Tax Burden to Hit Highest Level Since 1969 Under May

Under Theresa May the tax burden will rise to almost 35% of GDP, the highest level since 1969 when Harold Wilson was in office – who was also a PM who liked to introduce price caps. This of course makes a mockery of the mealy-mouthed manifesto pledge to “keep taxes as low as possible”. The Tories say a vote for Labour means more borrowing and more taxes, the same is true of them…

Graph via Ed Conway.

May Manifesto Rejects Free Markets and Individualism

Theresa May has doubled down on the bashing she gave the libertarian wing of her party at last year’s Conservative conference, setting out her and Nick Timothy’s principles:

We do not believe in untrammelled free markets. We reject the cult of selfish individualism. We abhor social division, injustice, unfairness and inequality. We see rigid dogma and ideology not just as needless but dangerous. True Conservatism means a commitment to country and community; a belief not just in society but in the good that government can do; a respect for the local and national institutions that bind us together; an insight that change is inevitable and change can be good, but that change should be shaped, through strong leadership and clear principles, for the common good. We know that our responsibility to one another is greater than the rights we hold as individuals. We know that we all have obligations to one another, because that is what community and nation demands. We understand that nobody, however powerful, has succeeded alone and that we all therefore have a debt to others.”

Should bring an end to the Maggie comparisons.

In terms of policy this means the previous Tory vow to never raise income tax, VAT and NI has disappeared, replaced by a flimsy “firm intention to reduce taxes”. May’s Tories are not a committed low tax party.

“Paying your fair share of tax is the price of living in a civilised democracy but politicians should never forget that taxes are levied on businesses that employ people, and individuals who work hard and face tough decisions about how they spend their money. The Conservatives will always be the party that keeps tax as low as possible and spends the proceeds responsibly. It is our firm intention to reduce taxes on Britain’s businesses and working families.”

And it means Miliband-style big government intervention in free markets. As the manifesto says: “A Conservative government will strengthen the hand of regulators”.

“Government can also help by making consumer markets work more fairly, and in doing so reducing the cost of the essentials that families have no choice but to buy… Tackling living costs must mean making consumer markets work fairly. Markets should work for consumers, as well as producers – with competition keeping prices low and encouraging new product development. Poor information, complex pricing and exploitative behaviour prevents markets operating efficiently for the benefit of all. As Conservatives, we believe in markets as the best means to bring about prosperity and innovation, but we should act firmly and fast when a market works against the interests of consumers. Since 2010, we have capped the cost of credit for expensive payday lenders and will shortly ban letting agent fees. We will now go further to reform markets in the interests of consumers and reduce the cost of living. A Conservative government will strengthen the hand of regulators.”

The money Britain will stop sending the EU each week will be spent on a very LibDem sounding fund to reduce inequality:

“We will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund, specifically designed to reduce inequalities between communities across our four nations.”

And there will be a new sovereign wealth fund funded by shale gas revenues and privatisation:

“We will create a number of such funds, known as Future Britain funds, which will hold in trust the investments of the British people, backing British infrastructure and the British economy. We anticipate early funds being created out of revenues from shale gas extraction, dormant assets, and the receipts of sale of some public assets.”

Spending more money while delaying clearing the deficit until 2025. Even George Osborne is now attacking May from the right, he says: “Far from using Brexit as a chance to get rid of red tape, the Tories are using it as an excuse for extra regulation”. Tough day for those of us who believe in untrammelled free markets, individualism and reject egalitarianism…

Labour Election Broadcast Star’s Firm Registered at “Tax Efficient” Accountant

The celebrity Corbynista who criticised the Tories’ tax record in Labour’s election broadcast is the sole director and shareholder at a company registered to the address of a “tax efficient” accountant. Maxine Peake, the Dinnerladies actress and Corbynista luvvie, who is a former member of the Communist Party of Britain, appeared in Labour’s PEB attacking the government for “giving the super-rich tax handouts of tens of billions of pounds”. Yet Maxine is not so chatty about her own affairs…

Companies House records show Peake is the sole director and shareholder of Flat Cap Limited – a company with £145,000 cash at bank and in hand. Flat Cap Limited has no other directors or company officers. It has no online or physical presence, except a filing with Companies House. Its registered address is the office of accountants Creasey Alexander & Co, who boast on their website of their tax planning advice and “tax efficient investments”. Guido readers will know this is a textbook arrangement used by all manner of celebrities and entertainers

There is no suggestion that Peake has evaded any tax or that she or Creasey Alexander & Co have done anything wrong. Guido has asked her agent multiple times over the last 24 hours if she pays herself dividends through her company. They would not answer that question or speak to us on the record…

Tory Record: More Debt, More Taxes

As is traditional in elections the Tories are warning that Labour will bring more debt and more taxes. That is a given, however what is the Tory record after 7 years?

