Taxing the rich.

Here’s a surprise. I agree with the three main political partiesĀ  in the UK that we have to tax the rich. They are right to say most of the tax has to beĀ paid by those with the higher incomes and with more assets.Ā  All three main parties have been living high on rhetoric about taxing the rich and closing tax loopholes for the last decade, and all three in power have decided to put tax rates up and impose new taxes on the rich. It’s certainly worked. The top 1% of Income taxpayers pay 27.5% of all Income Tax, and the top 25% pay 75% of all Income tax paid.Ā  44% now pay no Income Tax.

Some of this is not Ā socialismĀ but Ā commonsense. There’s no point setting out to extract tax revenues from those who have little income andĀ  no assets. Even the steeliest state tax tyrant knows you can’t get money out of those who do not have it in the first place.

The issue between socialism and commonsense is how you tax the rich, and by how much. Socialists want to tax the rich because they do not like them. They do not mind if they tax them beyond the point where they leave the country or to theĀ  point where they are no longer rich enough to pay the extra taxes. Sensible Conservatives want to tax the rich because we want decent public services and understand it is the richer part of the country that has to pay for the bulk of them. We want to tax the rich in ways which will coax the money out of them we need for a decent society, without taxing them so much that they leave, stop investing, decideĀ  not to participate fully in the private sector economy for fear of having to pay more. We believe in the power of aspiration. Many people who start out with no assets and little income aspire to have assets and a decent income. Too much tax can blunt aspiration or thwart ambition.

This poses two questions. What is the right rate for taxing income and consumption of luxuries? Tax at too high a rate and you will collect less revenue and do damage to the productive economy. Tax too high and the marginally ambitious for a better lifestyle will conclude it is too difficult. What is the right balance over taxing things the rich do which are usually thought of as a good if others do it, like buying a home or investing in a pension fund.?

It is clearly right that we will only have a successful economy if the rich share their surplus somehow with those on lower incomes. We rely on the rich to invest in businesses that will employ others, to buy luxury items and services which others supply, to redevelop our cities and build new buildings. If they do not spend and invest enough willingly, the UK economy may be impaired. Germany’s refusal to share her massive surplus with her partners in the Euro shows what misery large scale underspending and underinvestment can create if the rich surplus holder is too cautious.

Taking some of the money off the rich in taxes does ensure more of it is spent, as much of this money is given to people on lower incomes as benefits or in the form of public services free at the point of use. Take too much and you may get the opposite effect, as the rich go elsewhere or adapt their behaviour to an even more cautious private sector pattern. If a relatively well off person feels their tax rate is too high, they may well spend less to conserve what money remains.

In subsequent posts Ā I will look at what this means for the detail of tax policy on income and assets.

124 Comments

  1. Lifelogic
    April 11, 2017

    You say “Conservatives want to tax the rich because we want decent public services”

    But if you have virtual (Hobson’s choice/take it of leave it mate) monopolies in Health and Education (as good examples) you will never get decent public services. You get fairly dreadful and expensive monopoly ones as we see.

    The best way to tax the rich more is to encourage them to pay some tax and then also to pay privately for their own education, health etc. The exact opposite of what this government is doing. You should give some tax incentives to encourage more and more to go privately. Increasing choice of providers and innovation in the process. Under Thatcher we have tax relief for company and private medical cover and no insurance tax on it.

    This government has just increase IPT on medical insurance to 12% for example. So if you go privately you pay four times (so very few can afford to). Labour, Libdims, Green loons and socialist Gove even what 20% vat on private school fees! Probably socialist May & Hammond too in secret (given their other silly positions).

    Another way to get more from the rich would be to have a bonfire or red tape, go for cheap energy, relax planning and stop handicapping them at every turn. But there again May want gender pay reporting, quarterly tax returns, to build on EU employment regulations, worker on boards and endless other insanities…….. what a totally misguided, lefty dope she is!

    1. Jerry
      April 11, 2017

      @LL; Until you define what you mean by “fairly dreadful and expensive” you are doing nothing but generating hot air in such a debate! Most people do not consider the NHS expensive in real terms considering that the NHS can not cherry pick what services they provide as the private medical care companies do (for example how many provide their own Emergency Ambulance and A&E services for example, or even train their own doctors and nurses etc), and just what equates to being a “dreadful service”, having to wait ones turn, having to share a ward, not having a personal ‘butler’ service?

      Also, there would be no less tax revenue spent on providing a 24/7 NHS service, staff would still have to be employed and paid, nor would there be any less treatments available etc. even if more people did buy personal health insurance because the government still have to assume and plan for the worst. There would also only be marginal savings from not then treating people, basically those medical supplies that do not have a shelf life.

    2. Hope
      April 11, 2017

      Fraser Nelson highlighted the other day, as if a reminder was needed, how the Tories are using stealth taxes as a weapon. It is not just income tax for goodness sake. Fuel duty, congestion charge, VAT, tax on insurance, tax on energy, environment charge i.e. Wind farm stupidity, tax on travel etc.

      Look at your community charge bill and now we have add one which are central to the services councils should provide within their ordinary budgets! Now we have flood defense, social care in addition to ordinary increases! Guido highlights over 2,000 concil employees receiving over Ā£100,000 in renumeration and a further 550 earning over Ā£150,000! They are simply not worth it. Some are on over Ā£500,000!

      1. Lifelogic
        April 12, 2017

        Indeed, plus the gold plated pensions. No wonder they need all those bus lane & hatched junction mugging cameras and parking wardens. Perhaps 20,000 “fines” just to fund one person’s gold plated pension.

    3. eeyore
      April 11, 2017

      Tax Freedom Day this year, according to the Adam Smith Institute, is June 3 – 154 days into the year and four later than last year. They calculate it on all taxes, direct and indirect, and it is an average as we do not all pay the same percentage of tax on our incomes.

      Perversely, the less you earn the more tax you pay in proportion to your income, partly because poor people must spend all they make and cannot save, and partly because they pay more “sin taxes” on the naughty things that make a hard life bearable.

      Soaking the poor to pay for the rich seems an excellent way to encourage the former to become the latter. I look forward to the Conservatives pushing it at the next election.

    4. matthu
      April 11, 2017

      When you state it like that, it all sounds so obvious.

      Thank you!

    5. Narrow Shoulders
      April 12, 2017

      Spot on

    6. JDee
      April 12, 2017

      In order to gain maximum economies of scale the public provided health service must be a near or absolute monopoly.

      1. Lifelogic
        April 12, 2017

        Since when has a state monopoly ever been remotely efficient the NHS is sick joke. Perhaps we should have just a state provider of Lada type cars too for maximum economies of scale. Clearly all those food shops, restaurants and the likes need to be a state monopoly too. Should work well always has in the past!

  2. Lifelogic
    April 11, 2017

    Doctors trained abroad up to 13 times more likely to face competency probes as reported yesterday (in the Times I think).

    So why are so many (even straight A*) students being turned away from medical schools in the UK for lack of places each year? I assume this is either the power of the medical trade unions, government incompetence or governments reluctance to fund the training fully (perhaps thinking imports of doctors from overseas is a far cheaper option). Though perhaps not in the long run given all the medical negligence claims.

    Of course people should be able to pay more and buy a place (if they are competent to do one) but this prohibited too, apart from a few places like the private Buckingham University or they have to train abroad. Why restrict places for people who are competent and can pay the full cost? This when at least half the courses are UK Universities are of little or no value at all and they all get funding.

    1. alan jutson
      April 11, 2017

      Lifelogic

      Agreed.

      Seems amazing that we do not appear to have enough medical training places to enrol our own High powered students.

      If the government are worried about them training and leaving, then make it a condition of training that they have to serve in the NHS full time for a period of years after they have fully qualified.

      Thus they sign up and serve a term of years like in our armed services personnel have to.
      Seems such a logical solution.

