Taxing whilst promoting growth

Most people’s definition of the rich is someone better off than themselves. The millionaire feels poor in the company of billionaires.

Clearly, someone who has a decent home they own and sufficient invested capital to  be able to pay their bills for the rest of their lives without needing to take a paid job is well off. Many retired people however, are by definition in that category. Many when they retire own their own home and have sufficient accumulated pension to live comfortably without recourse to work. People who achieve that well before retirement age, usually through success in business  but sometimes through inheritance, have financial freedoms the rest of us do not enjoy.

I do not myself wish to punish people who through hard work and energy have bought themselves a decent home and built up financial savings for their later years. Governments of all persuasions used to encourage people to do both these things. There was mortgage interest tax relief to help home buyers, and unlimited tax free savings within a pension fund for the prudent. Recent governments have removed the tax relief on home purchase, and now have retrospectively limited the tax relief allowed to people who have saved and invested well for their old age.

I want to see the tax system allow people to succeed. Business success, when someone builds their own business from nothing, is a fine thing we should wish to encourage. High income and capital gains tax charges put some off building their business, or encourage people to sell out early. Buying and improving your own home is also a good idea. Why then make it more difficult with high Stamp duties?

There is a lot to recommend New Labour’s tax settlement for the better off. They kept the Conservative’s top  rate of Income Tax at a maximum of 40% for most of their time in office. They cut Capital Gains Tax to 18%. These two rates were somewhere near the optimum rates from the point of view of the total amount of revenue collected.  There is plenty of evidence that CGT above 20% raises less, and that Income Tax above 40% loses revenue. People with high incomes and substantial assets are much freer than others to  move their domicile or place of  business. They are also free to do less,  venture less, earn less, if the tax rate goes too high. CGT is very avoidable. Many people refuse to sell shares from their investment portfolios above the tax free allowance. Many people are now sitting on second homes or BTL properties that they do  not wish to sell because they do not want to pay the tax. It is easy to see CGT receipts going up if we went back to Labour’s uniform rate for all assets of 18%.

Stamp Duties are  now at very high levels for the dearer properties.  Once a home goes above £925,000 the marginal Stamp Duty soars to 10%, or 13% for a BTL or second home. Over £1.5m the levels are 12% and 15%. In the Thames Valley I have seen some executive new build  family homes on modest sized plots on the market for around £2.5m. That would mean the family that buys paying £213,750 of Stamp Duty. In Central London in the dearer districts £2.5m would not buy you a house.

These rates should  be brought down.




  1. Mark B
    April 13, 2017

    Good morning.

    Our kind host last sentence is rather telling. Here is a prominent Back Bencher making a single and profound statement. And it is TRUE !

    If the government did less, and lets face it, what it does do tends to favour large corporates and those with land to put bird-mincers on, then it would not need so much tax in the first place. It could then lower the tax rates and encourage growth and the ‘can-do’ mentality which has served this country and other Angloshere countries well.

    The government needs to get out of the, ‘Nasty Party’ mindset and learn to govern for all.

  2. Lifelogic
    April 13, 2017

    Rates are indeed far too high even for maximum tax revenues and they should be well below current rates. The Laffer point is not the optimum for the economy or the good of the people is it way above it. CGT, IHT, income tax, NI and Stamp duty are way above the best rates. CGT is not even indexed now so you are taxes on profits you have not made. As indeed are landlords thanks to IHT ratter Osborne. IHT threshold in the USA is over ten times the pathetic UK £325k the rates far lower too.

    Pension savings are not as you say “tax free” (other than the 25% tax free) they are just tax deferred. The absurdly restrictive and costly pension structures forced onto investors also effectively impose a “tax” (or cost and risks of running) onto pension savers. Still yet more pointless jobs for parasitic workers and bureaucrats I suppose!

    The best place to start is cutting taxes at least to the Laffer point and deregulation (which is always a win, win for everyone (but the few parasites who create jobs for themselves creating and advising on the complex regulations). A tax cut with no loss of revenue at all.

    1. Lifelogic
      April 13, 2017

      Plus it releases the many people doing all these essentially parasitic jobs to get a productive one instead.

      1. Hope
        April 13, 2017

        JR forgets to mention Browne raided pensions and not to be outdone so did Osborne! The only exemptions to a law t of tax that the rest of us pay being MPs.

  3. alan jutson
    April 13, 2017

    I fail to see why primary residence housing should be taxed at all, the same goes for utility services.

    These are the essentials of living.

    I was going to say next they will be taxing the air we breathe, but they do that as well with all of the fake green taxes on travel, congestion, parking and emission charges, which do nothing to improve air quality at all.

    The fact is the tax demand is too high because the Government (of all colours) what to run our lives for us, and the value they get on spending our money on a whole range of services and projects is very poor.

    1. Lifelogic
      April 13, 2017

      All sort of things that are essential for living are taxed, electricity, water, clothes, getting to and from work, shoes, houses, house repairs, imported food, sewage …… do not give then any ideas about the air we breath. If they can find a device to measure it they will surely start charging for that and the CO2 “pollution” (as they call it) that we emit when breathing out!

      1. oldtimer
        April 13, 2017

        They already have the idea. In the Blair years the Cabinet Office produced a paper in which it considered a tax on cattle for the methane they produced. The Aid budget has been used to fund similar research in Bolivia (I believe I have got the right South American country). Nor should we forget Brown’s incentive to switch from petrol to diesel engines to cut CO2 emissions, while failing to deal with NOX which actually is noxious. All too often tax is more about meddling in peoples lives than focussing on what its real purpose should be, namely to raise enough money to pay the essential costs of government as efficiently as possible.

        1. Hope
          April 13, 2017

          I am still waiting for the bonfire of quangos- starting with the expensive, but can mpetely pointless, Environment Agency (£1.5 billion). Now we are paying extra to local authorities for their work why are we paying twice? We are now also taxed on insurance premiums for the same thing introduced by Osborne.