In 2010 the Tories promised to close the deficit by 2015. They failed to do that, so Osborne shifted the goal posts to aim for 2017/18. Under Hammond the OBR now says the government is unlikely to balance the budget by 2026. If the political will had been there they could have balanced the budget; from a worse position over the same period Ireland managed to balance the budget and cut the debt. Ireland now has a lower debt to GDP ratio than the UK and a higher GDP growth rate. The repeated Tory failure to balance the budget means that the national debt continues to rise and is now 89% of GDP. The Tories have added £500 billion to the national debt in 7 years, Hammond plans to add a billion a week to the national debt under Theresa May...

Taxes have risen under the Tories. The claim by the Tories to be a low tax party has not been true this century. They raised VAT almost immediately upon coming into office. They argue they have cut business taxes, yet they raised dividend taxes on small business owners and tried to raise National Insurance contributions. To be fair it is a mixed bag, some taxes have gone up, others down. According to the OECD the overall tax-to-GDP ratio has risen from 31.5% of GDP under Gordon Brown to 32.5% under George Osborne. Taxes have risen under the Tories…

This is not to say debt and taxes would not rise catastrophically under Labour. If you want to balance the budget you have to cut spending, George Osborne used to say privately that the Tories wouldn’t get re-elected if he slashed spending. Enda Kenny cut Irish government spending by 10% and GDP growth has been much faster than in the UK. He got re-elected and is the longest serving Fine Gael prime minister in Irish history.

Emily Thornberry Thinks You Pay VAT on Milk

Emily Thornberry was on LBC over the weekend talking about the impact of VAT on people on middle incomes. An important issue, though it was illustrated by Thornberry with a rather odd example:

“Things like VAT are things that people on average incomes are hardest hit – we all have to buy milk.”

Milk is zero-rated. No one pays VAT on milk. This is a more embarrassing mistake than not knowing the price of a pinta…

Hammond’s Tax Bombshell

No surprise: Hammond tells the BBC he needs “flexibility” in the manifesto, so the 2015 pledge not to raise income tax, NI or VAT looks like it’s going out of the window. Hilariously John McDonnell is now attacking the Tory tax bombshell: “You can’t trust the Tories on tax – we can expect a tax bombshell if they get re-elected.” McDonnell is attacking the Tories for raising taxes, threatening pensions and not closing the deficit quickly enough. Funny old world…

Hammond U-Turns on National Insurance Rise

Philip Hammond has u-turned on his Budget National Insurance rise, telling MPs that it was against the spirit of the Tory manifesto. He confirms there will be no NI rise this parliament. The letter:

A sign of how weak the government is that it is forced to u-turn on its Budget after complaints from a few MPs, and also what a disastrous error it was to forget the Tory manifesto. Wow…

You Pay £15 Million For Local Trade Union Pilgrims

Millions of pounds of taxpayer-funded subsidies are still being dished out to trade union ‘Pilgrims’ across the country, a report by the Taxpayers’ Alliance has found. Despite promises by the government to clamp down on so-called ‘facility time’, there remain 371 local authority staff members who spend more than half their time working for trade unions, while being paid by the taxpayer. The cost of facility time (paid time-off taken by trade union representatives to carry out union duties) was at least £14,648,030 since 2012. Nearly a third of those local authorities analysed did not publish the data on their involvement with unions, thereby breaking the law.

