On Monday at the Selsdon Group meeting I set out the case for lower taxes for all.Ā Ā Fewer people facing benefit withdrawal as their income rises should be paying any Income Tax. To make it more worthwhile to work we need a smoother progression at lower income levels. The policy of inceasing TaxThresholds to take more people out of Income Tax altogether has boosted family incomes, and is likely to be extended in future budgets. The Benefits cap also helps to limit high marginal rates of tax and benefit withdrawal at higher income levesl but needs to be allied to tax cuts toĀ assist with living standards.
Making work more worthwhile means less taxĀ allied to Ā realistic levels of benefit support and sensible rates of withdrawal of support as income rises. A combination of tax cuts and benefit reform is desirable to cut the numbersĀ of people who have to pay for their own benefit top up by Income tax, a wasteful money go round employing officials to take the money off people in tax and give it back to them in benefit.
We need to raise more money from taxing the rich to pay for all the public services and bring the deficit down. The way to do this is to impose tax rates the rich will pay, and set internationally competitive rates which means they will come here and stay. The rate of Capital Gains likely to maximise the tax revenue from the tax is under 20%, as studies of past changes to CGT in the UK and US show. The rate of Income Tax should be brought back to Mr Brown’s 40% maximum. As a socialist who liked taxing the rich, you can rest assured Mr Brown would have set the rate higher when Chancellor if he thought it would have raised more revenue.
In discussion people drew attention to the high rates of tax created by the withdrawl of the Personal Allowance for the higher paid, and to the low starting point for the 40% tax rate. These are also issues which need addressing. We want tax cuts for all. That will yield more revenue to pay the state’s bill’s, unleash more jobs and enterprise, and make it more worthwhile to work and set up businesses.
October 1, 2013
I very much enjoyed your speech yesterday, John. Your message of aspiration and not just envy made very good sense. I hope the Government will consider your ideas on tax. Personally, I would like to see a reduction in VAT. As I recall in the beginning it was supposed to be a tax on luxury goods. Now it is a tax on so much more, even essential repairs around the home. I am hoping that it will be reduced to no more than 15 per cent in the near future.
Reply Thanks. It was good to meet you.
October 1, 2013
Aspiration not Envy should indeed be the message.
That an fairness between the bloated 150% overpaid and 50% useless state sector and the worker bees in the private sector that pay for it all.
But Cameron does not get it and is just driving them over the Cliff John Major Style. After he come 3 in May 14 to UKIP and Labour what will he do then? Nothing he says will again be trusted so how will he address this position with a year to run.
October 2, 2013
Would that fantasy include private sector business with the government as the only customer. Or businesses supplying these businesses and the wages paid to the workers further spent in the private sector. Communist ideology in the form of a free market simpleton. We would see how useless they are when the services they provide are cut. As for 50% overpaid would that included the lower paid workers such as cleaners. Services you claim not to use but have a think how many you do use.
October 1, 2013
Cheshire Girl: “Personally, I would like to see a reduction in VAT.”
VAT is an European Union tax.
John and his chums in Westminster simply rubber stamp any law that comes out of Brussels (usually without any scrutiny at all), nor does the party he chooses to be a member of have any inclination to change the status quo.
reply Both comments about Conservative MPs are untrue.
October 1, 2013
JR: “Both comments about Conservative MPs are untrue.”
Has this administration refused to implement any regulation, directive or ‘law’ originating from Brussels?
One might ponder the meaning of the term ”directive’.
Is Kenneth Clarke an Eurosceptic?
Reply Veto on Fiscal Treaty, repatriation of criminal justice powers, cut in EU budget, offer of referendum etc
October 1, 2013
“Is Kenneth Clarke an Eurosceptic?”
And while I’m at it, what happened to that firebrand of the Eurosceptic movement within the Tory party, what was his name ….. George Eustace!
October 1, 2013
APL
VAT is not an EU tax, it replaced the complex and discredited Purchase Tax in the seventies and had little to do with the EU in its original form.
Also, its a bit rich to have a go at Mr Redwood when he is a champion for all of us who want to wrestle control back from the EU.
Why not aim your attack upon those MP’s who are blindly in favour of the EU having even more powers.
October 2, 2013
Edward2: “VAT is not an EU tax,”
How odd then that all the European Union member states impose VAT, that the rate of VAT is set by Brussels and all the Westminster regional administration can do is decide what rate an item will be rated at for purposes of VAT.
And yes the old sales tax was discredited, because the Tory traitor Heath wanted to introduce VAT. It had the merit of being simple and the revenue went to the Westminster government.
If a tax ever ought to be discredited it is VAT, I don’t think there is a more complicated or fraud prone tax ever concieved.
Edward2: “its a bit rich to have a go at Mr Redwood ”
John Redwood is doing his best to get the Europhile Cameron and the Europhile Tory party reelected.
I oppose that goal, as we are were we are largely because of the Tory party!
October 3, 2013
Para One
You said “VAT is a European Union Tax”
I suppose we are both partially right in that there has been a clear harmonisation of VAT in Europe since the seventies when we in the UK replaced Purchase Tax with VAT as a UK choice not at the ruling of the then EEC.
Para 2
Therefore APL the only vote you can make is for UKIP
Of the main stream parties who stand a chance of gaining power only the Conservatives offer any opportunity to reduce the growth of power of the EU.
The other two parties are very enthusiastic for more integration.
October 2, 2013
JR: “Veto on Fiscal Treaty”
Deliberate misdirection
The Fiscal treaty as you call it, was not legislation.
Now my question was, what legislation or directive originating in Brussels has been vetoed by the current Westminster administration?
That would be NONE.
THIS is not a cut in the EU budget!
The UK was outvoted on the extra 7.3bn for this year’s EU budget – so the UK will have to pay about 875m euros more.
Cameron didn’t get a cut in the budget, he didn’t even get a cut in the increase in the budget demanded by the EU. But in John Redwoods world that is ‘a cut in the EU budget’.
JR: “repatriation of criminal justice powers”
I’d like to hear more detail about that.
snigger!