      2. fedupsoutherner
        April 13, 2017

        LL. Yes, when you think of all the subsidies paid out for wind turbines to shut down and the extortionate price of the intermittent energy they do provide then it’s no wonder our bills are going up all the time. Add to that the carbon tax on coal, gas etc we are being taxed out of existence. Taxed off the roads with the price of insurance and fuel too. We are the highest taxed nation of the planet when it comes to vehicle fuel. Perhaps this is how they will control too many people on the roads. VAT is a disgrace too and is charged on almost everything that is necessary just to live. Whatever government gives us in allowances is eaten up with taxes on life!! How this supposedly conservative government can say they want a competitive economy is beyond me when they are choosing to go down the most expensive route for energy which affects EVERYTHING. When are they going to actually do something useful?

        1. Lifelogic
          April 13, 2017

          Plus all the EU common tariff taxes on food imports.

  4. eeyore
    April 13, 2017

    JR has warm words for those who have succeeded by their own efforts but no comfort for the inheritor of wealth, or even the plain fortunate. He draws attention to CGT and SDLT but not IHT. A line is subtly drawn between earned and unearned wealth, and implicitly the latter is up for grabs.

    I’d like to put in a word for the meritless lucky. Not all of us are talented and energetic. Not all have sharp elbows and a driving will to succeed. We might possess other virtues, or even none at all. Why should the good things of life be safe only with those whom government (i.e. politicians) think deserve them?

    The sanctity of private property, earned or inherited, merited or unmerited, used to be one of the great truths of Conservatism. It allowed the accumulation of capital reserves without which no great work can be undertaken, and armoured the citizen against the jealousy, oppression and rapacity of the State. When even a Tory of the Tories declines to defend it I think we should all be anxious.

    1. Lifelogic
      April 13, 2017

      Being able to give the money you have earned to your children or whom ever you like is a vital incentive to people to save and work.

      IHT is hugely damaging as it kills this in part.

    2. a-tracy
      April 13, 2017

      If they meddle with inherited wealth it will be a massive mistake, what else drives those who desire and can achieve social mobility, most of the time you’re motoring up from the bottom you can’t take out and spent or take too many holidays or be extravagant but if you’re fortunate you see your children and the goal is to throw them a couple of the rungs of the ladder higher up than where you started. If you don’t have children charities, causes close to your heart, sponsorships etc. generally start to motivate you. Start to deter this because you think the State can decide how to distribute wealth creation at your peril Mr Government.

      1. rose
        April 13, 2017

        It is fashionable to talk a lot about social mobility but we never hear about social stability. This we have lost, sacrificed to the great god, population churn. Inherited wealth and property had a great part to play in preserving social stability and continuity and should not have been demonised. All sorts of things were inherited: skills and crafts as well as farms and businesses, and other property. Specialised excellence cannot always be achieved in one generation.

    3. Mitchel
      April 13, 2017

      That “Conservatism” hasn’t existing for an awful long time.Mindful of the mid century revolutions in Europe and the momentum towards universal adult suffrage here,didn’t even Lord Salisbury,well before WWI say(I forget the verbatim but words to the effect that) “we are all socialists now”.

      I suspect he meant the upper classes should adopt the language and clothing of socialism in order to survive (as many of them have done – in the socialist-inspired bureaucracy);to use Lampedusa’s great quote “everything must change so that everything can stay the same”.

      For the most part,the Tory party’s anti socialism has been no more real than it’s euroscepticism.Thatcher’s “success” was partial and reversible.And we are lumbered with the accumulated debts and liabilities of this fudge.There is no possibility of the government repaying any of it’s debts and I am expecting/planning for a raid on capital come the next serious downturn.

      1. Lifelogic
        April 13, 2017

        As you say “For the most part,the Tory party’s anti socialism has been no more real than it’s Euroscepticism”. Indeed and Thatcher’s partial “success” was indeed more than reversed by Major, Blair, Brown and Cameron.

      2. eeyore
        April 13, 2017

        Did Lord Salisbury say that? The quote is usually attributed to the Victorian Liberal leader William Harcourt. What the deeply pessimistic Salisbury did say was, “Whatever happens will be for the worse, and therefore as little should happen as possible.”

        A dazzlingly clever man and still a joy to read.

      3. getahead
        April 13, 2017

        Thatcher’s “fudge” was that she was kicked out of office by her liberal cabinet members, many of whom (those still alive), are currently howling because the voters got the referendum vote wrong.

  5. Narrow Shoulders
    April 13, 2017

    “These rates should be brought down”

    True but should anyone who can afford to take on a £2.5 million house be paying the same council tax as someone in a house worth less than £1 million?

    If council tax were levied on purchase price (banded?) then little old ladies and others who live in expensive houses merely because of price inflation will be protected. This may also dampen the BTL market as recent speculative purchases will attract greater council tax and so be less attractive to tenants.

    Reply Council Tax bands are related to values

    1. alan jutson
      April 13, 2017

      N S

      I thought the idea of Council tax was to pay for the services that we all use, why should it be based on property values at all.

      Never saw anything wrong with the poll tax, as it spread the tax burden more fairly across the community as we all paid the same for the local services in our own area, this should have eventually made local elections rather more responsibly democratic and based upon performance of the local council and its members.

      1. getahead
        April 13, 2017

        Didn’t take into account “people’s ability to pay”.
        Abandoning it completely however was not the right way to go because it was indeed fairer than the property value system.

        1. alan jutson
          April 14, 2017


          “peoples ability to pay”

          Agreed, but the main house owner/occupier could aways choose to pay for those living in their house out of choice, then they would still be no worse off than under the present system.

    2. A.Sedgwick
      April 13, 2017

      Council Tax introduction was a panic measure after the sensible poll tax was derailed by trialling it in Scotland. Basically it was Rates Mk2 but spin was hard at work well before Blair. Those were the days when water was also included in the Rates for all.

