the maternity risks. The EU is responsible for most bureaucracy and directives and our puppet Government just falls over itself to implement it. I’m afraid with the quality of all the mainstream parties leadership don’t hold your breath on any commonsense solutions. They just implement what they are told by the EU or Sir Humphries. None of the current crop have worked in the real world outside of the Westminster bubble. Silver spoons and no life experience.
I see Mr Cameron bending over backwards to be unpopular again on foreign aid. Perhaps he can revisit Lords reform, Gay marriage, banning Christians wearing crosses in the workplace. Are there any advisers near him with any sense?
August 11, 2012
So you want the wealthy to have a massive tax cut and everyone else to have a minor one. I can’t see that being popular.
August 10, 2012
I do not believe the Chancellor is so stupid as not to realise this.
So one must find other reasons for his failure to implement what you and many others suggest.
August 10, 2012
Perhaps not – but he was certainly stupid enough to use the idiotic phrase “morally repugnant” about people far more moral than his, tax borrow and waste, government are.
People who would prefer to keep their money, perhaps to use it wisely in their businesses to create or protect jobs – rather than watch his government waste it on the green religion, the PIGIS, the Olympics or happiness indexes.
August 10, 2012
Or maybe just doss around in the south of France telling everyone how poor they are whilst the banks piss it up the in pointless property loans and derivative scams at the expense of manufacturing and the taxpayer in general.
August 11, 2012
It is the government who waste money, hand over fist and misdirects resources so hugely -what was the cost of the Olympics £150M per medal won by the UK or the all the green expensive energy tosh?
Not individuals like me having a (part working anyway) two week holiday in France with my family total cost about £600 per head.
Reply: You can hardly ascribe the whole cost of hosting the games to the medal winners!
August 12, 2012
They often waste money by cutting taxes. Your blind belief that the money is then used for the greater good and not just put in offshore accounts is a group think pointless and absurd BBC mindset like the green religion that you so despise. Where is the evidence of the top rate of tax cut job creation and the exodus of these geniuses?
August 12, 2012
It’s a good idea keeping people with money around. They tend to spend money on the sort of goods and services that the UK provides. The poor spend their money on food and the necessities of life and on …. the National Lottery. Now that’s a real con if ever there was one. Demand for food is fairly inelastic and to the extent that it isn’t obesity is the result.
August 12, 2012
To reply.
Well what do we actually get for the £10Bn a couple of weeks of rather tedious TV, some idiotic commentary and some stadia of rather little use and mainly in the wrong place. Also a big debt for the productive to pay back with interest for years to come.
August 12, 2012
So, Bazman, do you advocate letting failed banks fail, as I do?
August 13, 2012
You forget the banks became to big to fail. Collapsed banks would not punish the peole who caused them to collapse and the economy would have gone into free fall. What would have happened if the cash pints refused to give out money and the saving you has in national banks where effectively stolen? You should just take it on the nose?
August 10, 2012
I suspect Europe has hand to play in this. They already read our budget before it is announced in parliament. They tell the Irish what VAT rate they will have and they implement coups for those who do not do as they are told ie Italy and Greece.
Just to remind you, Greece were going to hold an EU referendum (it’s called democracy to give the people a choice- something Mr Clegg finds difficult to grasp with the recent Lords reform) the EU did not wish this to take place so the government was disposed of. Perhaps this is why Dave is scared to have a referendum.
August 10, 2012
Ah, Mr Clegg, indeed. For him EU=excellence UK=bad and must be entirely subordinated to the EU as soon as possible. Traitorous in my view and some might even say treasonable behaviour.
How any person in their right mind could vote for him after his childish rantings re HOL reform beggars belief….
August 10, 2012
I think you’re being a little unfair to Mr Clegg. He is very astute. A big EU job is coming up in 2014, around the time the coalition will fall apart and Mr Cable will be able to re align with Labour for the 2015 election, as Lib Dem leader.
As we are unlikely to ever get a vote on the EU, the urgent legislation required is for all domestic politicians to be not permitted to subsequently take an EU job. Once this job for life option is removed for MP’s losing their seats, as will happen to Mr Clegg, then the enthusiasm for the EU may dwindle amongst senior MPs.
August 10, 2012
Can I ask that as a new Mark on this blog, you adopt some distinguishing feature to your name?
August 10, 2012
Indeed but not much chance of that law going through, also it should preclude people who have had EU jobs/pensions working as BBC trustees.
August 13, 2012
I’ll add the W to distinguish my name. Should have considered that before posting. I’m new to this.
Lifelogic. I too fear that this idea will not happen. I would just like the idea highlighting. Mr Clegg ought to be hounded to rule out taking an EU job in 2014, to further strain the coaltion. Not that I think a minority Conservative Government would actually pass any conservative legislation.
I’m sure social democrats like Cameron will talk a good game to stop the loss of votes to UKIP, safe in the knowledge that any valid “right wing” legislation will not pass the floor of the commons.
I feel frustrated that MPs like our host have never decided to gamble with the prospect of a split in the Conservative Party whilst people of his view still hold seats.
August 10, 2012
Why should he worry about it, he’s going to lose the way he’s going anyway. However, it might affect his own future in Europe if he held one….
Zorro
August 10, 2012
I think I have found some savings to be made in the Croydon Police…….
zorro
August 11, 2012
Firstly Greece and Italy had new Prime Ministers in exchange for a bailout because their current leaders mismanaged the economy. Greece and Italy could have kept their current leaders and refused the bailout but chose not to.
Secondly due to the Greek elections the Greeks have now chosen their Prime Minister. So it was clearly not a coup.
Thirdly Greece wanted to hold a ballot on whether they would accept the EU bailout, not a referendum on remaining in the EU, several months after they received this bailout. The EU objected and told the Greek that they had to hold this ballot before they received the bailout or they wouldn’t get the bailout. So the Greeks dropped the referendum.
But don’t let facts get in the way of your anti-EU rant.