      1. Hope
        April 11, 2017

        JR’s claim it is to provide better public services is a total sham. How many times have we heard this falsehood? Next his govt will repeat the mantra, Education, education, education. Balanced structural deficit anyone? Cut immigration to tens of thousands? Make immigrants pay for NHS? It is all a load of rubbish. Look st the fiasco budgets by Hammond and Osborne, not a bloo.. clue.

        We have to sale our homes for social care, to live with immigrants some of whom get it for nothing, now another squeeze on anything you leave for probate! The Tories literally want every penny you earn or save, even when you die. Better spend it and be feckless like the govt.

      2. APL
        April 12, 2017

        Alan Jutson: “Seems amazing that we do not appear to have enough medical training places to enrol our own High powered students.”

        Guess what? Medical training has been taken over by the state.

        Shortages of trained medical staff will follow as sure as night follows day.

        We should all thank God, food is still being distributed by Sainsbury’s and Tesco.

    2. 37/6
      April 11, 2017

      Ironically our home trained doctors often end up going abroad, retiring early or go job sharing/child breaks.

      My son only got one offer and was (thankfully) accepted.

      He had the UCAS equivalent of 4 A* and a B (he did the IB) he also had to submit a personal statement which had to include proof of voluntary work in the care system plus represented England at sport.

      He had to take the additional UKCAT and BMAT aptitude exams

      Two universities rejected him because he only gained a B at GCSE in English two years before the IB exams.

      Only one interview and only one offer.

      The fact is the competition for places is intense. Though there are, indeed, people with 3 As at A-level. Their personal statements had to include care work. If these minimum requirements are not met then the filtering system excludes applicants from the start.

      More places at med school are needed and it is not a fair trade – our doctors off to ANZAC nations whilst lesser trained and selected doctors are imported from poor countries. Not fair on anyone at all. (Except the ANZACs)

      1. Andy
        April 12, 2017

        We need more training places and we also need to be honest about it and train less women to be doctors. Like in teaching we need positive discrimination in favour of men.

    3. zorro
      April 11, 2017

      Never forget the innate incompetence of government run services especially nowadays….. Remember that chilling refrain?….”Hi, I’m from the government, I’m here to help”….

      zorro

  3. sm
    April 11, 2017

    Taxation should be clear and straightforward (a concept apparently beyond the wit of almost every Chancellor).

    Taxation (or its relief) should be used neither as a punishment nor as an incentive – no more porkbarrel politics please, and no more systems that make it worthwhile for the very rich to exploit every loophole.

    It needs to be made far clearer far more frequently to the general public that there is no such thing as Government money – it is ‘our’ money, and it must be used responsibly (and I appreciate that extends the debate ad infinitum!).

    1. Lifelogic
      April 11, 2017

      The phrase “government needs to invest in this or that” should be banned. Governments only “invest” by taking money off taxpayers or borrowing on the backs of them (people who, almost invariably, would have invested it far better.

      This government would not spot a good investment if it punched them on the nose. They even think HS2, Hinkley C and offshore wind are sensible! They think gender pay reporting and quarterly tax returns are sensible too!

  4. Richard1
    April 11, 2017

    Hopefully the need to be competitive post-Brexit will concentrate people’s minds on policies which maximise incentives and the need to take the most common sense approach. People will realise we can’t afford ideological socialism which impoverishes the Country, as it always has in the past, and as it always does elsewhere – looking at Venezuela etc, and – a milder form – even France.

    1. Lifelogic
      April 11, 2017

      Not just Venezuela/France etc. Look at the UK where they spend (largely waste) close to half of GDP and deliver very poor value for it. Then they inconvenience & tie up everyone in red tape, planning restrictions, daft employment laws, a devaluing currency by design and other total stupidities. They they tell the productive what they have to pay so many people cannot be employed (other than as a charity) and then the pay large sums to the feckless to encourage as much fecklessness as possible.

      Great plan what could go wrong! Get building on those “workers rights” and the gender pay reporting, compulsory worker on boards, quarterly reporting, compulsory pensions and the rest dear! After all Government knows best even if they have never met these people or businesses and know nothing about them or their circumstances.

      1. Richard1
        April 11, 2017

        Yes but the interesting thing is Mrs May’s initial stated desire for an ‘industrial strategy’, presumably to include some or more of the stupidities you mention, does not seem to have survived contact with reality. We have heard little of it the last six months, and again I think the relentless need for competitiveness post-Brexit will mean we won’t see its re-emergence. Of course we could do with getting rid of much of the red tape we already have, but at least I think its now less likely we will have more.

        1. Lifelogic
          April 11, 2017

          You think its now less likely we will have more.

          Why? May/Hammond want compulsory gender pay reporting, workers on company boards, to decide how much people put into pensions and are paid, to build on EU employment laws, to have new even more restrictive data protection laws, quarterly accounting to HMRC ……… They still have buckets more of it to dump on the productive.

      2. Leslie Singleton
        April 11, 2017

        Dear Lifelogic–It’s not so much that Pensions are compulsory (which is not so silly, meaning that people should have to save for their retirement) but that the employer is forced to contribute. Those Government TV adverts saying along the lines of, ‘O Joy, your boss has to contribute too’, with their anti-employer mindset are, perhaps hopefully, were, an unmitigated disgrace. Personally I have never grasped what Pensions have got to do with employers on any basis whatsoever–unless voluntary of course.

        1. Lifelogic
          April 12, 2017

          Why should people be forced to save for retirement if they do not want to? Perhaps they have a short life expectancy for example and do not expect to reach retirement age? Let them decided it is not governments role to order them about.

          1. Leslie Singleton
            April 12, 2017

            Dear Lifelogic–Otherwise a significant proportion will save nothing at all and, because the Government could not abide starving old folk living in the gutters, the State and our taxes would have to provide. Till recently all accepted that it was obviously necessary to save for one’s old age and that requirement has if anything increased now that family provision is fast becoming a thing of the past.

  5. Mark B
    April 11, 2017

    Good morning.

    It is not tax that is the problem, or even the levels, but what is being taxed and why.

    Our kind host mentioned sometime ago about, ‘sin taxes.’ These are taxes on things like tobacco and alcohol etc. There are also luxury taxes. Although I concede that sanitary towels are not luxuries it rather proves my point mentioned above.

    One way to help all is to reduce the need for such taxation in the first place. And to that end reduce the size of the state and what it spends those taxes on. Giving it away in foreign aid is not one of them.

    As I have said before :- Less is more !

    1. rose
      April 11, 2017

      Yes, Foreign Aid is a way of mitigating the effects of the CAP. So we pay twice, once to the EU, and then again, in foreign Aid. The figures in billions are similar.

  6. Glenn Vaughan
    April 11, 2017

    John

    Please define for me “the rich”. What is the definitive figure that distinguishes a rich person from a person who is not rich?

    Some people might perceive you to be a person who is “rich” though you might not regard yourself as someone who belongs to that category.

    Reply Read tomorrow’s blog about this – and offer me a definition

    1. a-tracy
      April 11, 2017

      Good question Glenn I was going to ask the same thing.

      Definitions are difficult.
      Now someone not working with children on benefits can obtain the equivalent of a Ā£25,000 pa job (Ā£20,000 net) that would have been rich to my sixteen-year-old self. I see from my tax statement that 25% of my tax goes on benefits is this percentage out of control? Or maybe we’re just wasting schooling some people because they couldn’t earn as much working. Then they’re on our tv screens saying their children are in poverty, they’re having to use foodbanks, they can’t manage on less than Ā£500 per week. We don’t even expect any community service for this benefit, help with the local elderly, infirm, parks, litter. We were always brought up to work and make a contribution. If this keeps growing and growing with no expectation to change then the lower down the earning ladder people are going to be expected to make greater tax payments, just like the 9% tax (loan repayment rate) for graduates from Ā£17k, then we’ll see if these university redneck socialists start to change their tune when they’re finally contributing.