      Councils should be drastically reduced in number, see Leo McKinstry Daily Mail article yesterday, and their reduced number self funded by sales tax with VAT abolished.

      1. The Prangwizard
        April 16, 2017

        Wasn’t it dropped because of the riot in Trafalgar Square? Violence pays off. Politicians always drop their principles and run scared. They claim to have misjudged the mood.

    3. Bob
      April 13, 2017

      @Narrow Shoulders

      Do people in expensive houses use public services more than those in cheaper properties? of course not.

      Council tax should not be used to punish the wealthy. This kind of thinking just panders to the green eyed monster. In some cases those people may not even have a lot of disposable income, say if they purchased the property long ago, inherited it or maybe just have a large mortgage which is being paid from income already taxed at 45%.

      But in any case, even if they are rich beyond your wildest dreams, they receive the same public services as everyone else and should pay the same as everyone else.

      1. Narrow shoulders
        April 13, 2017

        @ Bob I think you will find I addressed the point about asset inflation in my post. The tax should be based on purchase price.

        To reply from Mr Redwood, they are based on values but these values are not reflective of the true spread of housing prices.

        To Alan Jutson and others who say Council Tax is to pay for services that we all use then why is there a Central Grant from government? Increase the Council Tax take by basing some bands on overpriced property and reduce the Central Grant thus reducing the need for other forms of tax.

        To answer those asking if expensive properties use more services? Nthe y probably do not (unless they are housing refugee families with 8 kids) but nor do those earning large swathes of income use government services more yet the expectation is that there will be a larger income tax contribution from those who earn more. In this case there will be a larger contribution from those who pay more for their house.

      2. sm
        April 13, 2017

        People who live in costly housing, whether by choice or because an area has rocketed in value, will still use roads (which need maintenance and repairs), street lighting, police, public car parks, social care, libraries and green public spaces even if they are wealthy enough to send their children to private schools. All of this is run by your Council.

        I too thought that the poll tax was fairer, particularly considering the arbitrary valuations that were made when the Council Tax was introduced.

        1. rose
          April 14, 2017

          We call the Council Tax, Heseltine’s Folly.

    4. NHSGP
      April 13, 2017

      Abolish council tax. Abolish business rates.

      Only 20% of council income comes from CT.

      Small tax increase and give a fixed per capita amount to all councils.

      No need to collect the tax.

      Then its down to councils to get better value for money if they want to do more.

    5. Peter Parsons
      April 13, 2017

      “Reply: Council Tax bands are related to values.”

      Only in the loosest possible sense. In the street where I live there are identical houses spread across 3 different council tax bands. (Council tax banding is public information, so such inconsistencies can be verified by anyone). Such variation in valuations on identical houses is not defensible.

      Council tax should be scrapped and replaced by a local income tax sitting alongside the national rates, one local band per national income tax band. The only rule I would have is that no band can be set at a lower level than the one below, so a flat rate across all bands would be perfectly ok.

      It would make things much more progressive than Council Tax as each of us would then contribute in relation to our income, and therefore our ability to do so. (The Poll Tax was one of the most regressive taxes in my lifetime and was rightly scrapped.)

      Local Income Tax could be collected via HMRC simply by adjusting each individual’s tax code (so no additional burden or cost on any employer in the country. HMRC are already set up to do this as they already do it for lots of other things, so no real impact on them either. Income tax is collected monthly, so the local element could be distributed monthly, giving councils a regular monthly income stream comparable to how things work currently.

      The money that each local authority area currently spends on running a back office collections department could then be redirected into front line services.

      Local Income Tax would also do away with the need to have or process lots of the exemptions and adjustments currently needed under Council Tax (e.g. armed service personnel, single person occupancy, lower earners, pensioners etc.).

    6. MikeP
      April 13, 2017

      John they’re only related to values when houses change hands – unless you have another re-valuation in mind for those of us who have lived in the constituency for years ?

  6. Lifelogic
    April 13, 2017

    I was reminded yesterday of the insane law that says insurance premiums and pensions have to be gender neutral rather than related to the risk taken on – so women over pay for life cover and car insurance and men get ripped off on annuities, pensions and similar. This is such bonkers market intervention that surely even lefty, PC dope T May can see it needs repealing?

    1. Bob
      April 13, 2017


      Once Britain regains self rule there will be no reason to continue this PC nonesense.
      The idea that a board of directors has to be 50/50 male/female by law is preposterous. Are they going to prescribe quotas for disabled, LGBT, non binary, hair colours and ethnic or religious minorities?

      1. Mitchel
        April 13, 2017

        In theory but the Establishment,Brexit or no Brexit,appears to have no appetite to dismantle this stuff.Listen to what May herself has said recently-social engineering is here to stay.

        1. Bob
          April 13, 2017


          which is why we need to redouble our efforts to elect libertarians.

      2. rose
        April 13, 2017

        If they go any madder with the quotas there will be no heterosexual men of European descent left in employment or univeristies because the other categories will be so numerous.

    2. Richard1
      April 13, 2017

      I think that is an EU regulation

  7. Anonymous
    April 13, 2017

    Those who retire early are mainly police officers, teachers, fire officers… not business people running SMEs or those striving in the private sector. These pension pots would take a small lottery win to generate the same return – no way has 30 years of contributions achieved this.

    The country is deeply indebted and someone is going to have to pay. Presently there is no fair way of doing it. We first have to recognise that we live in a Socialist economy before we can even think about an equitable sollution.

    The effective levels of taxation affecting young graduates is particularly appalling. It is imprudent to get a degree. We still have the situation where the wise move is to get knocked up at a young age and attach yourself to the state teat.

    Let’s make it possible for those who want to pay more tax to do so on a voluntary basis. It would be useful to be able to ask Socialist commenters, when they propose redistributive policies at the expense of those who have worked hard “So. Do you pay the voluntary excess tax and how much ?”