August 12, 2012
But the Greeks want to renegotiate their austerity package. They want to slow it down. Germany won’t finance this, so it’s deadlock. Your move. Not my move, your move.
August 11, 2012
“I do not believe the Chancellor is so stupid as not to realise this.”
How often does one think, “Surely, if I, a mere layman, can see it, the Chancellor/PM/ etc can see it, so why don’t they act accordingly?” (The selling off of the gold reserves, and the manner in which it was carried out, is a good example, but there are countless others.)
Time and again, one searches in vain for the hidden reasonable motive for what our leaders do and say.
August 10, 2012
Agreed. On income tax there should be nothing to pay below GBP 10,000 and the top rate should be 30%. That would make us super competitive with the rest of Europe.
August 11, 2012
This might surprise you but companies prefer locations where there are highly skilled employees, or very cheap employees. Low tax rates for executives rank very low down the list, due to the ease of tax avoidance.
August 10, 2012
Whilst we have an economic moron at No. 11 we will never get any sensible policies, let alone tax reductions.
The government continues to spend over 50% of GDP and refuses to make any meaningful cuts. Gideon can only raise taxes to reduce thge deficit but as we all know this has failed so he prints money.
I am disgusted at your behaviour as you debauche my retirement savings and will never vote Tory again.
The silly two at the helm are slowly crippling our country and I am at odds to see why you continue to support such a party.
August 10, 2012
Indeed no small state vision from the top just tax borrow and waste socialism that kills wealth producer and pushes them away.
August 10, 2012
More prayers.
August 10, 2012
He can’t cut the true deficit, because politicians have decided to hide the true debt.
Talk to John about this. They don’t owe you a state pension, because “that’s not the way it works”, to quote him.
Quite what John doesn’t understand about the state pension is beyond me.
I’m forced to pay NI for entitlements to a state pension. The government tells me I’m entitled to X years out of 30 as a state pension. It owes me a state pension.
August 10, 2012
Nothing I can add to what you suggest with regard to taxation, other than at the same time simplify the rules.
I was notified by my accountant last week that my Company was due a tax refund for years 2009/2010.
This week I received a cheque from Customs and Revenue (for the amount he had claimed back) which on the face of it made absolutely no sense whatsover.
They enclosed a calculation which simply did not add up, as the calculation of tax paid showed last years figures, and the rebate was for the year before.
If the rules were simplified, then perhaps more people would understand them, and we would not need so many people in government departments calculating them and answering queries.
Interesting that I overpay tax due to the way the system works, and I wait nearly 2 years to get it back (no interest added).
I send in tax returns which arrive one day late, I get fined.
All seems a little one sided.
August 10, 2012
Off Topic
I see the BBC are at it again.
It is reported today that Director General Mark Thompson has ordered the newrooms to dumb down the reporting of GB medal winners at the Olympics, just in case we offend other Nations.
Another Clown, another error of judgement, why does he think so much money has been spent if we cannot celebrate a few Home winners.
Perhaps we should starve his organisation of cash.
I have to say that the BBC coverage of the Olympics has been for the most part excellent, with in my view John Inverdale the star, supported by many technical experts who were past games medalists.
August 10, 2012
Sorry another off topic subject.
It is reported today in the press.
It would seem from an answer to Parliamentary question that foriegn students are not paying back student loans they have gained from the UK Taxpayer.
Peter Lilley it is reported has given figures:
2009-2010 £49.2 million owed
2010-2011 £111.1 million owed.
He has agreed that enforcenment to pay anything back would be difficult.
There are over 80,000 overseas students in the UK and it is suggested that 42% of them are behind in payments.
Is this a back door way of giving out more foreign Aid ?.
WHEN, WHEN, WHEN, are politicians going to wake up and smell the bacon.
What a bloody farce, us plebs out here said it would happen, now you have the evidence, do something to stop it.
Oh forgot, on holiday until September.
Aware its not your problem John, but it just seems everything the government touches ends up in EXPENSIVE chaos.
August 10, 2012
The trick for UK students is to work abroad after graduating. After a certain number of years the debt is written off. The Lib dems did not need to sacrifice their party on the anvil of student debt after all.
August 10, 2012
It is indeed true and has been happening for a number of years. This is the ptoblem with loans and why it might be better to reclaim it on PAYE. I think that UK students need to stay abroad for fifteen years for the debt to be written off….Good incentive to work in the UK……Not!
Zorro
August 10, 2012
Long time to pick grapes..
August 10, 2012
Alan, these are tuition and maintenance loans in England and maintenance loans only in Scotland. EU students do not pay university tuition fees in Scotland whereas English students do.
Here is another rub. Scotland acting like it is already a separate nation and Westminster allowing it to take place even though it costs the taxpayer millions.The EU directive requires students to pay the same tuition fees as the host country. The UK is the host country for the EU directive as it is the nation state, Scotland is not a separate country nor the nation state for the EU directive. If Scotland were a separate nation state English students ought to get free tuition as well as their EU counter parts, which they do not.
The UK taxpayer is providing free university education to EU students at top universities in our country when they are our competitors. Madness? Only in the coalition headed by the BiS Messrs Cable and Willetts.
Now these hoons want to dumb down entrance requirements to give students with lower grades from poor backgrounds or poor rated schools in preference to those who have better grades. Yep, the coalition has lost the plot. Don’t forget this is at a time when the economy is claimed to be there number one priority- where is tomorrow’s talent going to come from? Why does the Uk taxpayer provide free education to our competitors and allow home grown (lesser performers-ed) to take the best university places?
August 11, 2012
Did anyone sensible ever expect many overseas students to pay the loans back I certainly did not?
August 11, 2012
@ lifelogic
It’s just the same as health tourism.
Make the user pay first and then claim back from public funds if they are entitled to.
It’s not rocket science.
And George Osborne is most definitely not a rocket scientist.