    2. Hamsterwheel
      April 11, 2017

      He falls into the lefty trap of using the term “rich” like its some kind of disease.

    3. Lifelogic
      April 11, 2017

      If people are fit, healthy and on UK benefit rates or similar they are far richer most people in the World. You get your children educated, you housings costs and free health care – what more do these people expect? The idea of it it being a % of average wages is clearly just a way of ensuring the numbers will always increase!

    4. Mitchel
      April 11, 2017

      Definition of rich?

      See the article in the current issue of The Spectator:-

      “Owen Jones discusses the ‘crisis of capitalism’ in a Ā£1,000 jacket”

      I’m sure Polly would approve!

    5. libertarian
      April 11, 2017

      In reply to JR

      “Reply Read tomorrowā€™s blog about this ā€“ and offer me a definition”

      The definition of a rich person is anyone who earns over Ā£28,000 per year is in the worlds top 10% of earners

      No rich people shouldn’t be taxed more, no poor people shouldn’t be taxed , no middle class people shouldn’t be taxed more the government already takes a min of 62% of everyones earnings. Currently the waste of public funds is at epic levels yet public services are in a dreadful state. No more tax, far less politicians is the way forward

    6. a-tracy
      April 13, 2017

      If the definition of a rich person is anyone who earns over Ā£28,000 pa then this would include all of those none working parents of children whose benefits have been capped at Ā£25k gross (Ā£20,000 net) or Ā£28,000 gross in London

  7. Narrow Shoulders
    April 11, 2017

    Mr Redwood, what you have written is correct. There is no point in punitive taxes, tax should only be raised to cover the country’s reasonable expenditure plus a little bit to create a small surplus.

    However you laud the top 1% of earners for paying 27.5% of all tax. This is hardly surprising as their %age take of the national income is higher than this. They also buy more houses, stocks and land which attract stamp duties and excises.

    My gripe with the tax system and my hope for future reform is that those who whose taxes are not collected through PAYE are given less leeway in choosing how much income to declare and how much tax to pay. Fewer reliefs would be welcome.

    Reply No, their share of national income is not as high as their share of Income tax!

    1. NHSGP
      April 11, 2017

      cover the countryā€™s reasonable expenditure plus a little bit to create a small surplus.
      ===========
      30% of taxes go on the debts – plural.

    2. Narrow shoulders
      April 11, 2017

      I stand corrected – according to the 1% “only” gather 12.5% of total national income.

      Hurrah for the amount of tax they pay.

      On a separate note I see from my first payslip of the new tax year that while HM Revenue made loads of noise about raising the threshold for higher rate tax payers by Ā£1,500 they have sneaked in a Ā£2,000 rise in the National Insurance Upper Earnings Limit clobbering those earning over Ā£45,000 per year by Ā£240. So we are allowed to keep Ā£300 through the tax threshold but lose Ā£240 through NI increase.

      Where was the revolt by MPs and media when middle England’s NI pilfering was announced? They came out fighting for the self declaring, self employed but not for us.

      Thanks!

      1. Narrow shoulders
        April 11, 2017
  8. alan jutson
    April 11, 2017

    I see the new Stealth Death Tax (Probate fee increase) may now be deemed illegal as it has never passed through, or been debated by Parliament as a tax, according to recent committee reports.

    What is your position on this John, as it has changed the basic rules of inheritance taxation where passing an estate on death from one partner to another used to be exempt, other than for a minor charge of about Ā£200 for probate.
    Now even a modest estate is going to be stung (in advance of inheritance) by many thousands of pounds twice for a couple, as well as possible inheritance tax.

    Reply I have queried the reasons for this and asked about the legal base for going beyond cost recovery and have received a strong letter claiming they have the powers to make this increase.

    1. stred
      April 11, 2017

      To make a charge for a service many times its actual cost and say this is to cover other costs incurred for other services would be called fraud, if a private company were to do so. The arrogance of Mrs May and her next door neighbour in claiming this is alright because ‘they have the powers’ just shows them up as collaborators with the civil service. No principles left. This tax grab stinks more than any yet.

      As regards CGT, I badly wanted to sell a flat I had already paid CGT on 15 years before. The value had gone up to Ā£140k. Had I sold it and paid CGT with no inflation relief, my children, who cannot afford to buy a property, would have been taxed again at 40% and been left with less than half of the value when I go up the chimney. And this amount would be worth half the value it was worth when the investment was acquired. During the spat between nos 10 and 11 someone said that MrsMay wanted to put up CGT. What a PM we have leading the party of low taxation.

      1. treacle
        April 11, 2017

        I also have houses I would prefer to sell, but am holding on to them because CGT is so high. My Council Tax bill went up by Ā£700 this year (absurdly, one can claim a 25% single person’s discount on one’s first home but can claim no discount on one’ s second).

        I could make more money than I do, but I don’t: my tax bill is so high that I would rather make less money than see it go up still higher.

      2. Lifelogic
        April 12, 2017

        Well that is what the bank did with their Ā£30 “you are 6p over you limit mugging letters” I suppose. The court eventually let them get away with it?

  9. Ian Wragg
    April 11, 2017

    What utter socialist clap trap. The government is taxing at about 45% of gdp and borrowing a further 5%. Money that is largely squandered on foreign aid, tribute to Brussels which May and Hammond seem keen to continue.
    We import millions of people on low skilled jobs and the taxes are used to subsidise them as well as giving lots of them social housing.
    We send benefits abroad without scrutiny and are now reducing the Royal Marine force by 200 to save money whilst funding girl groups in Africa and luxury hotels in the Caribbean.
    Socialism or Conservatism means tax borrow and waste on an industrial scale.

    1. Know-dice
      April 11, 2017

      Ian, you are sounding like “LL” today šŸ™‚

      I agree with both of you.

    2. rose
      April 11, 2017

      Besides child benefit, don’t forget the Ā£7 billions that go out each year in remittances, lost to the economy for ever.

      It is estimated about 7,000 ex soldiers sleep out each night. How many immigrants have you seen doing that? Our men are classed by their councils as “low priority”.

    3. DaveM
      April 11, 2017

      Ian,

      Whilst I agree with most of what you say, please allow me to correct one point. I am more qualified to comment on this than all but 3 other people! The manpower reduction in the RM will not save any money for 2 reasons:

      1. The ‘line numbers’or ‘liability’ is not being struck from the Navy’s strength, it is being transferred to the Navy in order to address manning issues on the new QE carriers. At the same time, authority is held to regenerate those line numbers as RM liability should the need arise for 3 commando units. In other words, manpower is being moved around the Navy as it always has been in order to man the ships currently required. It just looks complex because the RM weaar green rather than dark blue.

      2. The 3 main budgets – which it is my current job to manage – will not be reduced this year or in the next 6 years. In fact they will increase.

      Ultimately, the RM is being reshaped to better reflect requirements in the post-Afghan era (something the army needs to do as well). It is generally seen within the RM as an opportunity to make the force generating cycle more efficient and “easier” on the marines, whilst professionalising a unit to better enable it to carry out contingency tasks in support of the fleet. In other words, less blokes, relatively more money per bloke, and a better trained Corps!

    4. Graham
      April 11, 2017

      The reality is that taxes could take 90% of incomes and still the same arguments would be churned out.

      The assumption (even from our host sometimes) is that our earnings belong to government and they will decide how much you should have. Have really hated that concept right from my first job.

  10. Mark Hodgson
    April 11, 2017

    “If a relatively well off person feels their tax rate is too high, they may well spend less to conserve what money remains.”

    OR “If a relatively well off person living on interest on their savings feels interest rates are too low, they may well spend less to conserve what money remains.”

    O/T perhaps, but your conclusion offered me a way in. If the economy is so successful, why are we still living with emergency low interest rates at a level we have never seen before, some 8 and a half years since the start of the crisis? When is common sense going to return on this topic?