Reply This is why the Eurosceptic movement in our country regularly punches below its weight. The constant sniping against Eurosceptic successes by the Conservatives, instead of welcoming them and demanding more, is a great relief to our federalist opponents. The Fiscal treaty was vetoed by Mr C with the full encouragement of myself and other like minded Conservative MPs who met with him on the eve of the EU conference. It cannot now be a full EU Treaty and will not apply to the UK. The budget was cut – though we now have to see if we can prevent them increasing it again by the back door. Criminal Justice powers will be repatriated, something Labour opposes.
October 4, 2013
JR: “The constant sniping against Eurosceptic successes by the Conservatives ”
You live in an alternative reality.
Your assertions of Tory Eurosceptic successes are fantacy.
The treaty you describe – was not law, it was not even a treaty.
You answered a question I did not even ask.
You make wild unfounded assertions, relying on the ignorance and blind tribal loyalty to make sure nobody actually verifies what you assert.
October 2, 2013
I though the Tories are in favour of indirect taxation lower taxes and make VAT which is pretty much on everything higher. Go tell me it is not on everything and see how far you get. Food? Yes it is and on many more you claim it not to be on, but know it is.
October 3, 2013
Well Baz VAT is not on pretty much everything, you are wrong.
Quote from HRMC on food…”Food and drink for human consumption is, in general, zero-rated but many items are standard-rated, including alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, supplies of food made in the course of catering including hot takeaways, ice cream, soft drinks and mineral water.”
The full extensive list of items zero rated or lower rated is here in this HRMC web page article:-
http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm
October 3, 2013
Including alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, supplies of food made in the course of catering including hot takeaways, ice cream, soft drinks and mineral water.ā Add to that certain-types of cakes, biscuits, chocolate, yoghurt, milk shakes, honey, syrup, soft drinks and a few that would be arguable in a court of law whether thy were a biscuit or a cake such Jaffa cakes, warmish. Hot? No officer? Take some down the station and have them checked for temperature. Takeaways, restaurant foods pub foods pickled eggs I would have to ask, but after a few light ales with VAT would not care. Then you are right! At least more right then on the number of deaths due to industrial accidents. A full and extensive list of non VAT rated foods would be required to identify non VAT rated foods which in the main are not eaten unprocessed by the population in particular the poor.
Idiocy does not cover it. Ram it.
October 5, 2013
Just teasing Baz
Can you now imagine how difficult it is to run a small business when you have to sell all these very similar products at all these different rates if VAT
Every penny has to be accounted for and taxed correctly.
Get it wrong and fines and penalties await you.
Then do the same for about 10 other major employers responsibilities which if you get wrong can also end with you getting fines and penalties.
You should try running your own business Baz.
Then you would soon realise what me and Lifelogic and others are on about when they plead for less red tape and regulations.
By comparison H and S laws are a doddle.
October 2, 2013
Comment on Reply–VAT is of course a foreign European thing so it should be no surprise that the whole thing has got completely out of hand and should be scrapped the minute we leave.
October 2, 2013
Replaced with what? Higher taxes or lower benefits and services? No VAT would not change anything if we were more prudent?
October 1, 2013
I still think the benefits and tax system could be rolled together into one. And done quite simply from a technology viewpoint, and much simpler to administer.
Just make benefits a negative tax. Award benefits by manipulating the tax allowance. Put everyone not already on a payroll system onto a payroll and pay them a nominal one pound a month, and adjust the tax allowance to pay them more than this where necessary, indeed adjust it monthly so they donāt get a full years money in one go. Stops all the complicated integration problems between different systems and business processes.
Roll national insurance into income tax.
A massive simplification of the system would pay benefits in reduced cost of admin, and help by making it much more clear that any money really earned increased the take home pay.
Etc
October 1, 2013
I agree that NI should be rolled into income tax…transparency would help reveal how high taxes really are! Any tax cuts should raise the threshold…it is ridiculous how much tax really poorly paid people pay. This also helps to make benefits less attractive as an alternative to work.
October 2, 2013
Iain Gill , REPay ,
I am convinced that rolling N.I. into income tax would be a big mistake and would be playing into the hands of civil servants and MP’s .
Doing so would just legitimise the current misuse of N.I. as general taxation .
Instead , the pension element of N.I. should become a hypothecated tax which politicians cannot use for current spending and directed towards an asset holding state pension fund .
Hypothecation of N.I. has become much more urgent since politicians started floating the idea that the state pension is a welfare state “benefit” rather than the product which people were paying their premiums on the understanding of getting .
October 1, 2013
“done quite simply from a technology viewpoint and much simpler to administer”
Indeed also NI and income tax should be combined but it this is the state sector who cannot organise so much as a whelk stall. So it sounds like a Ā£500 Bn state sector IT project that will be abandoned, rather like the NHS one, after several years of absurd & colossal waste.
October 2, 2013
lifelogic–NI was a meaningful well intentioned concept that made sense once but now, following years of lying, theft and fraud in its name, I doubt there is a person Jack or Jill in the land who could come up with a single sensible reason for retaining this piece of meaningless additional complexity. “Insurance” ? Hah! Its swan song should coincide with a complete simplification of the Income Tax system. Instead of squawking platitudinously about “opportunity” Cameron should push what the Americans call KISS Theory = Keep It Simple Stupid.
October 2, 2013
Leslie ,
N.I. still makes sense .
What needs to change is that elements of it need to be hypothecated towards an asset owning state pension fund .
This is necessary to make it clear that N.I. belongs to the populace and is not for the Govt or Civil servants to use as general taxation , buying votes etc .
We know that politicians will always flog off assets at the bottom of the market , Conservatives out of dogmatic ideology and favours to their mates and Labour because they can’t get their hands on enough money to spend .
Better to deduct from peoples income and put something aside for their old age than the intergenerational theft of have all the money flow into puffing up property prices and then expecting cash strapped mortgage holders in work to pay taxes to support the previous generations means tested old age benefits .