August 10, 2012
“I have to say that the BBC coverage of the Olympics has been for the most part excellent”
Depends if you actually want to watch sport, if you want to watch and keep abreast of news (without having to resort to Russia Today…!) the last two weeks have been dire (on Freeview).
August 10, 2012
It is entirely one sided, they make a system that is like a game of very complex chess then fine you if you get anything slightly wrong or late with all responsibility placed on the tax payer. Most revenue staff do not even understand the system and cannot help or if they do often talk rubbish.
August 10, 2012
Alternatively it is a very simple game. Heads they win. Tails you lose.
August 10, 2012
The best way out is to play them at their own game.
What they’re counting on is people just paying up.
A couple of years ago I had a letter fall through the door from HMRC saying I had underpaid tax to the tune of £380. Only the year in question was four years prior to the letter.
A little research on the web and HMRC’s website later and a letter was sent back stating their own rules that tax over three years where the person believed their tax to be correct could not be chased.
Case closed.
Though they seem incompetent – I kept getting letters informing me of my year’s tax code, with a previous employer’s name on. This only stopped when I moved employers a second time.
Maybe if the tax code was simpler as I mentioned previously, it wouldn’t take four years to catch non-compliance.
August 10, 2012
Surely the smartest and most productive tax cut he could make would be to slash, or even get rid of altogether, the so-called “payroll tax”, aka Employer’s National Insurance?
August 10, 2012
I have never even got close to understanding why anyone would think that Employer’s NI made sense–and at same time as trying to encourage job creation, yet. It is simply evil but be of good cheer, for my spies in America tell me that Obama is bringing in compulsory provision of contraceptives: now that is simply unbeatable in its bonkersness.
August 10, 2012
Leslie
That sounds like a good policy to me, then at the same time you say no Benefits for any new single mothers in 9 months time.
I guaantee it would probably be more cost effective than the current system of just paying out with no limit.
My just a few children from from having children as well,with all that, that entails.
August 10, 2012
In case anyone not aware, I meant (above) compulsory provision of contraceptives by employers for their employess, as if employers, instead of being feted as “heroes” as they should be, for taking the risk involved should be punished or made some sort of milch power, over and above the taxes they pay already. I don’t even see why buinesses should be taxed at all, given their importance, not just from the point of view of economics but socially. Who can doubt that social unrest would fall like a stone if taxes were applied solely to individuals. The man ijn the strasse would rather have a job methinks and pay a bit more tax. BTW I own no businesses and never have and only very few shares.
August 10, 2012
Sorry–meant milch cow of course and there is a question mark missing after individuals plus a couple of typos. Getting old.
August 10, 2012
The Spectator had a short piece about an OECD report that ranked taxes by the economic harm they do.
http://blogs.spectator.co.uk/coffeehouse/2012/02/which-tax-cuts-would-be-best-for-the-economy/
August 10, 2012
Though from the individual’s perspective the order seems to be the reverse – what harms the economy least harms the individual the most.
August 10, 2012
I am not really sure I agree with the spectator all tax takes money from the economy and in the main wastes it. Property taxes like stamp duty, CGT etc. reduce sales/transfers of assets and are very harmful.
Tax should be such that it does not affect people behaviour much fiscal neutrality and low taxes are the key.
August 10, 2012
And now for some startling and hopeful news.
I am able to refine what I read on this and a lot of other blogs and to present them in the classroom for teachers to use for their lessons. They have no opportunity to do this because of the time factor.
So thank you all for your thoughts – they ought to receive a wider and perhaps even more important – airing.
Reply: Thanks. I am glad they are of use. That’s why I write them.
August 10, 2012
“His first chosen level of oil taxation, to get the industry to make a bigger contribution to cutting the deficit, was a turn off.”
Blindingly obvious to most of us – I wonder how he got the job!
August 10, 2012
It’s also a major reason why the balance of trade was so bad last month: oil production has been falling steeply on the back of the 2011 budget, and it will take some time for that to be reversed. The OBR were among the cheerleaders for the 2011 measures, which rather gives lie to the degree of expertise within their ranks.
August 10, 2012
Sack the oil companies responsible and put the contracts out to the highest bidders.
August 10, 2012
The Treasury did quite a lot of work on deciding what would be the optimal rate of CGT, taking into consideration the Laffer Curve effect. Their research showed 28% to be the optimum level. Why do you think they have got this wrong ?
Reply: Because the evidence shows the maximising rate is below 20%, and the Treasury’s own figures show a tax loss next year on CGT
August 10, 2012
28% might be closer to an optimum if there were proper indexation relief or at least taper relief. On the present regime, which excludes both those, the rate needs to be much lower, because it is effectively a savage wealth tax on realising long held assets whose value has risen in nominal terms due to inflation that can be avoided by using the assets as collateral and borrowing instead.
The largest yield of CGT came in Darling’s special offer year, when the top rate was 18%, and taper relief meant that many paid just 10%. It encouraged crystallisation of gains and the establishment of a new base value for assets, because it was plainly a special offer.
August 10, 2012
Exactly and CGT is a tax not even adjusted for inflation. So a 28% tax on profits you have not even actually made. Just “theft of assets” would seem to be a far better description.
August 11, 2012
CGT was raised to 28% because people were avoiding paying tax on their income by being paid in shares. Expect income tax revenues to collapse if CGT is reduced.
August 17, 2012
To make CGT fair, you need:
(1) Capital losses to offset capital gains
(2) Do the calculations in terms of constant prices – i.e. strip out inflation
If you do that, CGT will be low yielding – it should be.
August 10, 2012
I agree with Mr Redwood completely; so long as Clegg is not permitted to deluge the media with comments about “Tories helping their rich friends”, in the face of complete silence from any Conservative spokesman.
Clegg has two coalitions; his second one is with the Labour party, and focuses on propaganda, not policy; hasn’t anyone understood that yet?
Taxation has to concentrate on people who actually have money; reducing taxation can always be spun as “helping the rich” and a concerted effort is needed to rebut this evil socialist propaganda.