The map of local authority Pilgrims waste extends across Britain:

  • The worst offenders nationally are Birmingham City Council with £1,124,924 and Leeds City Council with £502,095;
  • In the North East, Sunderland – £258,697;
  • In the North West, Bolton – £390,481;
  • In Scotland, City of Edinburgh – £244,576;
  • In the East Midlands, Leicester City Council – £494,544;
  • In the South West, Bristol City Council – £134,931;
  • In the East of England, Suffolk County Council – £189,741;
  • In London, Lambeth Borough Council – £281,000;
  • In the South East, Brighton and Hove City Council – £262,016.

Alex Wild, Research Director of the TPA, said:

“Trade unions are voluntary bodies of members and so should only receive the support of those members, not taxpayers. A huge amount continues to fund union duties, often without the express knowledge or consent of taxpayers, which simply isn’t right.”
David Cameron’s government began the process of dealing with Pilgrims, time for Theresa May to see it through…

Fraser Nelson Takes Tories to Task on NI

Karen Bradley wheeled out the nonsense Tory line that the legislation only referred to Class 1 NICs. It is the same line that has been sent to Tory MPs doing broadcast today:

This is dire stuff. The legislation came after the election – the manifesto did not mention anything about Class 1 NICs. As spin goes it really is weak…

May: Hiking NI Taxes is Fair and Progressive

If voters wanted fair and progressive that was the offer in the LibDem manifesto.

The Tory manifesto promised not to raise National Insurance. Pathetic excuse.

May Opposed National Insurance Rise in 2010

Awkward…

Hammond’s Tax Bombing Raid on Britain

A White Van Tax, a tax on strivers – safe to say that was not a pre-election Budget…

Hammond Breaks Tory Manifesto Commitment Not to Raise NI

Philip Hammond has broken the 2015 Tory manifesto commitment not to raise National Insurance contributions. It was there in black and white not once but four times:

“A Conservative Government will not increase the rates of VAT, Income Tax or National Insurance in the next Parliament”

“we will not raise VAT, National Insurance contributions or Income Tax”

“commit to no increases in VAT, National Insurance contributions or Income Tax”

“we can commit to no increases in VAT, Income Tax or National Insurance. Tax rises on working people would harm our economy, reduce living standards and cost jobs”

Today Hammond hiked NIC payments for self-employed people from 9 percent to 10% in 2018 and up again to 11 % by 2019. Two 1% tax rises in two years for the self-employed. Tory manifesto promise broken…

CPS Corporation Tax Report Reveals Labour Black Hole

This morning’s Centre for Policy Studies report will be worth noting when Corbyn responds to the Budget later. Their new research out today finds that reducing corporation tax from 28% to 20% has helped increase growth and profitability leading to a rise in receipts by 28% since 2011. Labour’s policy is to increase corporation tax to 21.5% to fund £15 billion of extra spending per year. Yet the CPS finds that such a hike would only raise £5 billion, leaving Labour with a £10 billion funding gap. 

Labour have pledged to spend the corporation tax money 11 times already: on the adult skills budget, supporting British steel, ending public sector pay restraint, reintroducing EMA, scrapping tuition fees, extending pension credit, reversing Universal Credit changes, pensions triple lock, social care, the NHS and PIPs. And now the experts say it won’t raise anything like as much as they need. Ammo for the Tories when Corbyn gets up to respond to Hammond…

Hammond Transferred Shares and Property to His Wife

Philip Hammond very sensibly says he will not be publishing his tax return, saving himself the grief that Corbyn had yesterday. It also saves the Chancellor from having to talk about Castlemead Ltd. In 2010 Hammond was the subject of a Dispatches investigation which accused him of “doing a Philip Green”, transferring 40% of his shares in Castlemead – which had already paid him millions in dividend payments – to his wife. The programme claimed that any payouts Mrs Hammond then received from the company could be taxed at a lower rate, potentially giving the Hammonds a nifty tax saving. The other 60% of the shares were put in a trust, of which he remains a beneficiary to this day. At the time Hammond strongly denied he had avoided any tax, though he confirmed tax on the dividends would be lower if his wife was in a lower tax band than him. He declined to discuss whether this was the case.

There’s more. In 2014 the Mirror reported that Hammond had gifted his share of a £600,000 property to his wife, meaning Mrs Hammond was now responsible for paying all tax on the rent from the property. The paper accused the Hammonds of using the move to avoid tax. Hammond insisted it was a “private matter” but said any suggestion the transfer was “designed” to avoid tax was “incorrect”. 

