The middle-of-the-road IFS think tank has produced this chart showing that corporation tax will be higher in the UK than any other G7 country and higher than the average of OECD industrialised countries. That however is not the full story; the 7,000 largest companies will be part nationalised with 10% in the hands of Marxist McDonnell, unions will be restored to their 1970s status able once again to hold management to ransom, with strikes made easy for secondary picketing thugs and union agitators on the board. High earners will be taxed over half their income. Why would anyone invest in Britain?
Chris Leslie, a former Labour Shadow Chancellor, calls on McDonnell to “Come clean on tax raid plans” which are likely to mean soaring taxes for all, not just the rich. Leslie warns that Corbyn’s Labour could mean higher council tax, extra taxes on pensions and other tax changes in a new report issued by Mainstream, the anti-extremism campaign chaired by former Labour MP Ian Austin. Leslie says it time for
“… John McDonnell to come clean on how much Corbyn’s Labour will cost ordinary people. It’s ludicrous to suggest that Labour could fund its ever-growing and expensive wish-list simply with tax rises on just a tiny number of very wealthy people. Alarm bells should be ringing in households across the country. Because it will be ordinary families who will end up paying for things like making universities free for the children of millionaires, or giving Premier League footballers free broadband and free car loans.”
Corbynistas will slate Leslie as a “New Labour” critic. Back from when the party won elections…
Download full report here.
Today is economy day, Shadow Chancellor McDonnell will be up later promising to spend hundreds of billions of borrowed money and raised taxes. Sajid Javid has just promised to increase spending by hundreds of billions in borrowed money. No mention of that fiscal deficit the Tories promised to close in 2015.
All this borrowing will, they both claim, be financed from the sale of government gilts at the currently prevailing cheap interest rates. The market is suspicious and interest rates will inevitably rise if the market is flooded with gilts. The world’s biggest bond investment fund is Pimco, here’s what their chief investment officer for global fixed income told the FT this morning:
“The prospect of increased sales of gilts to fund more government spending makes the current high prices even less attractive. Gilt yields look too low in general. If you don’t need to own them it makes sense to be underweight”
Incidentally, the name of that chief investment officer is Andrew Balls, brother of Ed Balls. Saj knows that investors will not perpetually buy gilts at the high prices and the low yields prevailing today…
Polling by Public First for the Taxpayers’ Alliance finds that tax cuts are popular with workers. Lost in the all-party noise about spending on ‘free things’ is the enduring truth that tax cuts are popular with voters. The key findings were:
- 60% of C2DE voters strongly favour cutting the basic rate of income tax down to 15p in the pound, from 20p now.
- 68% of C2DE voters want tax thresholds linked to inflation or wage growth, so people don’t move into higher rate bands accidentally.
- More than 75% of those polled supported a cap on council tax rises.
- C2DE voters are more than twice as likely as ABC1 voters to back cutting corporation tax to 12.5%
- 68% of C2DE voters, backed abolishing the BBC licence fee, compared to 40% amongst ABC1 voters, one of the biggest disparities found between the two groups.
The patronising attitude of politicians, progressive think-tankers and broadsheet columnists towards the working classes is that they want more welfare spending, in reality they want to be able to keep and spend more of their own money on the things they want – like everybody else. They are pro-business because most of them work in small businesses. Poll after poll shows that the truth is that people who work hard to earn a living resent over-generous welfare benefits more than those on higher incomes; for example 50% of C2DE voters believe there should be a National Insurance “no claims” rebate every five years for people who haven’t claimed Jobseekers’ Allowance. Only 39% of higher earning ABC1 voters think the same.
In news that would attract more attention if not for Brexit, the government is briefing that there will be no the major tax cuts despite the promises Boris made during his leadership campaign, such as raising the income threshold for lower earners and increasing the 40% tax rate threshold from £50,000. Going into an election without having delivered Brexit or tax cuts means Boris definitely won’t be running on his record as PM.
Guido has been told in explicit terms “the cuts ain’t happening“, with the Treasury instead prioritising spending on infrastructure, such as roads and hospitals. The Treasury is already weary of Boris’s spend-happy approach to government, with the policies announced at Tory conference alone totaling almost £60 billion. Government borrowing was £9.4 billion in September according to data released yesterday. The first time in 5 years that the level of borrowing has increased year-on-year in September. Total borrowing for the financial year to date stands at £40.3 billion, £7.2 billion more than in the same period last year. In comparison the revenue lost to HMRC keeping the promise Boris made to raise the higher tax threshold for the middle classes looks like mere pocket change.