August 10, 2012
Ok if you are a multinational oil company, easy to say they don’t want to pay your corporation tax and will go and play in someone else’s back yard. If your onshore company makes parts for other domestic companies, it is difficult to up sticks to lower tax climes. Remember there are two corporation taxes, onshore and offshore. You are talking about the latter, to which can be added declining petroleum revenue tax.
Frankly, it is a bit worrying to have a Treasury boss, make such a fundamental mistake in his previous budgets with oil and gas taxes! I think we need a bit of a 21st century revolution at the Treasury building. It and the BoE appear to make policy, as if we were still on the Gold Standard.
August 10, 2012
It’s actually quite difficult for oil companies to up sticks with all that investment in North Sea platforms, wells and pipelines. They are simply faced with closing down fields early, and not drilling new wells: the historic investment is stranded and wasted.
Don’t be confused by the idea of “offshore corporation tax”. It simply means that North Sea profits are isolated from other activities and taxed at special higher rates. There is no ability to offset losses in other parts of the business, or to carry losses in the North Sea over against profit made elsewhere. Indeed, even the ability to set off losses in one field against profits from another is restricted.
August 10, 2012
Thanks Mark good info. We were comparing offshore and onshore CT as they are separated in the Budget “E&F Outlook” (Table 2.8) section along with PRT. The latter appears to be dropping from £1.8 billion to £0.8 billion in 2016/17. Don’t know if that is a reaction to tax policy or just running out of the stuff. ATB Acorn.
August 10, 2012
PRT only applies to fields developed before 1993, most of which are in production decline being over 20 years old, and some nearly 40 years old. But certainly a number of fields shut down early.
Data are available here:
https://www.og.decc.gov.uk/pprs/full_production.htm
28 fields have produced no oil in 2012 that produced at least some in 2011, compared with just 7 that produced no oil in 2011 that were still producing in 2010.
August 10, 2012
Everybody that has any knowledge of business or just common sense knows that taxes are way too high in the UK. In fact anybody that isn’t blind can see it. They have been too high since Gordon started raising them a decade ago. George has made it worse ever since he’s arrived. There are no signs that he or Dave are even aware of the problem and if they are why have they not done something?
I have no expectation that anything will be done. Dave is well on course for a massive defeat next election and many people are leaving the sinking ship already. More defect to UKIP daily as do donations. This coalition is a waste of time and space.
August 10, 2012
Its now just a two and a half year time waste until the general election.
August 10, 2012
Lower rates of tax, and higher thresholds will increase work ethic, and stabilise/increase income. It will also help reduce the benefit bill and tax credits.
zorro
August 10, 2012
Reducing the number of people paying tax is a laudable aim but as any minor increase in income at this level tends to be spent on life’s necessities then it does little or nothing to help to kick start the economy. Conversely those with a larger disposable income to spend tend to use more local services and labour and therefore boost the local and global economy. Hitting the better off is surely self defeating and not only in a recession.
I assume this ‘given’ is ignored by the politicians because the ‘robbing the poor to give to the rich’ backlash is too difficult to handle?
August 11, 2012
Those with larger incomes rarely spend on local services and labour because they can afford to purchase products from a wider area. They’re also more likely to save money or invest it, neither of which have much effect on the local economy.
By contrast those with less income are far more beneficial to the local economy, usually because they can’t afford to travel far from it.
August 10, 2012
It would seem that the energy companies have lobbied for the reduction in the tax by threatening to not develop these fields but in fact this was a bluff.
Reply: Not so
August 10, 2012
You obviouly have no grasp of economic factors which affect O&G producers and the concept of “marginal fields”.
August 10, 2012
Faced with the new regime (some of the more damaging elements related to reduced allowances particularly for decommissioning), oil companies were shutting down platforms that provide the key links for other fields to be developed. Once the infrastructure is closed, the economics of development of small new fields nearby are destroyed.
August 10, 2012
And Inheritance Tax? The very very rich don’t seem to be affected by this, as from what I read they seem to have means of avoiding any serious affects on them. Yet someone like me may get stung because such ‘wealth’ as I have is in my house with some additional savings. Why should I, and thousands of others like me, not help my children and grandchildren to the full from my efforts? Abolish it. I haven’t yet looked into ways of reducing my liability, but I will. Such action may keep them from calling on the state anyway.
And Stamp duty, it distorts and slows the housing market, encourages corrupt practices, and makes many people much much poorer. Abolish that too, along with a reform of the mortgage market – I may get the chance to sound off on this another time.
I urge a radical simplification of the personal tax system at the lower earnings end as well, and on savings income, which I have mentioned before, with an exemption limit of £20,000pa. This, and a switch from ‘welfare’ to ‘entitlement’ for those who might need state help. The numbers however will fall dramatically as they will keep all of their income below the exemption limit. State costs will fall on the staff need to adminster the much reduced system, the vast state property portfolio won’t be needed and so on. I would also eliminate a lot of what I call non-jobs, teaching assistants, community support officers and such like, there’s no room here for a complete list. And deregulation..ok dear Readers, I will stop now.
But before I do … as for incentives to business, could we not extend tax breaks to building ships, sinking new mines, making machine tools which we used to do quite well and so on. We need new jobs, but do we not need old ones too, someone has to build stuff. Outside China, Germany seems to be the one building the quality items, why not us too? Howls from the green lobby and the liberal left can be heard already. Am I mad? No I don’t think so. You can’t tell me there isn’t a better way to run things than the present way.
And may I add my thanks to you Mr Redwood for giving us the opportunity to express our views on your pages – it must be hard work wading through them sometimes.
August 11, 2012
If you want to help your children and grandchildren then give them money while you’re alive. Allowing people to inherit wealth they haven’t earned just creates an upper class that doesn’t know the meaning of hard work.
I have no idea what you’re talking about regarding welfare. Most people need welfare because they’re not earning £20,000 per year.
