Paul Goodman has a piece over at ConservativeHome speculating that an early election in 2023 could be part of a cunning plan to never implement the tax hikes Rishi scheduled yesterday.
“The Corporation Tax hike to 25%, due to happen that year, will no longer be needed. The freezing of income tax allowances will go the same way. And Sunak will be able to have another look at the other thresholds, allowances and exempt amounts he is also freezing.”
Ignoring the rumours that Rishi wanted to hike the tax this year and Boris over-ruled him, the one bit of good news for low tax Tories, the 130% super-deduction for capital expenses is why Guido thinks it is a delusion that Rishi doesn’t really intend to raise the tax burden. A 6 point hike in corporation tax rates from 19% to 25% in 2 years encourages finance directors to delay their firm making investments until they can take advantage of the higher deduction resulting from the higher headline corporation tax rate. The Treasury realises raising tax rates tomorrow postpones investment today.
The purpose of the 130% super-deduction for 2 years is to make that calculation for finance directors irrelevant, removing the cliff edge. 19 x 130% gives you 24.7 meaning the finance director has no accounting reason to delay making that capital investment. That is the real purpose of the super-deduction. It also signals that Rishi firmly intends to be the first Chancellor since Denis Healey to raise corporation tax.
Nick Boles’ tweet about Theresa May’s “timidity and lack of ambition” has resonated with both Leave and Remain Tory MPs and right-leaning publications. Nicholas Soames is the latest to come out and call the government’s policy programme “dull dull dull”:
It really won’t be enough to get people to vote against The Corbini they must have really sound reasons to vote Conservative.We really need to get on with this#wherestheboldandbravesofaritsdulldulldull
— Nicholas Soames (@NSoames) January 22, 2018
This isn’t just awkward Sarah Wollaston types or long-standing Remainers and May critics like Ed Vaizey. The lack of ideas and ambition in Number 10 has been the main concern of large numbers of MPs since the election, echoed even by May’s former chief of staff Nick Timothy. MPs have been sending each other Juliet Samuel’s coruscating critique of the government in the Telegraph this morning – it’s hard to argue with her:
“Talk to people at any level of the Conservative Party. You can ask MPs, council leaders, party officials, local associations and you get the same description. There’s no direction. Nothing is happening. The operation is headless, clueless. What’s the public evidence of this? Well, just consider the terrible wounds inflicted on this Government with growing frequency. Many of them aren’t its fault when they first emerge, yet somehow, they “become” its fault.”
They agree over at ConservativeHome, where Paul Goodman pleads this morning for some direction and fresh ideas:
“Why should she not deliver a series of speeches, over the next year, to set out why, in her view, the social market, as Keith Joseph put it, works better than the socialist state?… There’s much that the Government could do without proposing new laws that Parliament would vote down. On the NHS and social care, it could set up a Royal Commission… On schools, it could lift the cap requirement on new faith schools… On skills, it could advance Boles’ plan for new two year technical diplomas… On housing, it could free up more state-owned land… On ownership, it could have a look at Michael Fallon’s ideas, including tax breaks for companies that offer free shares to employees…”
Instead Gavin Barwell has reportedly once again shot down the hugely popular Vote Leave policy of spending the Brexit dividend on the NHS, to the outcry of colleagues like Rob Halfon. The unrest over the lack of policies has been bubbling away for months, it is starting to come out into the open…