    Reply Good question. I was against the last cut in UK rates

    1. NHSGP
      April 11, 2017

      Pretty obvious.

      The state has a debt problem. 12.5 trillion pounds when you report the pension debts.

    2. agricola
      April 11, 2017

      Because the spendaholic government is the greatest borrower. We are beginning to get whiff of what government and the BoE have done with Libor rates, I suspect they do not ignore interest rates.

    3. APL
      April 11, 2017

      Mark Hodges: “If the economy is so successful, why are we still living with emergency low interest rates at a level we have never seen before, ”

      It’s simple, the governments low interest rate policy has encouraged debtors to increase rather than pay down their debts.

      For example, a corporation that borrowed Ā£1,000,000 in 2010 and budgeted for the interest at for example; 2%, might have chosen to pay down the debt in 2012 had not the government forced interest rates to 1%. Now instead, the corporation increased its debt, because its repayments are the same even though its debt has doubled.

      So, now five years later, the government can’t raise rates even if it wanted to. Corporations have loaded up with debt in the expectation that rates would stay low, if rates rise. The economy is destroyed overnight.

    4. Caterpillar
      April 12, 2017

      I agree with JR’s reply, the is no reason anymore. Govt debt maturity has been stretched out to about 17 years, affordability is already good. Corporate are not seeking debt financing for buybacks unlike USA. Low interest is not encouraging investment, in contrast marginal companies are surviving so innovation down. M& A less than it could be. No inflation or growth reason for rates being this low. They need to nudge up or we could see downward currency in positive feedback – toughbto stop if it happens. Two quarter point moves in quick succession might help.

  11. oldtimer
    April 11, 2017

    Our family doctor suddenly decided to retire on 31 March this year – suddenly at least to her patients who got about one months notice. Our suspicion is that she decided to quit the pressures of the job (she was also the head of the practice) because of the reduction in the size of the pension pot she could save in a tax efficient way. I read that we are not alone. Thousands of GPs have decided to retire. The consequence is that her patients must now be shared with the remaining practice doctors, until they can find a replacement. One or two of these are part time (for tax reasons?).

    This is yet another example of how tax affects behaviour. The total tax burden is now around 37-38% of GDP – its maximum sustainable rate on historical evidence. It is starting to do real damage to the delivery of public services such as the health service.

  12. A.Sedgwick
    April 11, 2017

    What about National “Insurance”, Council Tax, VAT, Insurance Tax, Stamp duty, Death/probate taxes, car tax, fuel tax, green tax on home fuel bills and other small print stealth taxes. We have a dichotomy between the majority who in percentage terms are the most highly taxed in the democratic world and individuals and organisations, usually based overseas, who are allowed to beat the system for the perceived but very dubious greater good.

    The word “rich” has become a socialist term, it is not relevant. Level playing field taxation for all companies and individuals coupled with small government properly accountable and responsible for the expenditure of tax receipts and borrowings should be the objective.

    1. libertarian
      April 11, 2017

      A. Sedgwick

      Spot on. Well said

  13. Alastair harris
    April 11, 2017

    No. Poor people smoke and drink, and tax is levied on those transactions. Quite a lot of tax I would suggest. Rich is a meaningless noun in this context. You can certainly tax value (based on price), as long as those who suffer it are able to obtain liquid funds to pay it. What you have to consider is tax incidence. Those who pay it aren’t necessarily those who bare the cost.

  14. Ed Mahony
    April 11, 2017

    People wouldn’t mind paying tax so much if our society wasn’t so dysfunctional (lots of people don’t really like each other / just tolerate each other – let’s be honest – envy / snobbery, high levels of children brought up without two parents, high levels of couples splitting up, anxiety, depression, lonliness, anger, despair, and so on). And people appear far less modest and witty than they used to be or could be (including me).

    So many people are either (secretly) anti patriotic or else patriotic in a really crude, narcissistic way. We need to create more beautiful public buildings, streets and towns in general, support the arts more, and nature, and generally create a healthy sense of patriotism (that also engages with the rest of the world and doesn’t think it better than other countries).

    Conservatism can’t just be about money and the economy (important as that is of course). It needs to be far more holistic than that. It must be something that tries and enriches every aspect of British life. That we are, ultimately, a family (not a society or community or whatever) all with different talents to bring to the table. And key to that is finding ways of trying to instill Christian values into our society (whether people believe in God or not, Christian values of LOVE (SOFT + TOUGH LOVE), HARD WORK, SACRIFICE, HOPE, PATRIOTISM, LOVE OF ARTS, ALLOW THE STRONG TO DO WELL BUT HAVE SAFETY NET FOR VULNERABLE etc).

    Lastly, Christianity isn’t just about Heaven after we die (please God for us all – the ultimate goal), it’s also about building Heaven on Earth NOW (in fact you can’t separate the two, trying to build Heaven on Earth is also about trying to reach Heaven one day after we die – without sentimental piety and with focusing on the practical things of life, as well as trying to inspire people with love, hope, beauty, the arts, humour etc ..

    1. Ed Mahony
      April 11, 2017

      BTW, for hundreds of years, the Church has always taught that the Earth will not be destroyed at end of time, or rather it will be glorified into a some kind of new existence (sort of beyond what we can imagine now but something extraordinary and beautiful). And so theoretically England (and the rest of the world) will exist after the end of the world, but in a glorified state, and the blessed will be able to enjoy it (both in soul and with their glorified physical bodies), along with the joys of Earth and Heaven in general with God, please God.
      That is one reason I’m a patriotic. It’s like God has given us England (/ The UK) as a piece of work we must work on to make better in whatever way we can, using our talents to the full to achieve that. England of course is just one project God has given us. He’s also given us other projects to work on (our families, the vulnerable in other parts of the world, etc, and whatever other projects we might be called to).

      1. Ed Mahony
        April 11, 2017

        Whoops, apologies for going on here a bit

  15. APL
    April 11, 2017

    JR: ” I agree with the three main political parties in the UK that we have to tax the rich ..”

    Okaay. Now give us a definition of ‘rich’.

    Then we can decide what fraction of the population is rich, and how much we can expect to raise from that fraction of the population.

    Otherwise you are engaging in nothing but demagoguery .

  16. Antisthenes
    April 11, 2017

    Who is taxed and by how much is a secondary argument. Besides that can easily be decided by applying economic common sense. Such as the laffer curve and the law of supply and demand which tells us that as demand increases supply decreases. More important is to establish whether the reasons that we raise taxes are appropriate. I would suggest that in most cases they are not. Very many others will disagree as they see nothing wrong with the concept of forcibly taking money out of the pockets of others to put it into their own. Despite the fact it creates a degenerate and morally bankrupt culture, social instability and an unsustainable economy.

  17. Chris S
    April 11, 2017

    Overall taxes are too high. This is because the Blair and Brown government expanded he benefits system, effectively allowing businesses to pay unrealistically low wages in the knowledge that the state (we) will top them up.

    The evidence for the expansion of wider state spending is easily demonstrated through the huge increases in UK VAT from 8% to 20%. German VAT has risen from 8% to 19% as have rates in most other EU countries. By contrast, sales tax in the US has stayed low by comparison.

    I profoundly disagree with you on the principle of taking more than 40% of voters out of paying income tax. These people have a direct interest in keeping taxes high or increasing them because there are no consequences for them personally. As a result they are much more likely to vote Labour !

    Why is a Conservative Government continuing to pursue this self-defeating policy ?

    1. Deborah
      April 11, 2017

      How can it be right for 44% of the population to pay no income tax at all, and thus share none of the responsibility if they vote for tax and spend policies?
      We have all heard of “no taxation without representation”, when nearly half the voters have representation without taxation I think we may be creating a problem.