August 10, 2012
Surely the first tax to cut is employer’s NI? This taxes every job in the country, increases costs for UK exported goods and services and acts as a disincentive to invest in the UK.
I would announce an intention to abolish this tax and start by reducing it for 18-24 year olds and then gradually decrease it as finances allowed.
August 10, 2012
Nest pensions savings scheme starts for many companies from this year through to 2015 effectively increasing Employer’s national insurance costs under another banner. Throughout my time in business I always justified Employer’s NI (current rate 13.8% on earnings over £144 per week/£7488pa) by believing it was half (or 5.8%) for the employees state pension and half (7% indeed Labour told employers there was an extra 1% for improvements in the NHS) towards medical care and potential unemployment benefit (1%). Now we are told there is no link and Employer’s are expected to provide from 1-3% on the payroll for a Nest pension which has no guaranteed fixed return – as state paid workers get for their 3% (after their NI reduction benefit for having a defined benefit pension?!)
So Employer’s tax is to increase from 13.8% to 16.8%. Using 2012/2013 NI rates an employee on a wage of £20,000 pa will cost a hidden (as it no longer appears on their P60 annual tax report) £1726.66pa in employer’s NI and a 3% Nest contribution will be an extra £375.36pa giving an overall tax bill to the organisation of £2102.02 up from 8.5% to 10.5% at this level. People are wondering why those organisations that can are hiring part-time instead of full-time workers this is part of the reason.
August 10, 2012
a-tracy
Sounds like another complicated way of picking your pocket.
Pleased I no longer run a business with all this added complication on top of existing complicated arrangements.
Do the government actually think all these seperate schemes actually help business or encourage new start ups John ?
Have politicians ever heard of the KISS method of management.
Keep it simple stupid.
August 10, 2012
Up to the end of the 1990’s this country’s private pension provision was looking healthy compared to other developed nations. It helped fund the growth as atleast 60% often would find its way onto the FTSE. However, facing an ageing population we needed a boost, instead we got Gordon Brown who chose every year to hammer it in favour of debt and credit boom.
A last panic ditch effort by Labour having decimated financial advice provision for the masses and pension provision it went for compulsion.
Private pension funds in 1997 from memory were near £1.5trn, today they are less than that, left untouched by Labour we would have expected it to have been atleast doubled if not trippled. Its too late now to look for big changes, more reports etc, we become an aged population around 2020 so times run out and we could have done without Labours switch from an investment economy to one driven by credit.
August 11, 2012
Given all the pension holidays companies took private pensions would have been in bad shape even if Labour have never been in power.
August 13, 2012
I never took a pensions holiday in my private pension unanime5 and it was still ruined. I have heard this excuse many times, however, most people with private pensions, e.g. the majority working in SME’s had private pensions that were robbed by Brown’s Labour party decisions with our investments that didn’t affect his union sector voters.
August 10, 2012
Don’t worry about tax take….We can afford to give 5 million pounds in ‘non lethal’ assistance to the FSA who are ably assisted by LIFG and AQIM….so probably we’re ok financially……
Zorro
August 10, 2012
William Hague berating Assad…….http://www.google.co.uk/search?q=hague+assad&hl=en&tbo=d&source=lnms&tbm=isch&sa=X&ei=MmwlUN3ULbCV0QWbq4GwCg&ved=0CCsQ_AUoAQ&biw=1024&bih=673#biv=i%7C2;d%7Cl6XfYL_zuEdOcM:
LOL
zorro
August 10, 2012
Simplify:-
Dump (merge into other taxes) employees’ and employers’ NI.
Get the coalition £10k threshold in place together with (the UKIP policy of) flat rate thereafter.
Flatten (or dump) stamp duty (but consider CGT on first homes).
Possible ‘Coalition’ compromises:-
If reducing income, corp’, CGT requires a compensating rise to keep the markets happy then raise VAT (!) but increase income threshold above £10k so that hitting the poor argument cannot be made.
If reducing rates looks like pandering to the rich bring in a wealth tax (!), even if it has to be the ‘mansion tax’ to begin with.
August 10, 2012
Caterpillar ,
CGT is in the main outright theft .
If you sell an asset which has doubled in face value as a result of inflation but has not increased in real value then you will be clobbered for no actual capital gain .
Inflation should be taken into account with at the very least some sort of taper .
I’m an average Joe , unlikely to ever be in the position of having to pay capital gains but the way it is set up at the moment is wrong .
August 10, 2012
A different Simon,
There are many studies (empirical and theoretical) of effects of CGT on homes that consider the effects of inflation, tapering, length of ownership, accural vs. realization etc., so I suspect it is possible to design better than it now is … though that statement probably does rely on the work of economists.
August 10, 2012
Well said.
August 10, 2012
Caterpiller
CGT on first homes ?
So why would anyone trade up or down.
So someone lives in their home for 40 years, how much tax do you think they should pay, should they choose to down size to release capital to pay for future care, or indeed move to care for parents ?
You did not mention inflation, tapering, and the fact that it was a above, all a home purchased to live in..
What next the air we breath !.
Sorry, but a HOME should be excluded from any tax.
By all means tax second homes with CGT as that is not where you live, but first homes, that is a nonesense.
August 10, 2012
Quite right.
Much more difficult is working out a suitable regime for BTL. Taxing landlords simply results in higher rents, yet giving them tax privileges (such as relief on mortgage interest) prices out homebuyers. CGT discourages sales by landlords (especially where there is no indexation relief), so we have a ratchet effect that increases the proportion of the housing stock in BTL ownership. Subsidy through artificially low interest rates (what other business can borrow as cheaply as a BTL landlord?) and generous housing benefit payments that put a floor under rents add to the mix.
August 10, 2012
Mark ,
Is there any other way of bringing down the cost of accommodation other than by generating a surplus of housing stock ?
If housing costs can be reduced the savings must imho be put towards provision for old age .
I think it’s necessary to implement this by increased deductions from peoples wages to provide a livable state pension of around twice current levels .
