Two weeks ago, Conservative Party Chairman Oliver Dowden proclaimed that taxes have reached a “high water mark” amid a cost of living crisis that’s seen the Treasury’s penny-pinching rise to a 28 year high. When asked by Sir Keir at PMQs today whether Boris still believes he and the Chancellor are “tax-cutting Conservatives”, the PM boldly replied “Yes, Mr Speaker, I certainly do!”. Guido presumes, therefore, that No. 10 & 11 will shortly be rejecting any suggestion of an online sales tax…
The online sales tax was first proposed by the Treasury in response to the proportion of retail sales conducted online rising seven-fold between 2006 and March 2020, accelerated by lockdown. In February the Treasury launched a public consultation on the proposals, which Guido has now spotted admits the tax would pile even more pressure onto hard-pressed consumers:
“the cost of an OST could be passed on to customers at a high rate.”
The IEA puts simply:
“Given the extent of competition in today’s retailing sector, the costs of the online sales tax (and the administration costs incurred by businesses) would be passed on to consumers, who have arguably received quite enough hits in terms of higher prices recently.”
Guido’s sure that regardless of the Treasury consultation any Tory government serious about tackling a cost of living crisis and reducing consumer costs wouldn’t take these plans any further…
Not for the first time, it’s Labour MP Siobhain McDonagh who’s provided the standout fireworks from Rishi’s treasury select committee appearance. With Sunak once again flaunting his supposed low-tax credentials, McDonagh repeatedly blasted the Chancellor for whacking up the tax burden to unprecedented levels – at one point even asking Sunak if he thinks the public “are stupid”. Which seems excessive, although given her line of attack, McDonagh needs to remind everyone she’s a member of the opposition – and not, say, the Tory backbenches – somehow…
Rishi: “…I think you’re talking about through to the end of the Parliament, we’ve already had that conversation.”
Siobhan: “With respect, you don’t decide what questions we ask, or how often we ask them. Let’s do the maths though. When you add up all the proposed tax increases, and subtract your fuel duty, income tax, and national insurance pledges, the net result is a 3.3% rise in the tax to GDP ratio between 2019-20, and 26-27.”
Rishi: “No it’s a reflection of the fact that public spending is also, over that period, going to rise by over 2 percentage points of GDP… Government has to pay for the things it’s spending money on… rather than cut public spending, we’re raising the taxes to pay for it.”
McDonagh then went on to question the timings of Rishi’s proposed 1% cut to income tax, suggesting it was a cynical election ploy. Maybe it is, although it’s still pretty good politics. Labour are probably going to have to vote against a tax cut now after all…
In December, Guido pointed out Richard Burgon had fallen victim to continually double counting when opining how to solve all of society’s problems. According to Richard, a top 10% wealth tax would raise £69 billion, which he would spend on, amongst other things: creating a ‘Social Emergency Fund’, ending the cost of living crisis, end people going cold, end hunger, cost future vaccine rollouts, pay for 150 new hospitals, eradicate homelessness, give nurses a “proper pay rise”, increase Universal Credit by £20 and invest in social care. Among other things…
It now seems it’s not just Guido poo-pooing this Burgon’s one-stop fiscal magic wand. Fellow lefty loon Howard Beckett, of Unite fame, yesterday tweeted that taxing the wealth of the UK’s billionaires at 3% would raise almost £60 billion – just £9 billion less than Burgon’s 10% wealth raid.
There are 171 billionaires in the UK with a total wealth of £560bl. Taxing their wealth over £10ml at just 3% would raise almost £60bl.
— Howard Beckett (@BeckettUnite) March 24, 2022
Stop the tax increases on workers. Tax the billionaires.