  8. Roger Ceccarelli
    April 13, 2017

    If only the Government would spend less. Period.

    For instance, the NHS doesn’t need more money throwing at it. It needs a stricter more focused (reduced) remit, better management, and to be patient led. Here’s another example of profligacy – smart meters. And yet another – Foreign Aid budget. Then there’s HS2, Social Security and the UK’s continued contributions to the EU. They’re all tip of the iceberg, and it’s clear the Government MUST reduce public spending. Significantly.

    Spend less, tax less. Smaller Government. Allow people to keep more of their own money.

    That’s the only answer.

    1. Lifelogic
      April 13, 2017

      The NHS need real competition from private providers, it is killing thousands. Free at the point of delay, rationing, incompetence and non delivery.

      The NHS is the envy of no one sensible at all, let alone “the envy of the World” as politicians & BBC types endlessly put it. Another dire, virtual state monopoly that is killing far more efficient competition by being “free”. It is not that easy to compete with “free” especially as your customer are so highly taxed and have to pay four times over to go privately.

      1. Lifelogic
        April 13, 2017

        Tax relief for anyone taking private medical insurance cover for their family would be a very good start indeed. That and kill Hammond’s outrageous 12% IPT tax on it!

      2. fedupsoutherner
        April 13, 2017

        L/L Best come to Scotland then where everything from parking to a packet of paracetamol is free on the NHS. The service is going downhill with waiting lists going up and up even for what are supposedly urgent cases but never mind. When you’ve got a hangover from a night on the booze you can always get free paracetamol! Still it’s a vote winner for the SNP in Glasgow and such places.

      3. Andy
        April 13, 2017

        The NHS needs to be broken up and returned to private ownership. This Stalinist idea has no place in the modern world.

    2. Bob
      April 13, 2017

      Well said Roger, you’ve hit the nail on the head.

    3. Man of Kent
      April 13, 2017

      Agreed – good points .
      The trouble is that government has found how easy it is to print money .

      Every month we print [overspend ] £7 or 8 or 9 billion and put it on the account .

      It is too easy to be lazy and not grip the situation .
      I sense we are just drifting along without bringing matters under control .
      Meanwhile as our debt increases so the interest bill has risen to some £36 billion – the size of the defence budget.

      We are in no state to weather the unexpected .

      As an ardent Brexiteer it grieves me that we are neither better prepared nor preparing for an independent existence .
      Osborne and Hammond have much to answer for .

      1. rose
        April 14, 2017

        The broadcasters never mention QE or ultra low interest rates. The inevitable inflation is continually being blamed on Brexit.

        1. APL
          April 15, 2017

          rose: “The inevitable inflation is continually being blamed on Brexit.”

          Except the inevitable inflation has been part of government policy for a century. For about thirty years it has been declared that 2% per annum is government policy.

          The Pound is the new Lira.

          1. APL
            April 17, 2017

            APL: “2% per annum is government policy.”

            Talk about hidden in plain sight!

    4. Peter Wood
      April 13, 2017

      You are of course correct, and I wonder why our host has decided to enquire about this side, the taxing side, of the income and expense equation? Mr. Redwood?

      Government is too large, too wasteful, and needs to return to basic conservative principles as mentioned. (2 large aircraft carriers that are easy targets for anyone with a set of supersonic missiles comes to mind. Fighting the last war again?)

      PS. Can you PLEASE suggest to Mrs May that she send our embarrassment of a foreign secretary go on a training course for 6 months?

  9. Dave Andrews
    April 13, 2017

    SDLT can be avoided altogether if the property is owned by a company and that company’s shares are sold rather than the property itself. Very useful for offshore trusts.
    This loophole needs to be closed, which would make Central London houses less attractive for tax havens and perhaps prices much more affordable as a result.

    Reply There are tax provisions on company purchases too

    1. Lifelogic
      April 13, 2017

      I think you will find the SDLT “loop hole” for companies has already been closed and there is the new enveloped dwelling tax mugging too.

  10. agricola
    April 13, 2017

    As I said yesterday, but so far not moderated, despite submission earlier than most, government lives like a leech on the backs of the aspiring and successful. They are always there wanting a slice of the action. Just like the feckless ten child dependent they cannot wait figuratively to go out and buy a wider screen telly. I would submit that government as constructed in the UK just lives on the back of society, getting in the way of progress and offering little benefit. It is the obese over eater that is genetically incapable of slimming.

    To highlight government incompetence and short termism, we need many more doctors. Government thinks better to poach these from developing countries at little or no cost even if they can barely communicate in English, than to train 700 plus of our own well qualified students who mostly do speak English and really want to be doctors. I would not let government near the proverbial piss up in a brewery, knowing they would urinate in the vats.

  11. Bert Young
    April 13, 2017

    High priced properties in my area are not selling due to the high tax that would be levied . This frustration works all the way down the property ladder market and is no benefit to anyone . Osborne made a huge mistake .

    Hammond has done the same thing with his tax on the probate system . It is a tax and it should be thrown out . Post Brexit a prime responsibility of Government was to stimulate and encourage our economy ; it has not done that . We need to show to the world that we are an attractive place to house businesses of all types and to become wealthy . This simple message ought to penetrate the brains of “remaining” Hammond .

    1. Anonymous
      April 13, 2017

      Bert Young – The refusal to pay capital gains tax is greed. The properties have increased in value beyond wildest dreams yet owners refuse to pay relatively modest tribute to the governments that facilitated it.

      Instead the young will have to pay. First on tuition fees, then on interest on tuition fees, then on the higher rate tax band they need to reach before they can get to the point where they become mortgageable enough to buy these lousy homes.

      For their sakes I hope they don’t stand for it.

      1. Know-dice
        April 13, 2017

        And interest on tuition fees reportedly going up to 6.5%

        How does the Government square that with the BOE rate of 0.25%?