Reply Often sell off assets well above the market bottom- selling Lloyds shares recently was miles off the bottom – and the state gets a continuing stake in success through taxation.
October 1, 2013
But Iain, think of the
nonjobs that would be lost!And where would people with those skill sets find alternative employment?
They’d probably end up as beneficiaries of the new streamlined tax and benefits system.
October 1, 2013
And what of those who pay income tax but do not pay NI at the moment?
October 1, 2013
Significant simplification of the system, reducing the number of seperate taxes down to far far fewer taxes, would save so much in administration that would free up a lot of money to make us all better off. Sure some would benefit to different degrees but the overall change would be massively beneficial.
October 2, 2013
What you suggest would increase the tax bill of very many pensioners by 50% – NI is not currently paid on Pension income.
I’m all for simplifying tax but I suggest care is needed otherwise there is a danger of screwing over people who have already contributed a lot to the economy, have already been screwed over too much by the previous and current showers and are not able to mitigate damage to their financial position through earnings and time.
October 1, 2013
They could have some reduced tax rates.
October 2, 2013
No, Lifelogic, you do not reduce all taxes by a little bit, you remove a lot of the minor taxes entirely. Every tax requires administration, collection, and checking to make sure that nobody is sneaking out of paying it. Every tax is an additional administrative overhead to run.
Abolish minor taxes entirely, and you also abolish the administrative costs associated with dealing with them. Abolishing inheritance tax entirely, for instance, also gets rid of a huge and rather expensive administrative burden of lots of tax inspectors and accountants trying to work out how the latest tax dodge works and how to break it; get rid of the tax and you don’t need all these people.
October 2, 2013
Or large companies actually paying them.
How do you propose to fund the benefit system that allows workers to work for wages that are not Enough to live on or do propose not to fund this support as it is clearly not needed for such a luxurious lifestyle by workers at the bottom. They just need to manage their money more efficiently and live in more basic accommodation furtherer away from their work and have less children as well as saving more. Have you read about the hardships faced by many or are you just convinced this is all a Labour lie put forward by scroungers.
When the questions get difficult you have no answers, but continue to spout absurd and pointless drivel.
October 1, 2013
I’d be much more interested in your views on Nigel making Bill Cash cry personally. š
October 1, 2013
Who actually did vote in favour of Major in his pathetic Maastricht no confidence vote? 339 of them I see.
How could anyone sensible have confidence in someone as plainly dim, pro ERM, pro EU, pro EURO, socialist and as unprincipled as “I don’t have a shred of regret about entering the exchange-rate mechanism” John Major.
I would not trust him to paddle a canoe safely for two minutes. Then again Cameron is just the same, but with less excuse. This as he is no so stupid. He just holds the electorate in complete contempt and rats on them at will.
October 2, 2013
lifelogic–Did you read the other day about that woman who went out in a canoe without putting the plug thinggie in??
October 1, 2013
We need to concentrate the tax reductions on working people by reducing NI contributions rather than income tax.
October 1, 2013
None of these suggestions are worth a candle unless there is a radical overhaul & significant reduction in the size of the State. Someone in politics needs to make the case for why those in work and paying taxes will benefit from a State that spends a maximum of 30% of GDP (including borrowing).
October 1, 2013
20% is sufficient, 30% more than enough, but we are at nearly 50% and still have useless, second rate” public services” – if you can even call them that.
October 2, 2013
Have you any evidence of 20% and what if this in reality proved to be woefully inadequate to maintain living standards and services for huge swathes of the working. I said working, population. Bad service to no service, low wages to poverty wages? They should just lump it? I bet they would not and quite rightly too. Poverty and hungry children is a political decision in such a wealthy country is the UK. Housing benefit is a large service and benefit to a large number of the population including many landlords who would be out of a job or poor without it. Ram that one Rigsby
October 1, 2013
Because of business failure (Thanks Gordon), my wife is supporting me at the moment. She has been dragged into the 40% bracket through fiscal drag and a clawback by this government against the Ā£10,000 threshold. Thanks George….
October 1, 2013
Indeed 40% threshold absurdly low now and at Ā£100K you do not even get your allowances so tax is in effect over 50% or your Ā£100K income. Hardly enough to pay a london house rent, transport to work, heat light and food. Let alone a pension.
Better off the dole then they pay it all for you.
October 2, 2013
100k is about 2000 a week before tax and this is not enough to live in London? Yet you propose no minimum wage. It is going to be expensive to subsidise these workers even further is it not by as you say benefits or do propose they can live on these wages without subsidy by the state in London? By living five to room or spending all their wages travelling in? Pension? As if. Now which is it Rigsby. Again no reply which tell us all we need to know.
October 2, 2013
Sorry Rigsby such a basic question cannot go unchallenged if you are not (misguided ed)?
October 3, 2013
Bazboy
I’ve just done a search of 8 major recruitment portals in London. I found 1,000’s of jobs on offer I didn’t find any paying national minimum wage. They ALL offered more. Jobs in the surrounding counties paying Ā£12k were paying Ā£18-20k in London.
Maybe it would pay you to try and find out what happens in the real world rather than your fervid socialist mind
October 4, 2013
Doing what? Jobs are not the problem in most areas, but you need the skills to do them. Often very specific skills. Tyre fitting ain’t rocket science, but try to get a job without experience. Software engineer, white goods technical supervisor? No chance.Same applies even to unskilled work such as barman, checkout work and van driving. Often they are looking for a certain type of personality and attitude and if you do not fit this then no job. Don’t get to exited though, as often the job does not exist why? Difficult to say. Legalities? Or they are fishing looking for an an athlete who is also a rocket scientist with a business degree willing to work for six quid or less. Just like you would.
October 1, 2013
We have however had little but huge tax increases circa 300 from the coalition, thresholds lowered,, the inflation tax, the quack energy tax pensions tightened, IHT ratted upon, stamp duty increased (these are both wealth taxes Mr Cameron so please stop taking disingenuous rot on your position on wealth taxes). Or knocking tax havens as the UK is one of the best going with the non-dom arrangements.
