Oct 01 2007
Some Conservative tax reductions
It is welcome news that a Conservative government would cut taxes on families, would raise the Inheritance Tax threshold, and would cut Stamp duty at the bottom end. These are all moves in the right direction.
What we need in the UK is an amendment to the Treasury model, to show how much extra revenue you can raise by lowering tax rates on profits and higher incomes. Whenever we have done it in the past the rich have paid more, and business has paid more. The same is true of the Irish and US experience, where they have cut taxes in recent years. It is a win win. Ireland has not only slashed its corporation tax rates compared to the UK - down to 12.5% - but they have enjoyed much stronger tax revenue growth and have increased public spending faster than us as a consequence over the last ten years.
It is high time the UK debate moved away from the pathetic Labour knee jerk response to any tax cut, that it is not affordable. The things that are not affordable are the tax rises that Labour are now imposing alongside their credit squeeze.
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
One of the best ways to reduce tax is a return to one of Mrs T’s policies, viz getting rid of all the government’s quangos.
Every week there seems to be a new agency or regulator, each with the ability to issue fines…Kerching.
I would also like to see the government stop using the criminal justice system as a stealth tax, as this brings the law into disrepute. People will loose respect for the law if it is seen as just another tax raising exercise. When one quango issues “a record fine” to another public body, who do they think in the end pays this fine? Of course we do, the tax payer. We have recently seen the BBC and a couple of NHS trusts fined, how crazy is that? We are effectively fining ourselves. If a NHS trust is fined by a government’s quango, is this not the same as a funding reduction as after all, it takes money away from frontline services?
Mr Cameron is right to try to cut down on the compensation culture which has emerged in recent years in this country.
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In politics the truth and the perception of truth are often two different things are they not? Experience tells us that the Laffer Curve is true and that socialism never works out in practice. If you challenge either of these mantras, however, and the press will brand you as a weirdo (certainly the BBC would).
‘How will they pay for tax cuts’? - That will be the question.
For my part, I think a smart move from the shadow chancellor would be to commit to public spending growth at 1% less than GDP growth over a full cycle - in perpetuity. That would enable plenty of tax cuttting.
Tax and public borrowing are outcomes. The real driver which can get you into a vicious circle or a virtuous one is spending. Gordon has us in a vicious circle right now. Only a real terms contraction of public spending has any economic coherence in the long run. The challenge is to sell that to an electorate where 1 household in 5 is wholly dependent on benefits and large swathes of the remainder are in public sector employment.
What’s good for the country may be electoral suicide.
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…and another point…
Spending less does not mean delivering less - unless you only have the managerial competence of New Labour (a party where not a single member of the Cabinet has EVER had a real job - unbelievable).
I think a strong theme of Conservative attack should be on managerial competence. This is after all what people expect of a government and there are so many horror stories of basic , gross incompetence to point at.
In a country where the government spends hundreds of billions every year it would only take a small efficiency improvement to pay for the entire defence budget for example!
Then there’s the issue of sturcturally embedded waste and nonsense spending. If Osborne took a meaningful look at the billions directed at various quangos, at ID cards, at most of what the DTI does, etc he could find many, many billions almost at once.
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I think you will have a hard job persuading Labour’s state propaganda machine - the BBC. They are responding to George Osborne’s speech with just that knee jerk reaction that you rightly ascribe to Labour.
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The Tories haven’t forgotten low earners have they? Gordon sneakily doubled their tax burden last budget and nobody in the Tory party seems to have noticed, possibly because it hasn’t affected their higher-than-average pay packets too much.
The Tory party faithful seem to have an obsessive preoccupation with inheritance tax. Nasty, unfair tax for sure, but don’t you agree in principle that tax cuts ought to benefit everyone, not just the noisiest Tory activists?
Shouldn’t the Tories look at bumping up in the income tax threshold to give us all bit of extra cash in our pockets at the end of the month? A nice, simple policy easily explained in election leaflets, on the doorstep, and on TV, and for lower earners, that bit of extra cash means the difference between fairly comfortable living and really struggling.
Reply: Thanks for a very good point. My brief was to concentrate on busienss and capital taxes. I do think we need to improve incentives and net take home pay at the bottom end of the scale.
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C’mon privatize the BBC!
That’s a tax break, and a progressive one at that, for all.
And it’s right, too.
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