      2. Peter Parsons
        April 13, 2017

        Totally agree. The implied social contracts between the generations are slowly being torn up. When I went through the higher education system, those of working age funded my education through their taxes, investing in me such that, now I am in the prime years of my working life, I am able to do well and to return that investment in terms of tax for pensions, healthcare etc.

        With tuition fees and maintenance loans, my generation is getting away without having to make the investment in the next generation that I received. If, when I reach retirement age, the next generation turn around to me and say “your generation didn’t invest in me, your generation saddled me with debt that you didn’t have to incur, we can’t afford to pay your state pension”, I’d be annoyed and disappointed, but I wouldn’t feel able to argue against it.

        1. libertarian
          April 14, 2017


          I would feel perfectly fine about arguing against it.

          Unless you are doing a necessary degree i.e. medicine, law etc ( i.e. one mandatory for the job) DO NOT go to university , its a waste of time and money and it will NOT get you the job of your dreams. Instead do an apprenticeship, earn while you learn , qualify without debt and you will also earn more money over your working life than a graduate.

          Our generation IS investing in the next , or at least trying to. Its just not doing it in the same way as 40 years ago because the World changed !!!

          1. Anonymous
            April 14, 2017

            The useless BA degrees subsidise the useful ones.

            Compare 9 hours of tuition with 25 hours of tuition for the same money.

          2. Peter Parsons
            April 15, 2017

            The Treasury’s own figures show that the money the government spends on supporting apprenticeships is a much smaller sum than the amount saved by shifting the cost of getting a degree onto students. This is despite the fact that the Treasury’s own research showed that the ROI in terms of long term additional tax revenue on funding degrees was higher than any other form of public spending.

            Every government in my adult lifetime has made the lot of those in post-18 education worse. Every one of those governments, of all hues, has made promises which they subsequently reneged on. The only conclusion I can draw is that most voters are in the “will not be a student in the future” category, so aren’t affected or impacted by such policies.

        2. rose
          April 14, 2017

          When I went to university only 4% went. So no comparison with today when 50% plus a lot of foreigners go.

          The older generation have been done out of interest on their savings for most of this century. The younger generation have made capital gains out of those savings, by borrowing at no real interest. If there is intergenerational theft, it is there.

          The older generation do a lot of babysitting and childcare to enable the younger generation to enrich themselves in a way that wasn’t open to their mothers.

          Then the older genereation have been very generous to the younger generation in helping with house purchase, school fees, etc.

          All in all, there is not much to apologise for, other than having allowed the population to double, thus making life harder and more unpleasant on every front, but that was a very difficult one to oppose and caused many a career to end.

          1. rose
            April 14, 2017

            PS you are right about the apprenticeships being missing but that, I am afraid, is a symptom of bringing in cheaper, better educated, and trained labour from abroad. I remember when employers used to nag the government and councils about the low standards in our schools and eventually a small effort was made to improve them, but alas, the employers no longer nag: they no longer need to. So instead, the universities are dropping their A level grade requirements for certain categories of school leaver, and that is after A levels have already been debased.

          2. Peter Parsons
            April 15, 2017

            The older generation are those who have benefited most from the growth in asset values caused by QE as they tend to have the most assets. Would the average home-owning pensioner be happy to gain a couple of percent extra interest on their savings at the expense of a third to a half of the value in their house?

            I bought my first property aged 27 at a cost of about 3x median earnings. Those same properties now sell for about 9x median earnings. I don’t know too many of today’s 27-year olds who could raise that level of finance to get on the first rung of the housing ladder.

      3. Hope
        April 13, 2017

        Not if you are an EU student studying in the U.K., particularly Scotland. They do not pay tuition fees at Menzies Campbell university despite promises made by his libdem party! Unbelievabley we are paying our taxes to educate EU competitors while giving our own children a lifetime debt, rather not we but the Tory govt.

        1. rose
          April 14, 2017

          We are also paying for “child refugees” to go to university. A huge draw.

      4. a-tracy
        April 13, 2017

        Anonymous I agree – They will not stand for it at the moment they’re still idealist wait until they want to start a family or buy a home and they’re only getting to keep 59% over £17k (or £21k if they graduate 2015), it’s the 50-year-olds of today that are going to get taxed till they squeak when they take over the government of the UK.
        There will be a day of reckoning, don’t forget these intelligent ENGLISH graduate students are only just starting work, discovering that their elders and betters are suggesting they can’t retire until they’re 70 with a state pension funded by their national insurance tax that is being contributed to at a rate of 25.8% over £8.5k if they’re an employee in the private sector.

        There is going to have to be some sort of 40-year mortgages available for them. They won’t want to rent when they realise the welfare state can’t keep giving pensioners free housing when they stop work and can’t afford their rents and rates because their private sector pension posts and nest give pathetic returns.

  12. Antisthenes
    April 13, 2017

    As you quite rightly point out there are optimum levels at which they will attract the most amount of revenue from tax. Either side of which tax revenue will decline. The Laffer curve is a very good means in which to calculate what those levels should be. A truism that is lost on a very many of us especially on the political left. Resulting in levels not being set based on economic common sense but for political reasons and to control behaviour creating imperfections into markets which are seized upon as being the result of laissez faire capitalism and therefore the call for the banishment of capitalism.

    It is not of course it is because of the effects of socialising society. Despite the obvious disadvantages and counterproductive consequences of socialising the clamour is for more of it. The chances are that the drive to socialise will continue unabated the consequences of which will assuredly make us regret that choice.

  13. Ian Wragg
    April 13, 2017

    Car insurance going up due to tax and government policy. Less people especially incomers not insuring their cars so insurance companies adding a 10% premium to cover uninsured claims.
    The government never looks for unintended consequences as with Gideons mugging property buyers with his insane policies.
    Air passenger duty means we change planes in Amsterdam rather than pay the government £400 duty.
    ISA ‘s cashed to lower probate charges.
    Stop wasting and get out of our lives.