      1. alan jutson
        April 12, 2017

        Deborah

        You make the same point that I have made in the past.

        Is it time to restrict the ability to vote, to people who actually pay tax on income.?

        Would be a very brave Government that came up with such a policy.

    2. Baldwin
      April 12, 2017

      I agree that the Cameron/Osborne/Clegg plan to reduce the income tax base so much was misguided.

      I think most people should pay their bit and there is a case for re-introducing the old 10% for those at the bottom.

      Perhaps this could be considered if National Insurance contributions are ever integrated into in income tax, along with a special standard tax rate for the retired, i.e., the same 20% as now.

      1. Narrow Shoulders
        April 13, 2017

        Reintroducing the 10% starting rate is a better policy than raising the starting threshold by more than inflation. Especially while the NI lower earnings limit lags so far behind the tax threshold. Most of these people have not been taken out of tax they are paying NI

    3. ChrisS
      April 13, 2017

      I’m very pleased to see so many contributors share my long-held view that everyone should pay some income tax.

      Sadly we are now in a position where it is almost impossible to re-apply income tax on the people who have been given tax free status by Cameron and Clegg.
      The outcry would be overwhelming. The only way of re-introducing universal income tax now is to integrate income tax and NI, something that is long overdue.

      Of course it hasn’t been done because successive Governments want to continue to con the ignorant voter into believing that taxes in the UK are low. We all know they are not.

      Perhaps combining the two taxes on income could be introduced and NI replaced with an NHS insurance premium.

      That would at least ensure people knew exactly what they are paying for “free” healthcare and at last the NHS would stop being considered a Holy Cow, beypnd criticism.

      After the North Staffs scandal, the disgraceful failings in Shropshire maternity care proves that the NHS has learned nothing. As usual, nobody will get fired or struck off. Imagine the furore if this had taken place in the private sector ! The silence from Labour is deafening.

  18. Bert Young
    April 11, 2017

    As things are our society has allowed benefits to go to those who abuse them , malinger and take advantage of every possible gap . Those who have strived in their careers , saved and been prudent in the conduct of their lifestyle have had to pay on the line . The latest imposition is the tax on probate ; people who live in the South and have seen property prices rise face this punitive liability – it is their home not just an investment !.

    I have always been a believer in low taxation . Revenues increase when this approach has been adopted with the resultant benefits available to all . Today , with a published 2.3 % increase in the cost of living we live in the anomaly of huge Foreign Aid being paid out to countries where much is creamed off to individuals – this at a time when the NHS is scraping along and many sufferers waiting longer for operations . Scotland is now able to offer a “protection” pill against certain infections while , in England , we cannot . Where is the balance and fairness in our society ?. We have a long way to go before we start thinking about taxing the rich to pay for the poor .

  19. Kenneth
    April 11, 2017

    The overall tax burden is ridiculously high and up to socialist levels.

    We need a government that believes in a small state.

  20. Prigger
    April 11, 2017

    Some rich Americans have given up their citizenship as the only way to stop paying taxes and moved abroad. French famously moved to Russia and here. Some UK celebrities and one politician/celeb are domiciled in the Republic of Ireland and elsewhere for tax purposes.

    As a principle, possibly impractical, I oppose personal taxation. Better the money is not allowed to be paid, earned, acquired in the first place somehow. It saves billions in admin alone.

  21. Paul Ryan
    April 11, 2017

    Assuming the rich all create viable enterprises. Most of the rich are rent seeking by hoarding natural resources such as land and investing in natural monopolies vital to human existence. The distinction between rentier and productive has become blurred. (BHS being a case in point, where rents are extracted from a dying business with the State picking up the social cost). So I’d advocate taxing land value instead, and try and leave taxes on work, profits and consumption alone. Land for example was there long before the rich hoarded it (they didn’t invent it obviously) and it will still be there long after they have gone. We would all be a lot better off without the rent seeking rich. The economic rents would still be there and it could be shared around it a much fairer way. Also homeowners, especially in bubble tastic London and South East are having any tax pay rebated back via house price inflation. So its incorrect to state they pay most taxes. Who is responsible for HPI? The State which zealously protects the land monopoly.

  22. MikeP
    April 11, 2017

    John, some are asking for a definition of “Rich” and I believe the Government already provides a clue with the 45% income tax rate applied to incomes over Ā£150k. Lower than this we still have the higher rate of 40% where people are “richer” but not really “Rich” as in a champagne and Ferrari lifestyle sort of way. Recent suggestions of adding VAT to private schooling overlook the unintended consequence that those schools could then reclaim VAT on their expenditure so the policy would raise far less VAT for free school meals than desired – typical Corbyn / Socialist empty rhetoric.

    I think the Treasury and HMRC should be far tougherand smarter in collecting and scrutinising tax on the self-employed as there are millions of them who are now working this way. They should also go after certain classes of luxury purchase (top-end cars, boats, private aircraft including fractional ownership schemes, golf club memberships and second or third homes) to ensure these are taxed appropriately. They’re clearly what the “Rich” like to buy, are clearly affordable but often out of reach of HMRC through VAT or CGT avoidance, and overseas or company ownership. Finally there’s the much-criticised area of Corporation Tax where international co-operation is required to ensure the UK gets its fair share of the cake without frightening away employers from being based here.

    1. Deborah
      April 11, 2017

      I suggest the govt definition of rich is not Ā£150,000 but Ā£120,000, when the government decides you no longer need a personal allowance and starts taxing you at 60%.

  23. NickW
    April 11, 2017

    1) Tax at the rate which maximises tax income.

    2)Ensure that the public are sufficiently well educated to understand that when people say “The rich should pay more tax”, that does not necessitate making the tax rate higher, the rich automatically pay more, even if they pay at the same rate as everybody else.

    There is the same confusion between tax rates and the amount of tax paid as there is between debt and deficit. The confusion suits the socialists just fine because it allows them to charge punitive tax rates on the “Rich”.

    Remember that the standard definition of “The rich” is “Anybody who has more money than me.”

    As for those grossly overpaid celebrities who feel guilty about the amount of money they are getting paid, and extol higher taxation, it should be pointed out that there is nothing to stop them writing an extra cheque for the revenue if they wish, or if they are in the public sector, asking for a salary reduction.

  24. NHSGP
    April 11, 2017

    30% of Tax goes on DEBTS, not services.

    Eventually even the poor will work out they are being taxed for no services.

    If you take NI.

    If Mr Median [26.5K a year now] had invested his NI, he would have had 900K in a fund at retirement.

    Instead he has 400K of state debts.

    The public is working out that the tax and no services is the problem. It’s called austerity.

    1. a-tracy
      April 11, 2017

      We are regularly told now by our politicians that NI wasn’t for your own pension fund, even though that’s how it was sold to us, it was for your parents as when it was set up those of retirement age got paid out without making the 39 years contribution, so it’s a ponzi scheme.

      Don’t forget on top of employee’s ni or self-employed reduced ni the employed worker has an extra 13.8% paid over Ā£8164pa, then, of course, everyone earning below Ā£8164pa isn’t paying a penny in ni and still get a state pension often with top up pension credits, so that’s no contribution to their healthcare or pension, so it’s full time workers who have to pay in their benefit.

      1. APL
        April 12, 2017

        a-tracy: “We are regularly told now by our politicians that NI wasnā€™t for your own pension fund,”

        Exactly what John Redwood said the other day on this very blog.

  25. Spare a kipper guv?
    April 11, 2017

    “Tax the rich!” in political terms can be like selling snake oil. UKIP preferred the pejoratives Elite or The Establishment so as not to annoy their uber-wealthy pay-masters who are now out of pocket and we may find them on some London streets sleeping in large cardboard used pizza boxes , ultra large, befitting their real station in the world.

  26. Christopher Hudson
    April 11, 2017

    The issue isn’t really taxation, people don’t mind being taxed, they understand tax has to be paid.