A state pension fund could created which could kick start a social housing building program thus giving future generations a chance .
People say that’s a livable state pension is unaffordable but it is cost neutral as otherwise the cost gets passed down the line to the next generation who are expected to fund means tested old age benefits and housing benefits etc .
The CBI’s ideological call to scrap pensions seems to be more about wanting to get their hands on that money now rather than wait until you retire .
August 11, 2012
The way to bring down house prices is to tackle mortgage subsidies and lending. Higher interest rates would force sales by those who paid and borrowed too much. Instead, we read that repossessions are now as low as at the peak of the boom in 2007.
If the size of mortgages was also restricted, both as loan to value, and perhaps as an absolute amount, that would reduce what people could pay. Instead we have the average mortgage being granted worth almost £150,000, against the average house price of a little over £160,000.
When I first bought property, no Building Society would lend more than £15,000 – no matter what your income, forcing the use of unsecured loans at much higher rates or lower prices – and the rates themselves were excruciatingly high. When I moved back I just managed to sell at what I had paid, but the intervening RPI inflation had been savage.
Incidentally, I think the best way of dealing with BTL is to require much lower LTV ratios to restrict their ability to leverage and outbid homebuyers, as well as tilting the balance of their interests towards income and away from capital gain. Highly geared portfolios run the risk of landlord bankruptcy and inadequate income to cover repairs, which is not in tenant interest. I’d also consider some form of right to buy for tenants in the event of landlord bankruptcy.
I’d also consider a temporary CGT tax break for landlords that might encourage some sales at lowered prices. Consider a property bought for £50,000 now “worth” £150,000, and therefore liable to £28,000 CGT on sale. At 10%, the tax is just £10,000, and the landlord can achieve a better net return on sale at any price over £130,000 (a gain of £80,000 and tax of £8,000).
August 10, 2012
Tax relief on mortgage interest for a landlord is hardly a tax break it is just taxing rental “profits” all business can deduct interest and running costs. How is a business expected to pay tax on profits that have not actually been made that is just theft of assets.
The tax on the interest then just falls on the bank anyway as they get the interest “profit” paid to them.
August 10, 2012
The main reason for CGT on first homes would be to limit the misdirection of resources to the purchase of bricks&mortar from other asset classes (that is from investment that, on average, leads to an increase in UK productivity).
Alternatively if first homes are preferentially to continue to be treated as a tax-free savings device then other policy ought to repsond to this e.g (i) dynamic LTV and (ii) ‘negative taxation’ on other forms of saving that fund investment.
August 11, 2012
Proper lending limits and no subsidies via mortgage interest rates or forbearance are the answer, not taxation. What you can’t borrow, you can’t add to the price you pay, and what you consequently don’t spend on the mortgage can be saved towards a pension and invested in the real economy. The difficulty is that lower prices expose the weakness of bank balance sheets, which is why politicians and the BoE have been running scared and propping up prices instead.
However, the banks depend on maintaining funding to keep the plates spinning. Large chunks of that funding came from overseas borrowing (peaking at around £800bn), and significant elements of that were withdrawn in the credit crunch as overseas banks didn’t roll over lending to UK banks (and in extreme went bankrupt): much of that lost lending has been replaced initially via the Special Liquidity and Credit Guarantee schemes from the BoE (at the peak worth at least £317bn), and later via QE as those schemes wound down.
This is of course a major reason why QE has been ineffective in the real economy: it has been used to keep house prices up instead, with all the pain on balance sheet reduction falling on other forms of lending – to business, and unsecured loans to households, and inter bank lending.
August 11, 2012
Mark,
W.r.t. weakness in banks’ BSs, is much of this due to procyclical effects of mark to market/model?
August 11, 2012
@AJ
“By all means tax second homes with CGT as that is not where you live, but first homes, that is a nonesense.”
With an exclusion for MP’s who buy a second home on their “allowances” ?
August 11, 2012
Since you don’t qualify the NI merger with other taxes do we assume you want those on pensions to now pay at least an additional 10% tax?
August 10, 2012
His own experience of oil and gas taxation should be an endorsement for the proposition that you raise more tax and get more success if you charge rates that companies are prepared to pay.
==============
Your letting the spin slip.
Let see. John Redwood’s policy. Government should try and extract as much money out of companies, forcing them to do the same to their customers.
In other words, governments aim is to extort as much as possible. Milk the cow for all its worth.
That pretty much sums up governments. They aren’t there for the good of the people. They are there for the good of politicians.
August 11, 2012
The same the world over, with some notable exceptions including our host.
August 10, 2012
How does government do something inherently right but superficially unpopular yet retain sufficient political support to remain in government?
Well, the answer is pretty obvious: you explain the rightness of what you are doing and failings of the superficial in terms and by means that the voters can understand. That means different presentations to different groups.
Government is in a position to do so, and to allow the opposition their say by comparable means.
Get rid of spin and be judged on the true merits of the case.
August 10, 2012
Chinese just moved into the North Sea couple of weeks ago with a buyout of Nexen. There were a couple of other players sniffing around but they couldn’t compete with the cash the Chinese were offering. So that’s another piece of good news, we need emerging economies to invest here and have to put UK PLC in the shop window.
Lot of activity in the latest licensing round too so some of the damage that was done is being undone. Too late for Mobil though ,the worlds largest energy company won’t be investing another penny in the North Sea and although other companies have bought over their assets it’s still a big loss. Sad thing is it was all so obvious but Osborne having no experience of real world economics just blundered ahead using the inflexible methods so beloved by the Treasury.
As you point out, he’s making the same schoolboy error with CGT but because it’s not so visible as spread out across a wide range of industries he’s able to blame Europe, or the Jubilee, or the rain, or the sun, or the Olympics – anything except his policies – for the disaster he’s creating.
August 10, 2012
Norman ,
You mention Chinese investment in the North Sea and we could debate whether this is a good thing or not .