    1. bigneil
      April 13, 2017

      You forgot the “Cash for crash” schemes – seemingly operated mainly by yet more
      of our human importations – which the insurance companies do not punish. The people who falsely claim should just be blocked from getting any further insurance by the MIB. Also charge them personally for the police and NHS costs involved in any of the so called accidents. Never being able to drive again might focus their minds.

    2. Anonymous
      April 13, 2017

      A tax on responsibility and one that will result in less responsibility – therefore more tax on responsibility…

      A downward spiral.

      Kids have got to drive !

      1. Anonymous
        April 13, 2017

        Go to a rural McDonald’s close to closing time. Mysteriously loads of middle aged people turn up to drink coffee. Ever wondered why ?

  14. John Plumb
    April 13, 2017

    Unfortunately, you failed to mention that in reducing the CGT to 18% the Labour Government also abolished indexation. This effectively penalised basic rate tax payers and rewarded higher rate payers. Due to increase in CGT allowance and the changes brought in by the Conservative Government that linked the tax to the tax bands, the higher rate payer is back where he started, but the lower rate payer is still paying approximately twice the amount he waould have paide prior to all the changes.

  15. Bob
    April 13, 2017

    Something else to consider Mr Redwood is that when people play by the rules, the government should not retrospectively change the rules.

    If someone pays contributions into a pension for 30 or 40 years, they should not have a retrospective Lifetime Allowance placed on their pension when they reach retirement age.

    New taxes should only apply to subsequent contributions.

    When I sell products to my customers, I can’t go back to them after the sale and change the price or the payment terms.

    1. Lifelogic
      April 13, 2017

      Indeed but moving the goal post is just what government do. Very damaging it is too.

    2. Know-dice
      April 13, 2017

      “I can’t go back to them after the sale and change the price or the payment terms.”

      You should ask BT about that!!!

      They charge in advance, then when they put their prices up credit you your advance payment and charge you the new higher price.

      1. Bob
        April 14, 2017


        This is why I don’t use BT services.
        They have never gotten beyond their monopolistic mentality inherited from the GPO.

        Anecdotally, I’ve yet to hear anyone with anything good to say about them.
        Maybe some of Mr Redwood’s readers can contradict me?

    3. Deborah
      April 13, 2017

      This is a particularly bad and unnecessary policy when the government already limits pension contributions at the start.
      It is a penal tax on successful investment and/or the vagaries of the market.

  16. formula57
    April 13, 2017

    Indeed the well-off can without much effort ” move their domicile” but as we learned from (named Labour figure ed) of blessed memory the tax provisions that make that advantageous whilst still remaining UK resident are somewhat awkward in the modern context and it is regrettable that action to close off this source of tax abuse has not been taken.

    Now citizens are required to look to their own resources where once they could look to the State, especially so in the context of further education provision but in other areas too, and charges for obtaining things from the government (like passports) are typically high, lessening the tax burden would seem appropriate.

    1. Lifelogic
      April 13, 2017

      Not at all easy to move your domicile! Tax residence perhaps.

  17. Thames Trader
    April 13, 2017

    The chancellor should focus on increasing the number of transactions instead of trying to squeeze the maximum tax out of each transaction. Each house move generates economic activity with use of tradesmen and sales of appliances, DIY materials etc, thereby maintaining jobs and generating VAT, income tax etc. Encourage owners of large houses to downsize by reducing or eliminating stamp duty when trading down in the market. This allows others to move up in the market. My proposal is simple. For anyone trading down in the market take the % value of the new property compared to the old, apply that % to the value of the new house and pay stamp duty on the result. The further someone trades down, the greater the tax saving.

    Example 1. If you own a £1m house and buy one costing £500k the new one costs 50% of the old one. 50% of the price of the new (£500k) house is £250k. You pay stamp duty on £250k, which is £2.5k. (Compared to £15k stamp duty on a £500k house currently)
    Example 2. Someone with a £1.5 m house buying a new one costing £900k. The new one costs 60% of the old one. Stamp duty is paid on 60% of £900k (£540k) which means stamp duty is £17k (compared to £35k currently)
    Example 3. You own a £750k house and buy a new one in a different area costing £400k. The new one costs 53% of the old one. You pay stamp duty on 53% of £400k (£213k) which is £1.8k (compared to £10k currently).

    With my proposal the Treasury still gets some tax in most transactions which, although less than under the current stamp duty regime, is more than if the house owner doesn’t move at all. The Treasury also gets full stamp duty from the buyer that’s trading up in the market. Everybody wins.

  18. NHSGP
    April 13, 2017

    unlimited tax free savings within a pension fund for the prudent.

    Spin alert – bells – kaxons.

    It’s not tax free. It’s tax deferral.

    Someone is central office is trying to set the agenda that more tax more tax and more tax is needed.

    It’s back to those debts John that you don’t want to talk about.

    30% of taxes go on debts and that’s rocketing.

    have retrospectively limited the tax relief


    It’s because you need to borrow even more from the future to pay for the past debts. So you restrict the ability of people to save for their old age because you are desperate for tax now.


    Because of that 12.5 trillion pound debt.

    Can you bring the rates down?

    Not a hope. Those debts are too large. Since you won’t publish them on the balance sheet people are deluded into thinking austerity is a policy and not a consequence.

    1. APL
      April 14, 2017

      NHSGP: “30% of taxes go on debts and that’s rocketing.”

      That is shocking. Would you kindly provide a link?

      30% of tax revenue to pay UK debts – interest rates are at 0.25%

      What would happen if rates went back to historical norms of 2 – 3%

      PS. Bored with the captcha thing.

  19. JimS
    April 13, 2017

    The elderly with home and capital don’t have much financial freedom, they’ve got what they’ve got and have little opportunity to add to it, rather just sit back and watch others take it away from them, be it by ‘double glazing’, taxes or care costs!