    The problem is spending. Wasteful, inefficient, ineffective. People in business, in daily life don’t spend Ā£900 million on a computer system and then decide half way through to scrap it.

    When governments get it wrong they get it 50 billions wrong.

    And I would argue that a lot of people wouldn’t choose for their hard earned cash to be sent to countries that think were idiots for sending them money. “Those dumb English. They’re 1.8 trillion in debt and they’re sending us money”. If they don’t care about their own people why should we.

    1. DaveM
      April 11, 2017

      100% correct IMO.

      I have foreign friends – and some friends currently employed in the military as doctors and nurses – who work within the NHS and who are flabbergasted by not only the levels of waste but also the appalling procurement processes and the prices paid therein. I imagine people who work in procurement for big supermarkets would cry with laughter or frustration if they looked into it. Why can’t this be addressed?

      And why is the govt still doling out endless amounts to people who don’t want to work?

      And finally, the overseas aid budget may be relatively small but it’s still our money which could be directed to social care or education.

      1. APL
        April 12, 2017

        DaveM: “the overseas aid budget may be relatively small but itā€™s still our money which could be directed to social care or education.”

        It’s not as if there aren’t poor people living in the United Kingdom.

      2. Peter D Gardner
        April 12, 2017

        DaveM, you need to look at the foundation of the NHS and what it replaced. It was and remains the flagship of socialism. This has been the great divide in British politics since WW2 and it is probably true to say the depth of this divide is nowhere as deep as it is in UK. If the socialists lose the NHS, they lose everything. The unions and the ideologues between them will mount the barricades before they allow the NHS to be effectively reformed. It is and remains unique in the world, not because it is so hard to emulate but because nobody else wants to, and they are utterly determined to keep it that way. Is this British traditional stubbornness and eccentricity? perhaps. But it is also self destructive obstinacy and a socialism that can only be enforced by law, as has been demonstrated in every socialist economy since Karl Marx..

  27. agricola
    April 11, 2017

    The so called rich who support the current socialist agenda from a covert socialist government will make their own choices. You may think I exaggerate, but almost all of your party were happy with the largely socialist EU, sufficient to try to keep us in it. That was until the population said “A pox on your house.” I would submit that about half the people leaving the UK each year for a better life elsewhere are indigenous British and talented. They have realised that the tax system in the UK does not reward success, in fact it lives on the back of it like a leech. For once I find myself agreeing with Lifelogic’s submissions.

    Anyone prepared to pay for their education, medical and pension needs should be able to offset the cost against tax. Their taxes are already paying for these services to the majority.

    It says a lot when you realise that the USA, having a population of 250 million plus, can get by with 435 Representatives (MPs) and 100 Senators (MHoL). You are way in excess in UK Government both in numbers and function. One great bonanza on the backs of the people, malfunctioning in just about everything you touch.

    1. agricola
      April 12, 2017

      Why so tardy with moderation.

    2. Peter Martin
      April 12, 2017

      You are overlooking that the USA has State legislators too. 49 of the States have both an Upper and Lower House.

  28. Peter Martin
    April 11, 2017

    I agree that the left generally are making a big mistake to think that the rich can be taxed more to support education and the NHS for example. The numbers simply don’t stack up. Maybe it is just about possible to raise a couple of billion with a mansion tax. That is nowhere enough. It just wouldn’t make any noticeable difference.

    The rich, in the widest sense, are those who have much more money, in pound sterling assets, than they can possibly spend. They don’t all live in the UK. That would also include the central banks of the big exporters in Germany, Denmark, Switzerland, and China. Good luck to anyone who thinks they can send a tax bill to the Bundesbank!

    So the question is what to do about all the sterling assets, mainly in Gilts, held by these organisations. Does it really matter if they want to hang on to their gilts?

    It doesn’t matter at all. The Government can, and does, simply spend that money anyway. It is how deficits are financed. Neither is there any need to feel bad about it. The Government has to recycle those saved funds bank into the economy to keep it going and thereby prevent another UK recession which wouldn’t do anyone, Capitalists or Labour, any good. Businesses would go bankrupt. Workers would lose their jobs.

  29. JohnOfEnfield
    April 11, 2017

    Thank you for your, always interesting, blog.

    I’m in favour of a much much lower overall tax take – say 25% to 33% of GDP. I find it offensive that the Government taxes both what I earn & what I spend the residual on in a myriad of ways. Even when I leave this mortal coil. Some also see Corporation tax as a duplicate tax because what is taken from the company can’t be paid in dividends to individuals. All grit in the engine.

    I would like the Personal income tax rates to reflect the need to maximise the tax take rather than be driven by the politics of envy. A high personal allowance & a flat rate somewhere just below the optimum point of say 28% ( I recognise there is disagreement on precisely where this point is) would achieve that end. It would not penalise those who earn a lot of money, just because the chancellor disapproves of their success. Such a, clearly stated, policy would (hopefully) act as a constraint on future governments increasing the tax rates above this optimum as that would naturally reduce the overall yield from the tax.

  30. forthurst
    April 11, 2017

    The taxation system should encourage wealth creation, e.g. from building businesses that create wealth and employment, and deprecate parasitism, examples of which are property ownership for the purpose of fleecing private individuals or local authorities of cash that would otherwise circulate in the economy, or short term speculation for the purpose of offshoring British jobs in support of a foreign predator. Wealth creation creates jobs; parasitism destoys jobs; they need different tax regimes.

  31. Jack
    April 11, 2017

    Tax doesn’t pay for any UK government spending whatsoever. Pay your tax in cash and they put it in the shredder.

    In a modern monetary economy like ours, where the currency freely floats, taxes work to reduce purchasing power and anchor the currency, but not “pay for” government spending.

    1. Jack
      April 11, 2017

      The Federal Reserve (and BoE) insiders/staff “get” this because, as they say, “you can’t do a reserve drain without a reserve add”. AKA the government MUST, as a simple point of logic, spend first before it can collect any taxes or “borrow”. The pounds to pay taxes can only come from the government spending them into existence!

      Extremely irritating that the political appointees on the FOMC and MPC (the ones who actually make the decisions) don’t understand this, and neither do any politicians except a few like Kelvin Hopkins who apparently attended one of Bill Mitchell’s talks a few months ago. Though I don’t know whether he fully “gets” it or not.

      1. acorn
        April 11, 2017

        Jack, you and I are flogging a dead horse on this site. There is no understanding of the job that taxation does in a fiat currency economy; controlling the net fiscal assets in the economy; and, hence the speed at which the economy goes without triggering excessive inflation.

        As you say, taxation does not pay for anything, it is just a “unit of account”, like the scores on a cricket scoreboard. Government “money” is created out of thin air when it spends; it goes back to thin air when it taxes. At any point in time, the quantity of government money still in the non-government private sector is, the national savings. Also called, erroneously, the national debt.

        The government’s treasury is not income constrained at any time. There is no bill presented to it in Pounds Sterling it can’t pay. It always spends before it taxes. It does not have to issue debt (Gilts etc) to finance its spending in any way.

        It “fully funds” its spending by issuing debt instruments (Gilts) to match government spending. Gilts pay interest and are a “risk free” asset for insurance and pension funds. There is no operational requirement for the government treasury to issue debt instruments. If it wishes to control overnight interbank interest rates, there are much simpler ways of doing that.

        Thankfully, all the techies I used to know at the BoE and on Bank trading floors, all know this is how the system works. They leave it to the politicians to sell the “Noble Lie” to the proletariat, that the government’s finances operate exactly like a household.

  32. Andy
    April 11, 2017

    We should just have a simple Flat Tax. I don’t see why the State should indulge in ‘redistribution’ nor in some areas where it pokes its nose. The more areas of life in private hands the better and the less need the State has to steal our money.