Only non doms have a sensible tax regime in the UK just Ā£30-50K PA each and that sector is booming and people living on benefits and/or illegal cash in hand.
October 1, 2013
No to mention all the back door fees, parking fines, motorist mugging and licences needed just to allowed to breath in the UK.
To cut taxes you have to cut expenditure and waste – start with HS2, the 50% of the state sector that does nothing or worse, quack energy subsidies and build Heathrow/Heathwick about 10 years too late so far if would cost nothing in government funding.
October 1, 2013
JR is one of a few Tory MPs who I would consider competent at setting a proper Tory budget width proper taxation. JR is not part of the modern social democratic Tory posh boy set. Therein lies the problem.
Cameron has acted without a mandate over gay marriage therefore any manifesto pledge will be treated with cynicism. Add his U-Turns and failed pledges/manifesto to the mix and it is clear Cameron cannot be believed or trusted on anything. His three line whip against an EU referendum showed his true colour over the EU so any future promise will be treated with the contempt it deserves.
We are all taxed too much because of feckless spending by the government: there is no difference between the current Tory party and Labour, borrow, waste and spend (EU, overseas aide, energy, HS2, free school meals for every child, welfare needs much more reform and much quicker, Middle East wars, providing homes and public services for the EU and third world etc). Today he nnounces he wants to copy Labour’s NHS policy to keep GP surgeries open 8 til 8. Again, copying Miliband.
October 2, 2013
Indeed.
Any future promise from Cameron or Osborne (the IHT ratter) will be treated with the complete contempt it deserves.
Reply Had Conservatives achieved a majority Mr Osborne would have increased the IHT threshold as promised. The Lib dems blocked it.
October 1, 2013
We are all going to pay 30 – 50 k each and this will be enough? get real and they often do not even pay council tax in on their asset holding homes protected under British jurisdiction and infrastructure whilst they live abroad contributing payments to a maintenance company and little else. Your idea of a no tax Britain is a non starter as who will pay for the infrastructure? Tolls on everything? Not paid by absent non doms though. just everyone else? No reply again when confronted of you idiotic fantasy world?
October 1, 2013
Do the maths Baz
Gross pay Ā£1000 per week and tax and NI Ā£400+ and then get everything the state provides or pay less than half that tax and NI and organise some of your own cover. Its the real big debate
For example state education now costs over Ā£6000 per child per year.
Private education is only a few thousands more per child and its very good.
The NHS cost each of us a few thousand a year each. Private health would never cost as much.
Its very comforting this Nanny state but its becoming very expensive.
October 2, 2013
What about the rest of the infrastructural? Not real.
October 3, 2013
State infrastructure is already there Baz, it just needs maintaining.
New infrastructure can come out of general taxation.
The debate is about what else the State should provide versus the level of taxation needed off us.
Car manufacturing? Phones? Mail and parcel delivery companies? Steel making businesses? Coal mines?
All those were owned by the State and now they are not.
Times change.
October 3, 2013
Basically the problem is what if you cannot pay? You then have a two tier system or in this case a three tier system. Nobody believes for one second after the privatisation of the utilities and rail, the rest rightly or wrongly put tens of thousands on the dole and are now foreign owned and run for the benefit of a few in some cases as insider communities The privatisation of the NHS would be anything other than theft of a one of the few benefits to a large majority of this country. Would those unable to pay receive the same treatment and education as those not paying or unable to pay for the, presumably, premiums and fees? We live in a democracy which the rich must pay more to maintain this. Why should anyone just accept government by the rich for the rich?
October 3, 2013
What if you cannot pay…
The state would help as they do now.
Do you not think you might be better off if the state taxed you much less and left you to spend your own money as you wished rather than than this giant nanny state telling you what to do.
Would you prefer just one state supermarket for example.
October 4, 2013
So basically what you are saying they should be allowed to pay less tax in order to take out private health insurance? What is new about this? Your state supermarket is just like saying takeaway competition is good as bad ones will just fail. Bit more complicated though isn’t it in the real world?
October 2, 2013
Private education at the top schools cost about Ā£30,000 per child per year, so it’s significantly more than state education.
Private healthcare costs less because they don’t provide any of the most expensive treatments and instead use the NHS. If private healthcare providers had to have emergency wards like state hospitals their costs their costs would dramatically rise.
October 3, 2013
Uni
Just a few top schools like Eton and Harrow charge the high fees you claim are a norm.
The average private school fees are getting close to the rising state costs of education as I originally said.
I realise what the NHS provides things that are different to private health care but the idea that the NHS is free, is not true. We are paying several thousands each per year for it and you can get private health cover for a few hundred a year.
Even if the private sector had to provide NHS type cover it would not be as expensive.
October 4, 2013
Uanime5
The cost of a years education at a top public school is Ā£9k the rest of the fee is for boarding/living which state schools don’t provide.
The countries leading specialist heart hospital opened last year in my town. Its private
The first private A&E service opened in 2004 there are now quite a lot of them http://www.theguardian.com/society/2004/apr/16/health.medicineandhealth
The trouble with you socialists ( well you and Bazman at least) is that you live in a fantasy world, you never check your facts, you never link to evidence. You just spout the old cliched nonsense.
October 5, 2013
A few points I have made to you about fantasy worlds such as no minimum living standards in Britain, and the consequences of by such policies, as no minimum wage or housing benefits have gone unanswered by you libertarian. Or the effectiveness of the tickle down effect. Basically your main fantasy.
October 1, 2013
Non Doms are resident in the UK! Just not domiciled (ie not of British origin and intending to return to their home country at some point).
October 2, 2013
This residency is checked for the number of days they are here a year I suppose. Oh! They are not..
October 1, 2013
First we need to re-establish the correct role of the State and roll it back to those boundaries. Then clearly deliver it should those reduced activities as efficiently as possible.
Currently the attitude seems to be that the State owns everything we have and earn and can choose how much of that we are allowed to retain. This is the State as our master not as our servant.