    A tax that makes no sense to me is insurance premium tax. Isn’t insurance a good thing and to be encouraged? It is another area where people seek to help themselves to others’ money, e.g. ‘legal costs’ and ‘whiplash’ for car insurance and insurers taking a premium and then claiming against another insurance that the client holds and has paid a premium on. (A friend took out cycle insurance. The bike got stolen, the insurer claimed against my friends house insurance, he lost his ‘no claims’ bonus on that so he paid three times).

  20. Alastair harris
    April 13, 2017

    Reducing rates is not the answer. Simplifying and scrapping is. Ask yourself, does it have to be so complex? The interplay of the different taxes offers plenty of scope for “tax planning”. In practice all this really does is provide employment fir my legal colleagues. Any changeover period is always disruptive, but a combination of income tax (simplified to one rate and one allowance) and VAT with no exemptions apart from a threshold on business to reflect the collection cost (exempt small business) is both overall progressive, and capable of delivering the required income, at a lower cost. And reducing the complexity frees up resources to more productive use.

    1. Anonymous
      April 13, 2017

      £12.5 trillion pound government debt.

  21. acorn
    April 13, 2017

    I would still go with the IPPR suggestions. Council tax is regressive across a number of different measures; is paid by most households and is by far the most important source of revenue among taxes based on wealth. 0.5% of residential property value per annum, paid by all. including individuals, companies, trusts and foreign owners.

    A land value tax needs introducing. A new tax on the value of all undeveloped land would help build the infrastructure for a more comprehensive tax.

    Replace Inheritance Tax with a Lifetime Receipts Tax. Inheritance tax has little popular support and raises little money. Replacing it with a lifetime receipts tax would make the tax system fairer and more efficient. The UK’s Inheritance Tax is not, in fact, an inheritance tax; it is an estate tax. It is calculated on, and paid by, the estate of the deceased, not by those inheriting. Capital Receipts Tax, or an accessions tax is not a new idea. It was put forward by the Institute for Fiscal Studies in 1973. Ireland has had a Capital Acquisitions Tax since 1976.

    Realised capital gains are subject to tax during a person’s life but unrealised capital gains on death are not taxed. One crucial difference between Inheritance Tax and a Capital Gains Tax is that a person’s main home is not subject to capital gains tax but is subject to Inheritance Tax.

    UK Property and Wealth Taxes rake in £62bn (Council tax, Stamp duty land tax, Inheritance tax, Capital gains tax, Stamp duty on shares). You could replace all with a progressive Council Tax going up to 1% per year on £10+ million residential property.

  22. Mitchel
    April 13, 2017

    O/T but interesting to note that Ambrose Evans-Pritchard in today’s Telegraph is talking up the chances of the hard left candidate in the French elections :-“the meteoric rise of Jean-Luc Melenchon on a Proudhonist-if not Bolshevik-platform has changed the equation….Both candidates (he and Le Pen) are anti-German,anti-American,anti-globalist,anti-NATO and pro-Putin.Both want some sort of parallel currency or sovereign monetary control”

    He even raises the prospect of a LePen – Melenchon run off.I don’t know how realistic that is but if the French people really want change,they can’t seriously vote for Macron.

    1. ian wragg
      April 13, 2017

      Mitchel, your last paragraph could be the best solution for France. The place is a financial mess and only a revolution (yes again) will cure it.
      My French colleague is appalled at what’s going on and his 33 year old son who speaks 3 languages fluently and has a degree in one of the sciences can’t find work.
      His father who is beyond retirement age continues working too support him and his family.
      They are taxed almost out of existence. His tax slip ran too 9 pages.

      1. APL
        April 14, 2017

        Ian Wragg: “His tax slip ran too 9 pages.”

        Well, somebody has to pay for the wreckage in the banlieue.

    2. Mitchel
      April 13, 2017

      Explored further-and expanded upon-in Jonathan Miller’s article in today’s Spectator :-“Emmanuel Macron is France’s Ed Milliband,not it’s Justin Trudeau”

  23. The PrangWizard
    April 13, 2017

    I don’t envy ‘the rich’ for being rich however it is defined. I object to the behaviours many adopt when they become rich along with those who have been rich for some time. It is their behaviour which tempts many to find some form of punishment.

    I welcome the governments attempts to move away from taxes on savings, but there is a considerable way to go on this; it was a surprise when Mr Hammond reduced the dividend relief this budget – a bad sign I thought. I like to see this reversed and the PSA go up to £5000. The attack on pension tax relief by Gordon Brown many years ago was a grave mistake from which we are still suffering today. There should be more incentives to save for the ‘rainy day’ as well as retirement.

    I ought to mention that I live on a modest company pension, and with the state pension I can fairly easily cover my modest living costs. I am fairly comfortable but not I think ‘rich’.

  24. Caterpillar
    April 13, 2017

    I think there are three general issues here and the first two always distract from the third (for personal and associated get-elected reasons);

    (1) What should be the level and source of tax? This is asked within the largely existing tax system.
    (2) The tax system is too complicated – let’s simplify, but keep a traditional view of what tax does.
    (3) The purpose of tax and money (creation) in the modern economy is ignored/not understood. Everything needs to change.

    As far as I can see (3) is where the focus should be. In the simplest terms tax and money creation (i) control/enable for what resources are used and who benefits from production, (ii) smooth growth. This needs to be the focus. Deciding the colour of curtains and where people sit in a house that is falling down is too short term, a new house is needed.

    (Ignoring the above, within the current system, both Govenment and BoE seem to have focussed too much on AD and not enough on long run AS.)

  25. William Long
    April 13, 2017

    As you say, Capital Gains Tax is to a great extent voluntary and more is certainly paid when the rate falls to a level which seems no big deal. The great injustice of Inheritance tax is that it too is voluntary, but only to the very rich such as owners of landed estates or unquoted businesses. Of course anyone can avoid it by giving their assets away and living seven years, but again this is an option only to those with sufficient wealth to leave themselves with enough to live on as well. The people hardest hit are those who have worked hard to amass modest savings on which to live in retirement and these savings will have been made out of income that has already been heavily taxed as it arises.
    The injustices of this tax are well illustrated by the number of exemptions that it has been found necessary to make and it should be abolished. Why this is not obvious to the Conservative Party is very difficult to understand.