  33. English Pensioner
    April 11, 2017

    I’m a great believer in encouraging people to do more for themselves and not rely on the state monopolies. In particular I think we should give far more encouragement to private schools and private health. I believe that individuals/families should be able to opt out of the state system and get appropriate tax allowances. The allowance could be limited at a maximum equivalent to the average amount spent per head by the state on these services, but of course people would be free to spend more if they felt they would be getting better services.
    I believe something like this works in Australia with state and private systems running side by side and among other advantages it encourages better services all round.
    Why do our politicians of all parties seem to feel it is wrong to allow people to “do their own thing”?

    1. Peter D Gardner
      April 12, 2017

      Indeed. The public sector in Australia is much smaller relative to GDP than in UK. User pays is a fairly standard practice across many government services. The public health system is a mix of taxation and private sources of funding giving consumers, aka patients, much greater control of where and on what funding is expended on services and invested in research and development. in education special provisions for disabled or handicapped children are available to both private and state schools. The list goes on. Private enterprise is not frowned upon but encouraged in individuals from an early stage. Changing now with creeping socialism but UK has been on this socialist path since WW2.

  34. Anonymous
    April 11, 2017

    It’s not the tax. It’s how it’s spent.

  35. Beecee
    April 11, 2017

    Seemingly forgotten when the cry goes up, ‘tax the rich’, is the impact on local economies – the Artisan Factor, i.e. using a local tradesman to do one’s DYI, repairs, decorating etc. etc..

    The less the ‘rich’ have to spend the less they will use the local one or two man bands who provide a service which the less well off have to do themselves, or leave undone.

    A glance at a local Yellow Pages will indicate that there must be hundreds of thousands of such business in the UK relying on locally based jobs.

  36. Mr Ed
    April 11, 2017

    A company should be taxed on its track record of donating to political parties. If it can afford to donate , it is not being taxed enough.

  37. Corbynasty
    April 11, 2017

    It’s not fair the rich will have more plastic bottles to return and reclaim their deposits. ( Not a Corbyn Statement, yet. )

    1. Jerry
      April 11, 2017

      Your comment and obsession with Mr Corbyn says far more about you than it does the leader of the Labour party. What is more, it also says far more about the prospects of the Labour party whilst being lead by Mr Corbyn, far from being hopeless the fact that the right and centre-right keep having to try and lambaste the man all the time suggest that his cause is far from hopeless. 1983 it is not…

      1. Edward2
        April 12, 2017

        Recent polls say that Labour voters don’t like their leader.
        They trail mid term in polls by a big margin
        Teresa May is far ahead compared to Jeremy Corbyn as a PM by voters.
        I do agree he has suffered an agressively negative press and this has had its effect, but he appears to be popular only with Labour Party members rather than with voters at large.

        1. Jerry
          April 13, 2017

          @Edward2; You are getting confused between Labour party supporters wanting a different leader and not voting to have their party in government, who ever the leader. If the latter was true then only a very foolish governing party would turn down the chance of renewing their mandate together with a fresh five year term, especially with the trials and tribulations of Brexit in 2019. As I said, 1983 it is not, more likely 1977/8…

  38. agricola
    April 11, 2017

    Your submission leads me to think that here is an opening for UKIP to design and fly with a whole new scenario for taxation, government involvement in peoples lives, and the creation of a truly entrepreneurial society. The current philosophy does not work morally or practically, so they could give thought to inventing a new one. The EU is not the only entity that blights our lives, so go Nigel.

    1. Bryan Harris
      April 12, 2017

      Nicely put – yes, we need nothing less than a tax revolution.

  39. Simon
    April 11, 2017

    At last a politician who asks interesting questions from the punters !

    For my two cents John all of this is academic as the government has not got its eye on the right ball at all. For all my adult life similar arguments / discussions have gone on about tax and indeed expenditure eg state pensions and so forth. Neither of these things really makes as much difference as the three economic factors which have dominated my life time – all of which have been caused by government policy. They are respectively, inflation for much of the early years of my adult life, low interest rates – since the banking crash and now ruining the lives of millions of people, and rampant and sustained house price inflation.

    The fact is the looked at fairly and through the right prism the overall quality of the vast majority of peoples lives has been falling at least since about 1980. There have been artificial boom, during the Thatcher years – but generally the trend has been a negative one.

    Until and unless the government you support and the party you are a member of addresses these issues – above all housing – then you are whistling in the wind putting up tax or fiddling at the margins.

    Once the present remaining home owners have sold up or died the UK will return to the 1930s and Rachmann landlords of the post war years even more than there are now with catastrophic consequences.

  40. a-tracy
    April 11, 2017

    Rich is all relative isn’t it? Someone living in Sunderland on over Ā£400,000pa that’s super rich for that area yet that’s what their poor councils with no money to spend on old age care pay their CEO to spend residents hard earned money in their locality, not exactly hard it is to decide where to spend (not earn) money. Wake up Council tax-payers.

    If you work in a sector that has guaranteed final salary pensions you don’t need to earn so much gross because you don’t have to save massive pension pots to retire safely at 60.

    If you work in London and areas in the South East where tiny properties are over Ā£300,000 you need to earn more. Whereas if you earn the same money in remote Wales you’d be rich, yet we let the national minimum, national living wage committees set the same wage all over the UK!

    It’s all going to go bang soon, I give it ten years max. we’re getting it wrong and can’t continue like we have been turning a blind eye to the problems, wracking up debts on the government’s credit card to spread largesse around Europe and the World with our big aid promises when we won’t train our own people for the right jobs, when we let unions control training numbers in important positions and where local councils all set their top rates of pay together and their customers just have to take it.

    House price inflation in the South is leading to enormous problems and not sharing out, everything but asylum seekers, to the great Cities around the UK has got to change and it won’t be before time.

  41. Dioclese
    April 11, 2017

    I have never agreed with tiered tax rates. If I earn twice as much then I already pay twice as much tax. Why should I pay 4 times as much?

    The way forward is to raise a single tax rate and push up the personal allowance to take the lower paid out of the system altogether.

    The current tax regime is vastly overcomplicated. It’s time for a ‘zero based’ approach where we start again with no preconceptions. It’ll never happen of course…

  42. The PrangWizard
    April 11, 2017

    This is not one of Mr Redwood’s best. Clearly he feels on shaky ground having to get in a denial early on that this is Socialism; ‘only some of it’ however is not. It sounds much like it to me. Then going on to express satisfaction that ‘the rich’ pay 75% of all income tax, and wants more; we will find out how much and how this will be done later I suppose. It’s now the Tories who seem wish to tax until the pips squeak, but never to be admitted.

    We seem to be being prepared for even bigger government, more Labour party ‘tax and spend’ which is much criticised. This is hypocritical politics, an attempt to claim a moral high ground, whilst betraying conservative principles, now of course abandoned.

    And off topic, but not entirely so in view of the severe cuts to our military, would Mr Redwood, being a big fan of ‘inward investment’ here declare therefore he is in favour of the proposed large purchase of rights in the Falkland Islands by an Argentinian investor?

  43. Jerry
    April 11, 2017

    The real debate needs to be about indirect taxation, not those direct taxes that people try to (legally) avoid or governments love to headline and then chase popular votes by cutting.

    Off topic; I note that inflation appears to have only been held steady in the official data due to a drop in air fares, thus for the vast majority of people in the UK the cost of living has in fact risen once again.

  44. Caterpillar
    April 11, 2017

    I think as Jack’s comment alluded to, a better picture is needed so that we all understand the role of tax and money creation in the economy. The structure needs to be sorted/modified before number quibbling.

    For tax I would like to see consideration of just a consumption tax with an allowance so can not be via VAT but income – savings => this to redirect to investment and away from C (we have a productivity problem). Similarly we need to look at cashflow taxes for companies.

    Mone creattion needs to be split between govt social credit, current large banks but regulated and community banks.