October 1, 2013
The evidence for the truth of the Laffer curve, with tax receipts rising as rates fall is overwhelming, and evident even from short periods, such as the 52% income tax rate in the UK and the negative effect from raising CGT to 28% (despite booming stock markets and property prices). Yet there are still leftists who deny Laffer. This is because they couldn’t really care about maximizing receipts, they are much more interested in attempting to impose equality and in stoking the politics of envy. insights into the leftist mentality are offered by Damian McBride’s book. Leftists of a certain hue are driven above all by hatred.
October 2, 2013
We have talked about the laffer curve before and you have rammed it, so are you having another go or is it just more RWC? See here:
http://johnredwoodsdiary.com/2013/01/23/how-a-higher-tax-rate-led-to-less-tax-revenue/
The Laffer curve is often used as a blanket ideological justification to reduce income taxes, especially the higher marginal rates paid by high-income individuals, regardless of where current tax rates might lie on it and a holy symbol of the faith of supply-side economics. This still stands so unless you have anything new to add ram it again..
October 2, 2013
As ever you are incapable either of citing facts or of coherent argument to support your case. There is extensive evidence that lower tax rates increase receipts and the converse. Perhaps you are the kind of leftist I was referring to?
October 2, 2013
Stating something as a fact does not make it one. Have you read the comments we made in the link? Have a read again instead of just writing more trickle down theory propaganda.
October 2, 2013
There’s very little evidence that low taxes provide the most tax revenue according to the Laffer Curve. Most research shows that a 50-70% tax rate provides the most tax revenue.
October 3, 2013
This runs counter to all the evidence from numerous countries over many decades. You are selecting evidence which supports your conclusion.
October 2, 2013
Apart from recent evidence that lower rates have actually increased revenues and recent evidence that higher rates led to reduced revenues.
Other than that you are as spot on as usual Baz
October 2, 2013
What evidence are you referring to? It can’t be this years tax revenues because we won’t know until April next year whether they’re up on the previous year.
October 3, 2013
Don’t be so pedantic Uni
Take a look at capital gains tax figures and the effect of reducing the top rate
Care to explain why a policy of reducing tobacco use is founded on increasing tax rates?
October 3, 2013
The reduction is usually with the poor who are by far the biggest tobacco users. There is little evidence of the increasable in taxation revenues and jobs created by the reduction of the top rate and what little there is would be far out weighed by reductions in the taxes for low paid instead who have no choice, but to spend all their income to live. Fantasy trickle down effect again.
October 3, 2013
So you are agreeing tax revenues rose when rates fell and tobacco revenues fell after raising rates to reduce use.
Thanks Baz Laffer
October 4, 2013
Laffer curve theory does not say this as the only rule. Give evidence of you increases in revenue. It not a dead cert as you say, but maybe in this case is true? Tobacco is a specific example like I say with poor people over represented as smokers. Did the rich smoke any less? I doubt it.
October 5, 2013
Look at the evidence yourself Baz.
There have been many articles by Mr Redwood on this subject quoting Government figures.
Do you not read them or is it you cannot bring yourself to believe them?
October 5, 2013
You and John Redwood need to quote some specific sources and at the same time you can give us specific examples of how the trickle down effect and tax cuts is making money and higher standards of living avalible to those at the bottom and not finding its way into savings account and other assets/investments abroad. All evidence says the inequalities are getting larger whether by Labour or Tory policies on tax cuts and wealth being given to the rich simply for being rich. Apologist fantasy is not enough. How much of Russian wealth trickles down or finds its way into the average Russian pocket by a low tax regime and massive resources? Not a lot. The country is basically plundered for about a thousand people. Ram it.
October 1, 2013
Stamp Duty cannot be defended in its present form. Why oh why are there the step hikes in this iniquitous tax. What genius thought this up?
Why not have it linear at x% on all transactions, ok exemption for first time buyers.
No one buying a house wants to buy it at a price any where near a step threshold. All this results in is an offer below the step threshold.
In order to encourage savings, all savings should be indexed to offset any gross return against RPI. Ie you would only be taxed if you made a real gain. This would help stop governments inflating the currency. When one looks at inflation losses over a working lifetime, why would one advise their children to save in any asset that can be inflated (possibly taxed).
October 1, 2013
While we are making a list of taxes, can the chancellor please revoke the tax on dividends in share portfolios. This was Brown’s first stealth tax before he went on to bloat the public sector and its unfunded liabilities!
October 1, 2013
Would have turned up at the Town Hall yesterday , but working, but I get the gist of the speech. What do you think of Manchester these days? Do you think it is still the majestic city it used to be or do you think that places such as The Trafford Centre have taken over visually and economically?
Reply I admire the great buildings in the centre, redolent of Manchester great age as a textile and merchant centre, and like the modern adaptations of some of those industrial buildings. I think Manchester needs more modern private sector investment – the crane count was well down on London’s.
October 1, 2013
‘We need to raise more money from taxing the rich to pay for all the public services and bring the deficit down.’
Have you been brainwashed by Miliband? Listen to yourself … ‘taxing the rich to pay for all the public services.’
Why not get rid of unnecessary public services? If you cut the waste and cut the costs you could cut the tax bill in half.
But you don’t and won’t.
October 1, 2013
I see that the Tories have borrowed an idea from UKIP’s policies by making Ā£1000 of a spouses unused personal allowance transferable.
They should have borrowed more of UKIP’s policies, like tax threshold at Ā£13k (all of which transferable to a spouse) and their simplified 25% flat tax rate.
Reply Many of UKIP policies were “borrowed” from the Conservatives who have held them for longer than UKIP has been around. Conservatives have always supported recognition of marriage in the tax system since I have been a member.
October 2, 2013
Which public services are unnecessary specific examples please of which ones would be cut to halve the tax bill.The rich should not be taxed to pay for public services such as infrastructure and education of which they benefit the most? I said specific examples or do not write RWC and other tosh.
October 2, 2013
Bazman
Well for a start the entire department of Business Innovation & Skills should be scrapped as it serves no purpose what so ever. It costs Ā£22 billion YES Ā£22billion to run.