  26. turboterrier
    April 13, 2017

    Sadly for us John is that, for all the ideas and visions we have of a future are just that words and dreams because you are a team of one trying to do your best but will those in the cabinet do anything about it? NO.

    To raise tax especially to deal with our horrendous national debt should be very easy and should never impact on the majority of the population.

    The Chancellor should take a very long hard look on the millions if not billions that has been spent on chasing the dragon of trying to control climate change. Wether it be solar field, panel to single or multiple turbines and bio mass, they all receive subsidies for operating. History will show that the politicians who allowed for the fortunate few to blindly follow this religion have done so because of the massive promise of the full potential and safe in the knowledge that will not be taxed too heavily to make it really worth their while.

    Companies, house holders who generate power to the grid should be taxed to enable the maximum profit after tax to be set at 20% nett. This will apply to constraint payments and any other form of handout, subsidies. Power companies will be paid to turn off their turbines in the summer due to the ongoing increase in solar panels! Economics of the madhouse.
    House holders if not taxed, asigned to business rates, it is all money to the exchequer. It is the better off who can afford all these options in the first place and we add cream to the coffeee by paying them extra. The 20% nett profit on turbines only hits a few landowners but they are still left with a tidy sum for doing three fifths of naff all.

    April 13, 2017

    Stamp duty should be abolished. Why should people pay more tax, if they move more? There might be a case for people in more expensive housing paying more but not because you move

  28. behindthefrogs
    April 13, 2017

    There is no reason to reduce stamp duty on higher value properties. It is unlikely that it would yield any more revenue. There is a case for increasing the number of bands. It should be aimed at putting downward pressure on property prices.

  29. John
    April 13, 2017

    Here is another wealthy group that benefit from our tax system.

    Take a (migrant ed) on average wage back home of about £6500k a year after tax.

    He or she can work here on rates of pay atleast double that (Min wage) average and often more tax free as here you can earn £11500 tax free, the Personal Allowance.

    There is one other country in the EU that has a tax free personal allowance being Germany, something just under £9000 from recent memory.

    They can work here for a few months earning £11500 tax free, then go to Germany earning another £8500 tax free all in under 6 months and bank say 3 x the average net income in (their home EU country ed) with just 6 months work.

    That would make them wealthy in their country all thanks to our tax system and Germany’s.

  30. MikeP
    April 13, 2017

    I think most politicians, and certainly most Chancellors and their armies of civil servants, think we’re soft in the head. Many of your loyal followers John will remember the relatively small Government days of single income households. True some folk may have had to work Saturday mornings as well as Monday to Friday but that one income covered all domestic needs of housing, food, utilities, even the odd holiday. But then someone realised that stay-at-home parents were another source of tax if only we could get them out to work. Enter the equalities age, feminism, consumerism, keeping up with the Joneses, the “Abigail’s Party” brigade.
    But the unquenchable thirst of big Government didn’t stop there. If the second parent goes out to work as soon as the maternity pay runs out they can employ a child-minder who will also pay tax directly or indirectly. Then you can get tax from the nursery staff where the kids go while the parents are at work, their dog-walker, cleaner and a whole lot more.
    Just tell your mates to cut the size of the State John, that’s what Conservatives are supposed to do.

  31. Caterpillar
    April 13, 2017

    I thought this

    And the comments made make a nice compare and contrast exercise for us all, six years on.

    April 13, 2017

    Keeping Capital gains Tax at 28% on second homes is detrimental. Buying property for many is not just about holidaying but was done in order to build a pension pot from the accretion of value in land. Not only does this therefore not get the relief on Revenue recognised pension schemes but since the rate is above the basic rate of income tax such investment is penalised.

  33. Jack
    April 13, 2017

    To grow the economy we need massive, and I mean huge, payroll tax cuts. I’d like to see a good discussion about the best way to go about this: cut the NIC rates directly or raise the personal allowance threshold? etc etc

    But can we please end austerity and get the economy booming at some point please?!

    If JR and his party are so irrationally afraid of government debt, even though it’s literally just the money supply, then they can still force banks to create money instead like this:

  34. Mark
    April 13, 2017

    I see no harm in keeping a high level of SDLT for some categories of purchaser. Overseas buyers predominate at the expensive end of the London market, and since they pay little else in tax in the UK, it does no harm to collect some tax from them. Whether we really wish to see the continued expansion of the BTL sector at the expense of owner occupation is a political decision: it is clear that over 80% of households would prefer to own than rent, and we are now down to 62% owner occupation. Imposing additional SDLT was meant to slow the rate of addition to BTL portfolios which it has probably done to some degree, although the purpose of withdrawing mortgage interest relief as a BTL business expense is highly dubious, as it will likely lead to higher rents and less maintenance of BTL properties, while potentially exposing some tenants to being evicted because their landlord runs into financial difficulties and the property is repossessed.

  35. Lindsay McDougall
    April 14, 2017

    Stamp duty should, like betting duty and share dealing, should be abolished. Taxing transactions that have not generated wealth and are only transfer payments makes no sense. We should on the other hand start to get rid of perks and bribes.

    There are some concessions we could do with getting rid of, following Nigel Lawson’s dictum “Taxes should be low and everyone should pay them”. Why cut corporation tax for no other reason than to align Northern Ireland taxes with those of the Irish Republic? Why cap the amount that people have to contribute to their own old age care at £70,000, a measure proposed from 2020? Someone with a house worth £500,000 can easily finance more via equity release.

    Incidentally, given that the interest rate on student loans is about to rise, what is the position of someone employed at the minimum wage but who has made a capital gain. Does that person have to pay CGT and pay off the student loan?

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