Looking onshore we have numerous companies sitting on tight reservoirs and shale which can be exploited by advances in drilling and stimulation techniques .
They are mostly small – because majors prefer to operate out of sight offshore or in sparsely populated deserts . They are almost all struggling for funding .
A.J. Lucas , a trouble engineering contractor from Australia own 56.5% of the rights to PED165 where Cuadrilla are drilling in Blackpool .
AJL have a market cap of less than £66m . One could therefore say that the Blackpool license is currently valued at significantly less than £117m .
A further £150m spent on drilling and fracturing could prove up resources with a net asset value of more than £60 billion ie over a 200 times uplift .
Shouldn’t we be asking ourselves why :-
– British companies are not stepping up to the plate for development of onshore resources ?
– British investment managers are so conservative and possibly myopic as to pass this opportunity up ?
This cannot all be explained by the British institutional investor community investing offshore because they are not participating in similar developments in Poland , Australia or elsewhere either . I suppose they are more concerned about fees and charges than investment performance .
August 10, 2012
As a person who works in the energy industry, particularly O&G, I whole heartedly agree with your comments. There is still many undeveloped fields available in the North Sea (and globally as a matter of fact) and we need governments to encourage companies to invest.
However you also illustrate another point in that its no use lowering taxes in one area and then making them higher in another. With the current economic forecasts we need to act to stimulate our economy. Companies are looking not just at corporation tax but also cost of operations and energy is a big part of this.
A recent submission to the government from a professor of economics points out that DECC’s renewable policy which the government want to pass as law will cost £126 Billion, whereas the same amount of power could be generated by gas at a cost of £13 Billion. If the government persists with this policy household bills are likely to rise by £300 on average and goodness knows what the bill will be for manufacturers and commercial properties.
This is not acceptable and now that the LibDems have withdrawn support for boundary change it is now time for the government to withdraw support for the LibDem led energy policy which will cripple individuals and companies alike.
August 13, 2012
Yes Mactheknife ,
It really does appear to be an attempt to administer a lethal dose to British industry .
This shows that there needs to be a radical purge of fifth-columnists from Whitehall .
August 10, 2012
Preaching to the converted – try your front bench.
August 10, 2012
Still trying to raise tax revenues? No growth until attitudes change then.
Best they look at ways to reduce taxes or we will continue in the presennt situation for the next decade
August 10, 2012
All good suggestions. I don’t think you would have much trouble persuading the Chancellor, who is reputed to be a supply sider. However, we are in Coalition. Logically, you should be able to persuade Vince Cable but ……………………. Then there is the Prime Minister’s egalitarian streak to contend with.
August 10, 2012
perhaps he should also give some thought to the marginal rates about to be experienced by those unfortunate households with one earner over £50K and children.
August 10, 2012
I agree entirely with your comments.
The flip flop on oil and gas taxes is a mark of gross ineptitude, an ineptitude trumpeted to the skies by Mr Alexander and his LibDem colleagues at the time – they claimed responsibility for it. It was matched by Mr Osborne agreeing to it at the time.
There is no doubt that income tax and CGT rates are too high, act as disincentives to risk taking and hard work. That is obvious from declining tax revenues whatever Treasury models may have calculated in setting current rates. I wonder if they factor in the net present value of future income into their calculations? It doesn`t look like it.
August 10, 2012
I doubt the Lib Dems would approve any taxation reduction that was seen to aid the private sector.
August 10, 2012
Dear Mr Redwood,
The thrust of your argument must be correct. Cut punishing tax rates, prune exemptions and the revenue often rises.
But I fear you are guilty of the same heresy as Mr Balls: counting your chickens before they are hatched. He claims that extra public spending will more than pay for itself in higher business growth. You assume that cutting taxes will generate higher revenue through business growth.
Successive governments have spent the growth dividend before it is earned, only to find that revenue growth is smaller than they expected and borrowing higher.
As you have so often and so clinically pointed out, the Coalition’s deficit reduction plans depend mostly on assumed future growth in revenues from higher output that has yet to materialise.
Yes, the taxes that bear down most on business costs and enterprise should be cut. But they have to be replaced by higher taxes elsewhere to make up the historic revenue that is lost. Only when the predicted higher revenue actually appears can it be banked and accounted for.
August 10, 2012
Rather than playing with income tax the governemtn should concentrate on getting rid of national insurance. Similar effects can be achieved but these will concentrate on improving the position of the employed.
In the case of employers’ national insurance there are numerous advantages that can include improving the chances of employment for the under 24s and improving the position of home production and exports against imports.
August 10, 2012
Stop taxing us, thats the message. Where does it say any government can just load us all up with debt and taxes? I do not vote for most of the money given away from my taxes. I feel frustrated and powerless. Just like the dear lady who was told by Cameron that her tax money is going to Foreign aid because he promised it. What about the promises he made to her, she has a problem paying for her cancer treatment, is British and rightly has demanded that Camerons promises to her take precedence to promises to foreign Nations. Is she right ?
August 10, 2012
Raising the personal income tax allowance to take people out of the taxation system is always presented as “a good thing”. But is it? This country is full of people who think money grows on trees. Far better to tax all income from whatever source. I would also make it compulsory for all till receipts to show in red what tax is being collected. And finally, large illuminated signs on all garage forecourts showing the before tax price per litre.
August 10, 2012
No thanks – many people in this country earn very little. Tax spending, not earning. Those with deep pockets spend a lot more than those who are hard up.
August 10, 2012
Actually VAT is a far more regressive tax on the poor than income tax is.
August 10, 2012
By the way, the recent “Peoples Pledge” survey in an area near me showed a very large amount of people in the majority of those surveyed want an EU referendum. The question of course, in or out. Nearly all of them are looking for an out and then tip toe forwards when the dust has settled it would seem.