Guardianistas can take comfort this morning, that despite the global dystopia depicted on their news pages, one of their own – Justin Trudeau – has won the Canadian General Election. Though the Canadian Conservative Party actually won the most votes (and as the Guardianistas never tire of telling us that means Hilary is really president or something). Trudeau is well known for being incredibly right on about climate change, immigration, foreign aid and gun control – the whole package of virtue signalling. Yet he ran and won as a tax cutter…
He promised more tax cuts and depicted his Conservative opponents as only wanting tax cuts for the rich. He has promised “middle class” tax cuts and tax cuts for small businesses and a reduction in sales taxes. Who knew tax cuts could be so popular with voters?
Ominously for Canadian voters, Justin failed to mention his promised tax cuts during his victory speech (which he very gracelessly began one minute into his Conservative opponent’s concession speech). He big up his environmental policy. Choosing to skirt over his recent oil pipeline expansion announcement…
Boris Johnson is proposing raising the threshold for paying higher rate income tax to £80,000. It is currently at £50,000. This means that income tax on earnings between £50,000 and £80,000 will fall from 40% to 20%. Because the national insurance thresholds would rise too, the total income tax and employee national insurance on earned income will fall from 42% to 32%. This represents a much needed tax cut for millions of middle class taxpayers.
In 2018-19, the higher rate threshold was £46,350. This was increased to £50,000 for 2019-20. According to research from the Taxpayers’ Alliance if governments since Blair in 1997 had increased the threshold in line with earnings, it would have been £58,895 by next year. If governments had increased the threshold in line with earnings since Margaret Thatcher’s last budget in 1988-89, it would have been £73,268 by next year. The higher rate was never designed to be paid by millions of what Corbyn’s 2017 manifesto called “ordinary households”…
Fiscal drag is real and has dragged millions of middle class families into a tax bracket that was only ever intended to be paid by the rich. For Conservative candidates to oppose a much needed reset of the thresholds to keep up with inflation and earnings increases is incomprehensible. These are the middle class voters that have to be won back from the Labour and Brexit parties…
Boris’s leadership rivals have been taking aim at his tax cut for people earning between £50,000 and £80,000 – the middle classes who were key to the most recent period of sustained electoral success for the Tories. For aspiring Tory leaders to attack families earning £50,000 a year as “wealthy” is not a strategy that is going to pay dividends, these are public sector professionals and private sector middle managers, not tycoons. For Labour politicians with short memories going on the attack, Labour’s 2017 manifesto specifically identified those earning under £80,000 a year as “ordinary households”…
In fact, because of George Osborne’s 2013 child benefit reforms, many families earning between £50,000 and £60,000 a year are hit by some of the highest marginal tax rates in the UK tax system and end up paying an effective 60% tax rate as child benefit is rapidly taken away, as the Telegraph’s handy chart above shows. Even the Guardian ran an article just a few months ago bemoaning the “60% tax trap”…
Voters will keep £9.6 billion-a-year more of earnings in their pocket to spend in the wider economy, set against a backdrop of over £26 billion of fiscal headroom. The higher rate of tax was meant to be a tax only on higher earners which caught only 1.7 million voters in 1990/1, it will hit the pockets of 4.3 million voters in the current tax year, on top of the child benefit double whammy. The Tories need to win back the professional classes once Brexit is over, this is a vote winner…
The TaxPayers’ Alliance (TPA) is celebrating a huge policy victory, with the Government finally implementing a £95,000 cap on pay-outs in the public sector, a measure that was promised by George Osborne and only now implemented.
The TPA has campaigned for curbs on golden goodbyes in the public sector, with the Public Sector Rich List and also the annual Town Hall Rich List. Yesterday the TPA’s 2019 Town Hall Rich List revealed there were at least 2,454 council employees who received total remuneration in excess of £100,000 in 2017-18. That’s 148 more than in the year before…
John O’Connell, Chief Executive of the TaxPayers’ Alliance, tells Guido:
“Senior bureaucrats are already rewarded with pension schemes that ordinary Brits could only dream of, so it’s only fair to place a cap on exit payments. Bar some understandable exemptions for soldiers and spies, golden goodbyes will finally come to an end. The average council tax bill has gone up by more than £900 and the tax burden is at a 49-year high, so this announcement is an important step in the right direction.”
Taxpayers will be breathing a sigh of relief, defunding over-generous pay-outs for the public sector top brass will save an estimated £100 million-a-year. Long-term this will save taxpayers billions – what a great policy win!
If you started paying the TV licence fee in your student days and are now 75, you would – at today’s rates – have paid approximately £7,500 into the BBC’s coffers. After half-a-century of being forced to fund the likes of Gary Lineker’s multi-million pound fees, it seems not unreasonable that your retirement from working should coincide with getting him and all the other overpaid celebrities off your back. That is why the government exempted OAPs from facing jail for non-payment of the BBC’s regressive telly poll tax.