The Department of Culture Media & Sport that costs us Ā£5billion is pointless
Start with that then we can also look at some of the 1100 useless Quangoes
If we bothered to focus on the core essential public services that we need in order for the country and society to function and stopped wasting 100’s of billions of pounds on vainglorious state meddling we could scrap income tax all together and then everyone would be better off
October 3, 2013
Department of Culture Media & Sport even according to the Daily Mail is 1.6 billion the 22 billion is no doubt a fiction too. Maybe you could tell us what are core public services and what are not? Any service if used by someone is ‘core’ Especially if it was you.
October 3, 2013
Baz
Unlike you I check stuff I got the numbers from the annual accounts submitted by both departments.
Core public services are Health, Home, Foreign, Education, Defence, Welfare.
Your last statement is wrong. I don’t use education or health yet I think they are core services. I do use culture media and sport and BIS but I don’t want either.
October 4, 2013
Give us a link and we will take a look to confirm what you say and within those core services there would be other services that could be core for many meals on wheels, looking after disabled children. Cut them as they are not core enough for you. To be replaced by nothing or by weasel words ‘reallocated’ and ‘absorbed’? Had your ingrowing toenail been not defined as core you would of course be writing to your MP?
October 5, 2013
Whenever cuts are mentioned core services such as the ones you have come up with Baz are trotted out.
You could do away with several ministries and many quangos as well as reducing greatly those on huge six figure salaries without causing any pain for the poor n needy.
In fact the money saved could go to improve their lot.
Cut at the top first wouldn’t you agree?
October 5, 2013
Dear Bazman
Are you totally incapable of following a discussion?
Looking after the disabled and in growing toenails are HEALTH issues. What did I say was a core service that needs to be maintained?
You obviously don’t read the posts you rant. Should I ever have need of an ingrowing toenail procedure I will have it done privately. No need to write to anyone. My willingness to pay twice means there are more resources available for those people who have to rely on the failing NHS for their provision..
If you want to find out facts google it. I’m fed up doing all the work for you.
You are in favour of spending any amount of taxpayers money and borrowing from banks to spend on anything as long as its in public sector
October 5, 2013
What if you want it like that is not a core service? These departments are not really services in the way we know them. Is the tax system a core service. Yes it is. If spending more on collection results in many times more tax receipts is this efficient and right? Do tell us! They should not collect taxes due?
Where is you link anyway to the costs.? Oh there isn’t one and if there was would be ripped to shreds and you know it. Borrowing money to spend in the private sector is good though. Many companies have the state as their only customer so are in effect state funded even with the equipment provided by the state and lets face it if that is the case you might as well run the job too and keep the ‘profits’. Like as a home owner I am my own landlord and enjoy the ‘profits’. I do not need a landlord or a manager help me do this. This idea of paying twice helps the NHS is your own fantasy it does not. he suggestion that using private medicine is in some way helpful to the NHS as it āfrees upā space for other people. It is not. This reasoning is flawed. It undermines the NHS. Itās like transport: there are public forms of transport, such as buses, and there are private forms, such as taxis. Now, if I decide to take a taxi and pay the extra, I could argue that I have liberated more space on the bus for other people. This is true, in theory. But it takes no account of market realities. If enough people take taxis instead of buses, then bus routes close down, the infrastructure is destabilised and eventually the whole network collapses. Then everyone is faced with the dilemma of either having to pay for a taxi if they can afford it, or walking if they canāt. In addition, the bus drivers NHS consultants are moonlighting as cab drivers as well, so further developing a market that results in fewer buses. Which only makes more people want to get a cab because theyāre seen to be more efficient. Ram it.
October 1, 2013
We should pay close attention to what’s going in in France, where the government is consuming the rest of the economy. French business people with drive and ambition, including many who have never worked outside France before, are coming to the UK in droves. Taxes are simply too high, and come from every direction. The big state, high taxes and institutional leftism are destroying the French economy. No wonder there was a party in the German election wanting even France out of the Euro.
October 2, 2013
The same thing happened during the boom years and as soon as the economy went bust they all went back to France with all their money because France has superior welfare. Also they took a lot of British jobs which increased unemployment.
October 1, 2013
Fewer people facing benefit withdrawal as their income rises should be paying any Income Tax. To make it more worthwhile to work we need a smoother progression at lower income levels.
The Universal Credit was meant to fix this as benefits would be withdrawn at the rate of 66p for every pound earned. This change should have been introduced years ago.
Making work more worthwhile means less tax allied to realistic levels of benefit support and sensible rates of withdrawal of support as income rises.
Given that more people are claiming tax credits because wages are falling don’t expect the level of benefits to fall if people go from unemployment to being paid as little as possible. Especially if they’re still claiming housing benefit because of the lack of affordable accommodations.
A combination of tax cuts and benefit reform is desirable to cut the numbers of people who have to pay for their own benefit top up by Income tax, a wasteful money go round employing officials to take the money off people in tax and give it back to them in benefit.
Given that most people in low paid jobs claim more in benefits than they pay in income tax such reforms are likely to leave the low paid worse off. Especially part time workers who aren’t paying any income tax as they will suffer all the pain from the loss of their benefits and won’t gain anything from the tax cuts.
One money-go-round that you could try to resolve is the low minimum wage supplemented by a tax credit top-up. I recommend combining them and into a higher level of minimum wage.
The way to do this is to impose tax rates the rich will pay, and set internationally competitive rates which means they will come here and stay.
Dubai has a 0% tax rate; how is the UK going to compete with that?
The rate of Capital Gains likely to maximise the tax revenue from the tax is under 20%, as studies of past changes to CGT in the UK and US show.
Studies also show that the wealthy will pay themselves in shares because they’re subject to the lower rate of Capital Gains tax, rather than income tax. Expect there to be a major problem when someone points out that you can avoid the 40% tax rate by being paid in shares.
October 1, 2013
You started with an encouraging remark :”On Monday at the Selsdon Group meeting I set out the case for lower taxes for all.”