August 10, 2012
The benefits/tax equation needs to ensure that there are incentives rather than benefits traps. The effective tax rates that apply via benefits withdrawal rates are quite punitive. It’s fiendishly complex to unwind, but it must be done every bit as much as reducing high marginal rates on medium and large incomes. The benefits would be a substantial reduction in welfare spending, and in immigration (and consequent strain on resources) to fill jobs that could perfectly well be done by those currently caught in benefits traps.
August 10, 2012
Executive Summary
George Osborne is not up to the job.
August 10, 2012
Opinions and attitudes no matter how sound and accurate , are pointless . Persuading the , so called , leadership of this country to do something positive and constructive is the only course to follow . The Manchester referendum result ought to be enough for all MPs to wake up to reality . Tax is an area that could influence voters before the next election , but , at that time , its the referendum that will decide the outcome .
August 10, 2012
Wow, so we set tax rates, see what happens – oh look, companies aren’t interested – let’s drop the rates and see what happens!
Oh boy! Is this it? Is this the best you can offer us? It is pathetic.
We have the biggest tax code in the developed world. 13,500 pages of tax law! Cameron said he was going to simplify legislation yet has done nothing!
Throw it ALL away. Flat rate of income tax of 20% on income above 10k and watch lots of tax roll in as people don’t mind paying a fair rate.
40% income tax on top of Employer’s and Employee’s NI, council taxes, taxes on fuel plus, of course, our old friend VAT mean anyone earning a half decent wage already has about 60% of their income filched by the government.
One really does have to wonder what the point of working hard is.
Come on – the country is going down the pan. DO SOMETHING! Don’t change a tax rate and wait to see …. time is running out.
How to finance a tax cut? Here’s a mad, mad thought. Instead of borrowing nearly 12 thousand, million pounds a year to send abroad as foreign aid, use that money to finance tax cuts.
The economy will boom and the tax will come rolling in again.
With a 13j,500 page tax code – tax is ludicrously taxing.
August 10, 2012
Does anybody ever learn anything from history ? Putin came to power in Russia and needed money. What did his government do? They cut tax to 13% and the money flowed in. Where were the people in this inept government 20 years ago, do they never read history books or talk to anyone who is not a politician. The ignorance and incompetence is breath-taking !
August 11, 2012
Which tax did they cut to 13% and what increases in tax revenues resulted from this?
August 11, 2012
Vladimir Putin (enacted in August 2000, effective January 1, 2001) promulgated a flat 13 percent personal income tax rate, and replaced various social contributions with a regressive unified social tax (UST). In 2001 collection of personal income tax increased by 26 percent (adjusted for inflation).
August 10, 2012
Well no one likes being taxed to high heaven, when so many are walking about and pay nothing. The fact is they have to live, and there’s nothing we can do about it. Starving them would be morally repugnant. However, if people are paying taxes they must have some decent level of income; there are many in this country who do not have that kind of living. Its fine to say, ‘make them work’, I agree, if there’s work to be done thy should take it. Is it fine to say those with the most should not pay a fair wack? We can all moan, and say our piece but those who have to fight for survival will always see things differently from those who are well off. The answers, well who knows, I know one thing, I’m fed up with seeing my children work hard pay their way, and taxes, while many get away with doing nothing. For me, I’m angry to see freeloaders living in the same street as me, in the same kind of house that we’ve worked for 25 years to pay for, pay £1000 per year council tax, while they get it all free and don’t work, and have three kids as well. Will someone tell me who’s the fool here!
August 10, 2012
Oil is a bit like money in that it makes the world go round, and in today’s global market place that statement is truer than ever. Oil men need looking after as like without bankers to look after all the money, the modern world would grind to a halt and we would quickly find ourselves in terrible trouble. A society without bankers is literally unthinkable. Businesses would be unable to borrow money, inflation run out of control, unemployment would soar savings would be worthless, currencies would fail and the smaller economies would need bailing out. It’s only thanks to the bankers that the world is not teetering on the brink of economic collapse.
Putting a fire out is easy, being a Doctor is like plumbing, but drilling for oil like banking is dangerous and complicated. The rewards can be massive, but a mistake can result in massive public bailouts. The inept chairman still has to be rewarded the same as he might move to another bank or oilfield. The public agree this is money well spent A more incompetent person not playing by the rules could loose 25 billion as opposed to 20 billion by reckless gambling and face having his seven figure bonus cut to six as a punishment. Ram it.
August 10, 2012
Largely agree but feel that stealth taxes should be reduced before income tax. Income tax is related to ability to pay but stealth taxes aren’t. The fuel duty also makes us uncompetitive. If continue further down this road, ie reduce income tax but not stealth taxes then what will we end up with?
August 11, 2012
Will these tax cuts for oil also effect existing operations? If so then how much does the treasury plan to lose in tax revenues because of these tax cuts and how much do they plan to gain from new business?
It would be foolish to assume that because tax cuts create more business that they will automatically generate more tax revenues, as the loss of tax revenues from tax cuts is often not matched by increased business activity. Thus the treasury shouldn’t cut CGT or income tax without very strong evidence that it will produce a beneficial result.
Given that there wasn’t an exodus of business leaders because of the 50% tax rate this is clear evidence that the 50% tax rate is not too high and that these business leaders are far less mobile that they claim to be.
As that forecasts on the economy have been repeatedly downgraded I doubt any increases in Corporation Tax will be very “buoyant”.
Finally as the Government lowered the 40% tax rate to prevent people gaining the full benefit of the increased personal allowance it’s their fault if it’s too low.
August 12, 2012
Exactly. Where are all the jobs that have been created by the top rate of tax cut? Unless any evidence can be shown of the extra jobs and wealth created then this has been detrimental. Believing in something does not make it true.
August 17, 2012
Is it possible to move to a £10,000 income tax threshold, a 40% tax threshold £10,000 higher than it is now, and a maximum rate of 40%, all within two years? Would that lose a lot of revenue?
Reply: Yes and yes. The maximum rate change should increase revenue but the other changes would lose substantial revenue.