There is of course no suggestion that Hammond evaded any tax or did anything other than pay the amount of tax he owed. Guido is of the view that compelling politicians to reveal their tax returns is a slippery slope – how long before a politician argues we should be like Norway where members of the public have no privacy. Though you can see why the Chancellor would want to save himself the trouble of explaining all this…

Corbyn Blames Tax Row on Media / Cabinet Office Conspiracy

It has been a long day of spin, claim and counter claim, rebuttal and pre-buttal, three on-the-record statements, multiple off-the-record briefings and questions to three government departments. Finally Jeremy Corbyn has tried to clear up his tax return, sort of. Guido takes you through it, blow by blow…

9pm last night: Journalists first began to query whether Jeremy Corbyn’s tax return included his salary as Leader of the Opposition. Corbyn’s team did not provide an answer.

1am this morning: Corbyn’s team released a statement explaining that he included his LOTO payments in the pensions and benefits section, rather than the employment section. They did not say why.

9am this morning: It emerged that the government’s accounts show a different figure for his LOTO earnings, and say it is a “salary“. Corbyn’s team did not have an explanation for the discrepancy.

3pm this afternoon: Corbyn’s team explain the discrepancy in a new statement: “This figure is calculated after deducting the waivers Jeremy has made of earlier increases to the benefit… A parliamentary pension contribution of £3,395 was also deducted”. They blame the Cabinet Office for not clearing it up and offshore media owners for having ulterior motives:

“The owners of the media companies that have attempted to cast doubt over Jeremy’s transparent and accurate tax return are of course among those who could stand to lose from the tax transparency and justice the British people demand. Jeremy believes firmly in transparency. These media barons have tax questions of their own to answer.”

Interesting conspiracy, or could it just be that Corbyn’s team didn’t understand the numbers and it took them 18 hours to work it out?

Death Tax Wasn’t Just Awkward For Hammond

The Sunday papers reported that Philip Hammond has shelved plans for a new death tax after deciding his previous statements on the policy meant a u-turn would be too toxic. The Sunday Mirror said Hammond “feared he’d look a plonker”, while the Sunday Times quoted an aide:

“Virtually everyone who was in the cabinet when the death tax was first suggested is on the record saying it is a terrible idea. That’s quite hard to get around.”

Guido knows another reason why a death tax would be a very brave move by the Tories. Which top CCHQ aide was at the forefront of those vicious attacks on Labour’s death tax back in 2010? The Conservative Research Department’s then deputy director, now Downing Street chief of staff Nick Timothy…

Diane Abbott’s Trumpian Tax Denial

This tweet from Diane Abbott is positively Trumpian. She says it is “wrong” that Corbyn bungled his tax return. To be clear, he declared his Leader of the Opposition salary in the pensions and state benefits section. Tax accountants agree this is bizarre and unorthodox, and there is no explanation from his team why it was declared like this. Diane says the media did not read Corbyn’s return properly. No – journalists asked Corbyn’s office for an explanation, they were unable to provide one for several hours. And they are still unable to answer the outstanding questions

UPDATE: Statement from Labour six hours later.

Corbyn’s Numbers Don’t Tally With Government Accounts

Jeremy Corbyn’s team say he was paid just £27,192 in his role as Leader of the Opposition in the year 2015/16. Yet this does not tally with the government’s accounts – dug out by James Tapsfield – which say Corbyn was paid £30,587 in 2016/16. Why is Corbyn’s declaration not the same as this figure? Team Corbyn say the £27,192 figure comes from his P60. They don’t know why the government’s accounts show him being paid £30,587…

What’s more, his earnings as Leader of the Opposition are clearly a salary. As you can see above, the government accounts call it a “salary“. So why does it appear in the pensions section of his tax summary, not the salary section? Have to wonder if this tax stunt was worth it for Jez…

UPDATE: Statement from Labour six hours later.

£40,000 ‘Missing’ From Corbyn’s Tax Return

It’s Budget week so Jeremy Corbyn has published a summary of his tax return to put pressure on Theresa May and Philip Hammond. What could go wrong? Well, it appears £40,000 in earnings from his role as Leader of the Opposition are missing from his 2015/16 declaration.[…] Read the rest

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