Aside from all this being based on the presumption that billionaires will just stay and fill in their HMRC returns, rather than sail off to Monaco aboard their yachts, that’s a huge difference. Guido won’t labour the discrepancy too much, though perhaps they should get Diane to have a look over their fag packet calculations…
As Rishi prepares to stand up tomorrow and confirm he’s raiding your payslip in the name of ‘fiscal conservatism’, he’ll be insisting he’s going to crack down on wasteful government spending. Guido thought it was worth pointing out where some of that spending is going. Here’s a selection of Guido’s reports on Whitehall waste from just the last year…
- Public Sector’s Highest-Paid Diversity Officer Earns More Than PM
- NHS Hiring 42 New Managers on Salaries Up to £270,000
- Whitehall’s Latest £400,000 Diversity & Inclusion Hiring Spree
- NHS Hiring Even More £60,000 Equality and Inclusion Managers
- NHS’s Latest Diversity & Equality Hiring Spree
- DWP Civil Servants to Receive Race Lecture During Working Hours
- Civil Service’s Crystal Healing Sessions
Endless cash poured into pointless woke nonsense, time and time again. If the Treasury finds it so difficult to cut spending, surely here is a useful place to start.
Before he stands up tomorrow, the Chancellor has already scheduled a stealthy hit to your take-home pay from the changes he made last time he stood up. Briefings in the press suggest he plans to reduce fuel costs by a few pennies. This is nothing compared to the pounds he is pinching from your annual take-home pay, with a combination of increased NI contributions and the freezing of tax thresholds in an inflationary environment. Lower rate taxpayers will lose an estimated £265 and higher rate taxpayers will get £952 swiped by Rishi.
Rishi’s schtick when he does media rounds is to claim he is doing this in the name of “fiscal conservativism”, the policy stance which aims to balance the books without increasing borrowing. You can only balance the books by increasing taxes or cutting spending. Currently the government is overspending by about £400 million a day – the state borrowed £13.1 billion last month – surely the fiscally conservative thing to do is to rein in over-spending. That is politically impossible if you don’t explain that the government can’t do everything. Public discourse across the political spectrum seems to be that something must be done to fix high energy costs. Borrowing money from taxpayers in the future to pay for their current energy consumption doesn’t seem fiscally conservative, it seems reckless and politically short-sighted.
Last time Rishi stood before the House in October he solemnly introduced two new fiscal rules:
- Underlying public sector net debt must be falling
- The state should only borrow to invest in future growth and prosperity – day-to-day spending must be met by taxation
So if there are to be any government handouts to energy consumers it must be funded by them out of taxation. This must be the circular economy we hear about so much…
Fiscal conservatives don’t balance the books by always increasing taxation to match spending, they hold the line on spending. The truth is we haven’t had a fiscally conservative Chancellor since Nigel Lawson. It is a sorry fact that no one under 40 years of age has ever seen the overall tax burden go down in Britain. Despite 20 years of Conservative governments since Lawson, the state has expanded, taxes have gone up and growth has been slow. China is cutting taxes to stimulate the economy because they have come to realise you can’t tax your way to prosperity.
Rishi would argue that with interest rates rising, taxes will have to go up to service the government’s debts. This is a pessimistic outlook. Grow the economy and taxes will flow, increase taxes on the economy and it won’t grow. Britain has reached the taxable limit of the economy…
Johnny Leavesley is not a household name outside his own household, although he’s far from being an insignificant character. He has an occasional column in the Telegraph, is a successful businessman, has been a Conservative Party treasurer and is currently chairman of the Midlands Industrial Council. Unlike the BBC’s “Tory Donor” who turned out to be a Labour Party donor, he’s the real deal. The Midlands Industrial Council, has for a long time, funnelled money from the business community into the Tory treasury. Their support over the years for the Tories has been worth millions.
Writing in the Telegraph this morning, he passes over Partygate to fire a warning shot about the ideological direction of the party:
I have been a party donor through bad times as well as good, but my enthusiasm can ebb and flow. The recent reiteration of intended NIC increases and the raising of Corporation Tax to 26% is regressive and disappointing. You don’t grow the economy, which pays for everything, by taxing it severely when it is vulnerable. It seems that our economic policy has been captured by the civil service. Have they never heard of the Laffer Curve? It is time for the government to act as a free enterprise champion and act Conservative. Get a grip Boris, or go.
This is a sentiment Guido hears all the time from true blue supporters. It is all very well changing the personnel and processes in Downing Street; many think a reorientation of the direction of travel is also needed.