  45. John
    April 11, 2017

    There was an interesting tax addition in the Budget which was the 25% tax charge on transfers of pensions to non EU countries.

    One of the fastest growing work groups is highly skilled people who then seek work in the global economy. So well paid individuals getting jobs around the world, lots in London. Part of their benefit package is a pension and I was hoping that the Government would look to ease the difficulty in these people saving for their retirement as they move from country to country.

    We can either design a tax saving vehicle for these people where we glean some tax revenue from them or we can hit them with a sledge hammer and get none.

    1. John
      April 11, 2017

      I’m directing them to wait till they are 55-58 to draw benefits in the main where there are dual taxation agreements so that the money can be paid gross. Very disappointed in that Budget addition.

    2. Narrow Shoulders
      April 12, 2017

      Surely just keep a UK bank account and PO box correspondence address and transfer the money as required.

      It’s what I intend to do with the state pension.

  46. margaret
    April 11, 2017

    As many have commented there are degrees of richness.Some get their brass by ‘knowing’ people, some get their brass by exploiting others talents; a common scenario these last 30 years i.e they take a large percentage for selling off people, some get their brass by stealing and conning and there are a few who slog , work hard physically and academically , have talent and have the luck to get on financially in life. It is such a shame to only reward these few with high taxes ..why bother ..sponge like everyone else!

  47. getahead
    April 11, 2017

    “In subsequent posts I will look at what this means for the detail of tax policy on income and assets.”
    Would you also consider John, how the size of the public sector might be reduced?

  48. Roy Grainger
    April 11, 2017

    Maybe start by devising taxes that are hard to avoid. As we have seen, increasing the top rate of income tax doesn’t actually increase tax revenue in any significant way. It seems to me sales taxes, such as VAT, are harder to avoid. Some of our VAT rates are lower than other countries, putting up VAT on some luxury items (expensive cars say) might be effective and lead to socially useful outcomes too.

  49. Andy Marlot
    April 11, 2017

    “It is clearly right that we will only have a successful economy if the rich share their surplus…”
    This one statement is so packed full of false assumptions it’s hard to even start but here goes. First it is far from “clear” except to the brainwashed that having large amounts of your money stolen at gunpoint by a group purporting to represent the people but not actually doing so, then redistributed through the most inefficient, violent and corrupt system ever devised by mankind makes an economy successful. One might even think that not having a vast, wasteful, inept, self defeating entity consuming a large proportion of the nations wealth could, in fact, be much better. The largest strides in human wealth and happiness happened before the welfare state and in spite of government not because of it.
    The real rich do not share their surplus with anyone. They are the owners, the ringmasters, the puppeteers. The people we are conditioned to regard as rich are merely the slightly better off, the ones that don’t live hand to mouth. The easy targets. No politician would survive long if he targeted the really wealthy like Rothschilds, Morgans, Rockefellers. We are just manipulated into squabbling about the scraps and how we should steal them from each other.

  50. Original Richard
    April 11, 2017

    ā€œ44% now pay no Income Tax.ā€

    I am not convinced that such a high proportion of the population not paying income tax is either good for democracy or for the responsible/respectful use of ā€œfreeā€ state provided services such as schooling and health care.

  51. Ken Moore
    April 11, 2017

    I hope that tomorrow we can resume discussions over the EU – there is much to discuss regarding Mrs May’s forthcoming betrayal of the Exit vote.

    Once again, the Conservatives are putting power above their principles.

  52. Lindsay McDougall
    April 12, 2017

    I do not have any objection to moderately progressive taxation, although it is progressive enough already.

    What I do object to is the constant desire of most politicians – all of most parties and 50% of Conservatives (the Wet wing) – for the State to spend considerably more than it raises in revenue. The fiscal position of the country is dire and the monetary position is worse. What will happen when base rate begins to rise and State debt is still 90% of GDP?

    We need to end ring fencing, which will require getting the 2015 manifesto off our backs at a General Election.

  53. Bryan Harris
    April 12, 2017

    Using subtle terms like coaxing does not make taxation any easier to swallow. It falls too heavily into the concept that we should all be happy and proud to pay our taxes…. which is utter nonsense of course when we see so much of our taxes wasted.

    There are many things wrong with our current ideas about taxation and one of these is that those that are rich are an endless tap of opportunity. You find plenty of people with money who are not rich, so this should be turned around somewhat to include those that have, if we are to go along this route.

    We are still awaiting the tax revolution we were promised more than 5 years ago. We live with a rule book so large and complicated, that adding more rules is more likely to result in more disparities…. First thing to do is to get this sorted, and create a tax system fit for purpose before we penalise any sector of society for political reasons.

    People that have money often spend more than those that don’t, so one thing that could be done would be to tax luxury goods at a higher rate…… and can we please go back to calling it purchase tax instead of VAT, taxation has rarely, if ever, added any value!

    We need a distinct shift away from personal taxation in a way that makes day to day living so much cheaper, less complicated and far less intrusive.

    I always wonder just why we have this complicated PAYE system where companies have to employ so many people to manage it, matching those in HMRC, when a company tax on head count would be so much cheaper and easier to collect!

    Come on John – twiddling at the edges will not improve anything – we need that tax revolution now!

  54. Peter D Gardner
    April 12, 2017

    All well and good thus far. But there are other considerations. One is that the thriving economy is one in which the money circulates. Otherwise it won’t do any good. So how is that to be done? The way it is done determines where exactly it can do most good.

    The second fundamental question is why focus on income tax? There are many other taxes in play. Complexity alone makes clarity of cause and effect difficult to achieve. So if the Government is to tax purposefully it needs to simplify most of all by limiting the number and variety of taxes in play.

    The third fundamental question is taxing income and property vs taxing consumption. Perhaps it is part of another broader more fundamental question but it seems to me that although there are differences in the effects of taxing property and income, consumption is fundamentally different from taxing either income or property.
    But the ranking is not important so long as all three come into the consideration very early on, because it is of overriding importance to limit the number of taxation tools in play.
    What we have at present is not a coherent policy but a desperate struggle to find something, anything, that can be taxed more.

    1. Peter D Gardner
      April 12, 2017

      PS I forgot the most important question of all!! What should the size of the public sector be? Need to decide that before considering where the money is to come from. Heaven knows Australia has problems of its own but one thing is clear. Its low public sector element of GDP (35% or so last time I looked) compared with UK (45-50%) is a significant factor in its success. Within limits the less the state is involved the more money is in circulation for others to decide where it should be used.
      A view I support is one, I think, I once heard Vince Cable of all people advocate at a seminar: every area of government expenditure should be reviewed to answer fundamental questions: a) why must the Government be doing it at all, b) where there is a problem can it be fixed by means other than taxation, c) if answers to a) and b) mean the government must use taxation, how can its use be minimised? This process should leave you with the target of a minimum public sector budget and still leave open options to use additional non-tax measures, such as users of government services paying for them in whole or in part (fairly standard practice in Australia).
      I really don’t see how changing the tax system can achieve very much without this process being applied first, given the position UK is starting from: a b awful mess.

  55. lojolondon
    April 12, 2017

    Assets should NEVER be taxed. Income should be taxed at a flat rate for everybody, because those who earn the least get the most benefit. Remove NI and tax credits entirely, they are dishonest ways of concealing the true tax burden. And remove tax on fuel, cigarettes, alcohol, insurance, etc, this is all retrogressive and very bad for our economy.

  56. Tony Hart
    April 14, 2017

    The rich invest their capital, because that is how they maintain their wealth. That investment provides funds for businesses and other beneficial organisations. So, why tax them any more? The problem comes when they spend their assets in ways that do not benefit the rest of us, like buying vast tracts of land on which they build mansions.

    How we prevent this from happening, I do not know. Perhaps a land tax, such as they have in Australia. Certainly, in a vastly overpopulated country like ours, a penal land tax would probably do a lot of good.

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