The BBC is lobbying hard for the government to pay the licence fees, claiming it is costing them hundreds of millions. This is not really a “cost”, it a loss of revenue. The BBC collects some £3.5 billion from the telly tax and £1.5 billion from commercial revenue. It greedily wants to get a few hundred million more from the over-75s. Here’s a suggestion, cut back on Lineker and the likes’ bloated pay packets and generate some more revenue from iPlayer worldwide.
If Netflix and Amazon can generate billions worldwide from online streaming, so can the BBC. There is no technological reason the BBC can’t do it. The reason they don’t do it is purely political. If iPlayer was a pay-as-you-go streaming service the rationale for the licence fee, such as it is, would be destroyed.
The BBC funding model is based on coercion, it is out of date. Netflix’s global success shows just how badly the BBC missed the opportunity to be a global streaming media company with the headstart it had with iPlayer. Now they want to make OAPs or younger taxpayers pay for their commercial mistakes…
This morning on the Today Programme, John McDonnell reiterated Labour’s ambition to hike the tax on those earning over £70,000 this morning, in an attempt to squeeze at least £6.4 billion out of them. What they haven’t accounted for is the change in behaviour that such a tax on the more successful would cause…
Hiking tax on the most mobile earners does not make economic sense. Currently, despite Brexit, the UK is extending its lead as Europe’s ‘tech unicorn’ capital, and last year more venture capital for tech came to London than the whole of France, Spain, Ireland and Germany combined. Labour’s anti-success policy would end the UK’s status as a good place to bring your business.
This policy could be even more damaging and unproductive than former French President Francois Hollande’s ‘megatax’ on the rich, the now reversed hike saw French competitiveness fall and professional emigration rise, making London the sixth largest French city in the world. Brexit isn’t causing an exodus of the job creators, but there’s no doubt that a Labour government would…
The TPA’s Chloe Westley asked Corbyn’s core voters in his Islington constituency whether they would like to pay more tax. Then she gave them the chance to put their money where their mouth is…
After eight years of Conservative government and supposed austerity, the tax burden this year is at a 49-year high, at 34% of GDP, with total government revenues this year at a 32-year high, at 37% of GDP. The 3% gap being the deficit. The government is spending a whopping £30,000 per household.
The state is growing, even inflation adjusted spending has doubled in the last half-century, with the curve going up steeply when Gordon Brown was splurging on welfare spending in the late 90s.
The financial crisis in 2008 saw expenditure sky rocket. The UK can only become a high growth economy if it is a low tax economy. If the tax take goes any higher, investment will go elsewhere…
Download the TPA report: Tax Burden
Liz Truss has kindly reminded Guido that the Treasury has other problems besides Brexit. The taxpayer is funding debt interest of over £1 billion-a-week, which is more than the budget for Scotland and Wales combined. Remember that when hear Scottish and Welsh MPs demanding more taxpayer spending.[…] Read the rest
The Truss / Gove banter last night has been blown out of all proportion, with one headline about the story actually reading: “Tory Cabinet Falls Into Open Warfare”. It was a joke about Gove rhyming with stove. Believe it or not, there are more important Cabinet splits than this one…
The row has distracted from the more interesting contents of the Truss speech, which was as sound an intervention as you are ever going to get from a minister in a Theresa May government.[…] Read the rest
— BBC Daily Politics and Sunday Politics (@daily_politics) June 20, 2018
Health minister Jackie Doyle-Price admits the obvious: there is no Brexit dividend while we continue to pay our subs to the EU.[…] Read the rest
The government currently has no idea how it wants to raise taxes to pay for the £20 billion-a-year funding increase for the NHS. Step forward Tory MP Neil O’Brien, the former Osborne SpAd who recently co-founded the Onward think tank, with a proposal: freezing the personal allowance for two years.[…] Read the rest
— BBC News (UK) (@BBCNews) June 17, 2018
Theresa May and the Number 10 spin team have done an impressive job of getting ‘NHS spending funded by Brexit dividend’ as the top line on broadcast this morning.[…] Read the rest
Tory MPs have been asked for their views on a new NHS tax in the clearest indication yet that Number 10 is considering hiking taxes to increase funding for the health service. In multiple meetings with Theresa May’s aides, MPs have been asked for their views on both a hypothecated tax and a general tax rise.[…] Read the rest
After a month of think tank launches and relaunches, op-eds and policy papers discussing the new radical policies the Tories need to win the next election, Ruth Davidson and Philip Hammond have come up with the uninspiring, unoriginal idea of high taxes, new regulations, more intervention, more borrowing and more public spending.[…] Read the rest