How disappointing that you later sounded like one of the two red Eds when you wrote:
“We need to raise more money from taxing the rich to pay for all the public services and bring the deficit down.” Which is it? Are you small state or corporate state Conservative?
Reply I am a smaller state Conservative, not a no state Conservative.The government is still borrowing Ā£120bn extra a year!
October 1, 2013
JR: “The government is still borrowing Ā£120bn extra a year!”
Yes, but your solution is to raise more tax, when you should be advocating reducing public expenditure.
You say you are a ‘smaller state Conservative’ but you advocate higher taxes to pay for the excessively large state your party, and the Labour party ( in fact two heads of the same monster ) have created.
Reply As you well know from this blog I also advocate spending reductions – we need both cuts and more revenue.
October 2, 2013
JR: “we need both cuts and more revenue.”
So you are not really a conservative, just someone who blindly supports the party that goes by the name of the Conservative party.
We need cuts.
We need cuts to reduce the deficit – to zero.
Even then we are still borrowing billions. It is just that the borrowing requirement is no longer increasing.
While the deficit is increasing it is nonsense to talk about tax cuts.
Reply I want there to be more tax revenue from growth in the economy. Tax cuts – cuts in the rate of taxes – can stimulate more growth and more revenue. Removing this massive deficit which I do wish to do cannot be done entirely by cuts
October 4, 2013
JR: “I want there to be more tax revenue from growth in the economy.”
The economy is being strangled by the growth of the public sector, the bill for that falls on the private sector – since NO ONE, including MPs that work in the public sector pays on penny of tax.
Everything someone in the Public sector is paid, first has to be taken from one of two sources, tax revenue on the private sector, or borrowing – which is tax revenue taken from the private sector tomorrow.
October 1, 2013
Reply to reply,
You don’t need to remind me, I keep telling you about the Ā£120bn per annum. As I said in my comment to your previous comment today – Yesterday, we heard a pledge from Osborne that he will eliminate the deficit by 2020 ā you know the one he said before the last election he was going to eliminate by 2015! You support this party and government and apart from raw tribal loyalty I can’t see why.
Reply Being part of a party in office allows me to get some things done that I could not do on my own!
October 1, 2013
Reply to reply,
Just what might that be?
October 1, 2013
My top 12 are:
1. Scrap green power generation subsidies. Plan the expansion of privately funded nuclear power stations for at least 50% of our power generation from this by 2030. As fossil fuel EROEI ratio continues to drop and with a continued rise in world energy requirements there will be an increasing fossil fuel energy gap, inevitably the cost of production and prices will rise until supply meets demand. Proven reserves and the use Thorium can provide all global power requirements for over 1000 years.
2. Scrap overseas aid. The citizens of the UK have an admirable record of giving to worthy charitable causes. It is IMO not a proper role for government to force people through taxes to give their money to people overseas.
3. Big government to become small government by doing fewer things much better.
4. Reduce council tax by reforming and making local government much more efficient.
5. Remove the EU governance, regulation and net contribution, so the UK MP’s we vote for make our laws and regulations. Building unused motorways and closed airports to nowhere in EU countries and subsidising inefficient farmers is not good use of UK taxpayers money. I’ve exported goods all over the world, you don’t need to be controlled by a supranational organisation to export anywhere. Just conform to local standards, build a global effective distribution system (expensive and time consuming), fill in the customs forms and ship out the goods, simples.
6. Make the railways much more efficient with more competition, through a privatised, regionalised Railtrack and more competition between operators.
7. Scrap HS2, the price is far too high for a marginal increase in speed. We should be like China and Japan be looking at 400mph+ Maglev. This will spread wealth northwards, by making our biggest economic hub London, commutable from Northern England. It should also be much quieter and have cheaper running costs compared to Victorian steel rail technology.
8. Introduce competition into the water industry. Incumbent monopolies with above industry average profits, is wrong. A north-south water grid would also mean no more water shortages in the South East of England
9. Reduce the threshold on what constitutes a monopoly from 25% to 10 or 15%, so we have more competition between companies and lower prices.
9. Simply the tax system 17,000 pages and rising means no single person can possibly understand it and a simplified system would reduce collection costs.
10. Cut compulsory regulation costs, should we be paying an indirect Ā£400m+ tax for the ineffective FCA regulation.
11. Sort out the lack of runway capacity at Heathrow and Gatwick, where a missed landing or takeoff slot means hours delays where they are running at near to 100% runways capacity. Frequent delays at Heathrow all too often make a business meeting in a day in Europe very difficult to impossible.
12. Scrap flight taxes which puts the UK aviation industry, trading, trade missions and inward tourism at a disadvantage compared to virtually all other countries.
October 2, 2013
1) The Government is having trouble negotiating with EDF to build one nuclear power plant, so they may not be able to build that many by 2030.
3) So what do you want to cut? Healthcare? Social workers? Police? Fire Fighters?
4) And how are you going to do this?
5) Leaving the EU will result in the EU putting tariffs on UK good, which will reduce our exports to the EU.
6) How is that going to work? Unless you have multiple trains going to the same place at the same time there won’t be any competition.
9) A monopoly has to control 100% of a market. Do you even understand what a monopoly is?
10) So you want to remove customer protection so that companies can make greater profits. Expect this to end badly.
October 3, 2013
Just quickly Uni Your Number 9 is wrong
The monopolies commission will act if one company can influence or control a market well before your definition of having 100% control.
And quite right too.
October 1, 2013
We are often told that we must import millions of people because of our ageing population – and that THEY are here to pay for state pensions the NHS etc.
How are they to do these things if most of them are on wages that are below taxable levels ? It seems that they won’t be covering their own costs, let alone those of our pensioners.
October 1, 2013
“We need to raise more money from taxing the rich to pay for all the public services and bring the deficit down.”
I agree that the rich should not be taxed until the pips squeak; however, it is important for reasons of parity and to ensure the tax base is not artificially constrained that all including foreigners pay their fair share.
There was some controversy recently about entertainers with special tax avoidance schemes, and one can be certain that these would apply elsewhere e.g. in the financial services industry; then there are the trust funds which continually evade the taxman. As to foreigners who are resident and are runnung businesses from here, they should pay full taxes as individuals and companies, not have sweetheart deals with the taxman. Then there are the ‘consultants’ in the public sector with limited companies whilst enjoying effectively permanent executive positions; why are these allowed?
However, the issue that needs to be addressed is how to get the cost of government down whilst ensuring that vital services are not compromised when simply constraining budgets normally leads to a reduction in (lower paid staff ed) controlled by the same quantitiy of chiefs and how can public procurement be more effectively controlled to prevent non ending sagas of hyper-expensive failing IT and defence projects and such scandalous ripoffs as PFI; the problems that we have are that most politicains have no managerial experience and are not necessarily very good at it in practice and that the civil service is full of generalists who are not competant to either procure or manage technical projects.
October 1, 2013
“Tax cuts for all”
YES, as simple as that.
We also want a SIMPLE but FAIR Tax System.
October 1, 2013
How about
20% income tax tax over say Ā£15,000 and 30% over 100K
20% VAT
No IHT
CGT at 15% after indexation for inflation
Corp Tax at 10%
Council tax roughly as now
No NI employer or employee.
No stamp duty or other turnover or wealth taxes.
This is more than enough to fund a sensible sized efficient state sector and the economy would boom creating more revenues.
October 2, 2013
alan jutson: “YES, as simple as that.”
Alan I am ideologically sympathetic to the principle of tax cuts. But would you explain how we can cut taxes while the deficit is increasing?
The implication of cutting taxes – if you mean real tax cuts, that is reduction in tax revenue rather than cutting here and increasing there .. – is that absent spending cuts the government will have to borrow more. QED the deficit increases.
October 1, 2013
Like many other commentators, the number one thing the government should do to help the workers is to abolish NI and to correspondingly change the income tax rate (to make it tax neutral, obviously). This is an “easy” way to hit the non-working rich (those who survive off investments rather than working). It will likely also save hundreds of millions of pounds by reducing a vast army of IR civil servants and tax accountants. Unfortunately a few million people will likely end up worse off, even though tens of millions of people will end up better off, and Cameron has shown over and over that he doesn’t have the guts to take on anything where special interest pressure groups will complain vociferously. Labour represents the people on welfare, the Tories represent the old and the rich, the Lib Dems and the Greens represent the puritanical (sanctimonious) middle class, UKIP represents the deluded. Nobody represents the workers.
October 2, 2013
So when the private sector worker retires on a meagre pension, compared to the public sector worker, that is funded through ivestments you wish to penalise the private sector non-working ex-worker for then living off investments?
October 1, 2013
Lower taxes for all will mean cuts to the public sector. This is the right thing to do but let’s not be under any illusion that it will not cause unemployment and hardship, not least in the private sector too. Much of the private sector serves those on the public sector payroll.
As I stated in a previous thread we must pay attention to containing corruption and third world practices and not allow them to contaminate our state apparatus, legal and political institutions – such virulent infection is the worst of the Nu Labour legacies. We can weather many hardships but once integrity and faith is lost there is no way back to wealth and we become like any other nation. Bye bye banking, bye bye property market.
Reply Lower taxes can stimulate growth which can then support a decent public sector from the extra tax revenues.
October 1, 2013
just remember the lessons of Lawson. When it comes to tax, less is more.
October 1, 2013
Dear Mr.Redwood,
Please do not forget the promised increase in the threshold for Inheritance Tax. This should continue to be Conservative party policy.
Reply I will return to this in a later post, but maybe we need different tax cutting priorities for 2015.
October 2, 2013
Unless we carry on (or is it resume?) cutting public expenditure and the deficit, tax cuts will be pointless. The Conservative Party’s song is to cut welfare payments to people of working age. It’s like a one note samba and it won’t be enough. Only by tackling the health and welfare costs of the over 65s will the next government be able to avoid raising the standard rate of income tax, the kiss of death for any Conservative government.
October 2, 2013
It would be helpful if the coalition (I assume that it is a sop to the Libdems, I certainly hope it is) stopped demonising and targeting higher rate tax payers and excluding them from any increases in taxable allowances. Though the married persons allowance was pitiful I see no reason why a higher rate tax payer should not benefit. They are after al having to compete in the cost of living market place with lower rate tax payers and benefit recipients. That they have more money coming in probably means they have more money going out.
Does the government want us all to move to the same lower income areas or will it celebrate diversity of income and expenditure?
Higher earners do generally have more responsibility than lower earners, it would be nice to have that reflected in take home pay and disposable income to encourage aspiration.
October 2, 2013
Roughly speaking raising the income tax allowance costs Ā£6bn for each Ā£1,000 increase (20% for 30 million taxpayers), and it benefits almost all taxpayers by the same Ā£200, with only the lowest taxable incomes getting a proportion (less than 10% of taxpayers), and those whose income is already below the allowance getting nothing at all, perhaps alongside those with the highest incomes where allowances are clawed back.
This is not a very efficient way of spending money to deal with the problems of high marginal benefits withdrawal rates that act as strong disincentives for work. Benefits withdrawal rates are taxes that claw back benefits. If the aim is to increase the incentive for work for those who receive benefits, spending the same Ā£6bn could help to make a much more effective incentive by concentrating it on reducing the benefits withdrawal rates. That does imply effectively increasing the spending on benefits by the same sum, but that could be recovered by cutting the need to spend on housing benefit (which really benefits landlords, not tenants) by defusing the property bubble.
October 2, 2013
To think Johnny – four days in Mancy – and no need for a brolly – until this morning !
Question. While the Sun was shining – did you work out how to ‘fix the roof’, or, did you actual manage to ‘fix it’ ?
October 2, 2013
I am glad you note the low starting point of the 40% tax band.
When this band was introduced, this was a tax that only the better off paid. Now, as inflation increasingly erodes the value of the pound, it will not be too long before it becomes the de facto basic rate.