Sir Phil's Top Chop Know How

It seems that new government appointee Sir Philip Green is enjoying the pressures of the new job. He apparently phoned up City AM to tell them their political editor was “a f***king tosser” for asking about his tax status. Surely a legitimate question given his new elevation to being the the Top Chopper of Whitehall costs. Green made the once failing Arcadia retail chain a huge success not just because of his eye for fashion. He did it by overseeing the removal of a huge amount of non-essential costs and he undoubtedly knows how to save on taxes.

Perhaps he will recommend the government move financial interests offshore and transfer it into Mrs Government’s name.

The Fable Digs In

In a first since the formation of the coalition, Vince Cable has had what could be described as a good day. Well he seems to have got his own way for once at least. Despite the idea being “Miltoned” previously by Downing Street, it now looks as if Cable’s plans for taxing successful graduates have been given the nod. Apparently taxing aspiration is making Britain “fairer”. No wonder he had some nice things to say about his bosses today:

But the big surprise, which in some ways is a pleasant surprise, is that the coalition does actually work. Personal relationships are very good, very businesslike. Having worked with the Tories, at close quarters, I’ve been pleasantly surprised that they’re not as I’d envisaged them.”

You could have fooled Guido. Cable has been walking around looking physically pained by his predicament. Rumours are circulating that he threatened to resign if his tax plan was rejected – perhaps he would have ended up back in Labour. It would not have been a fatal blow to the government though. Is placating this increasingly doddery old crypto-socialist really worth burdening the next generation with even more crippling debt?

The Danish Domiciled Dodger

Scandal has been brewing for a couple of days in Denmark over the fact that the opposition leader’s husband has mysteriously chosen to pay 15% income tax in Switzerland over the 63% rate in Denmark. Today things are coming to a head as Helle Thorning-Schmidt, leader of the Social Democratic party, has been forced to cut her family holiday short and return to the capital to defend herself.

The problem lies in the fact that the amount of time Thorning-Schmidt told the greedy Danish taxman that her husband spends in the country does not add up to the amount of times he has been seen going in and out of the family home. While many could understand a successful business man wanting to avoid surrendering nearly two thirds of his pay-packet, Guido can’t imagine Thorming-Schmidt’s in-laws would be too proud. What would the Hon. Stephen Kinnock’s father have to say about such blatant tax evasion?

Ouch

The VAT rise and freezing child benefit across the board will be the headlines tomorrow morning. It’s a painful budget but a million people out of income tax is pretty “progressive”. The Corporation Tax cut will probably bring in more money than the current rate does now, something Harman clearly could not grasp. While VAT is irritating, booze and fags are protected, not that they could have gone up much more. A council tax freeze was long overdue. However the hike in Capital Gains Taxation to 28% is Cable’s fiscal spanner in the works, unlikely to reap more revenue and hits the prudent.

+ + + Capital Gains Up To 28% + + +

Hearing CGT up, Corporation Tax down. No news yet on VAT.

UPDATE: Clearly the no smiles memo was circulated:

Go for Growth George

Government spending is approaching 50% of GDP, taxation is almost 40% of GDP and the consequent budget deficit is unsustainable. The choice is either taxes rise to finance government spending or government spending is reduced to balance the budget in line with tax revenues.

The British economy can not support a level of taxation above 40% of GDP, investment and enterprise would be driven away. To pay down the government’s debts we need a growing economy, creating wealth and tax revenues. We are already over-taxed, the productive sector of the economy is intolerably burdened by taxation to pay for the unproductive. If we want to grow the economy and balance the budget we can’t risk further increasing the overall tax burden.

Increasing VAT will reduce consumption, punish the High Street and burden the poor more than the rich. Before the election the Coalition’s leading political figures were asked time and time again: would they raise VAT? Time and time again they said they had no such plans. Trust in politicians is at a low, if George Osborne raises VAT or widens the scope of the tax he will be doing so without a mandate and it will betray what little trust was placed in his oft repeated claim that he did not plan to raise VAT.

Worst of all, it will take money out of the economy which could undermine the recovery. The City is not asking for tax hikes, the gilt market only wants spending control and the polls say the public favour spending cuts. George, the choice is clear, bring the economy into balance by controlling spending, reducing the tax burden and going for economic growth…

We're All Against This Together

It’s a strange day when the TaxPayers’ Alliance and the TUC are singing from the same hymn street. It’s even stranger when Guido and Ed Balls find themselves in agreement. The TPA have finally engaged in the battle this morning with a video attacking a prospective VAT rise. Guido can’t understand the morality of instigating a regressive tax rise that will mean more, not less, state dependency, leaving those who already suffer the most being even more broke. A hike in VAT to 20% would cost someone on average earnings £150 a year, that may not be much to millionaires like Dave, George or Nick, but those on lower incomes will definitely feel the pain.

The Coalition simply has no mandate to raise VAT, they were all asked repeatedly during the election campaign and replied they had “no intention” of raising VAT. Clegg actually campaigned against a VAT hike.

A 2.5% rise in VAT to continental levels is not worth the hassle, not when there are far more effective ways of saving money rather than further taxation. Why not start with the disastrous outsourcing of I.T. contracts? A study of government I.T. contracts made over the past 5 years shows that the taxpayer has ended up paying 40% or more above the market rates for outsourced services.  This means the public sector could save up to £6 billion on its annual I.T. spend of around £14 billion without affecting front line services. Overspending on government I.T. contracts alone is equal to 1% of GDP…

UPDATE: The TPA’s video:

Is David Running Scared?

If ever there was a true “heir to Blair” it would be David Miliband. Mentored and politically raised by Tony and Cherie, his old boss is staying out of the race publicly, though he has apparently loaned David some of the Blair Foundation’s staffers for the duration of the campaign. Of all the candidates running David Miliband is meant to be the furthest to the right, but his piece in this morning’s Guardian is quite the eye-opener. Finally a leadership candidate is talking about the economy and the deficit. It doesn’t make for good reading though:

“If the Tories stick to their proposed formula of £4 of cuts for every £1 of tax rises this will see departmental spending slashed by a third outside of the NHS and international development. The balance should be 2:1.”

He goes on to call for an end to the charitable status for independent schools, extending the City bonus tax rather than raising VAT, a mansion tax and with faux naiveté he backs the “Robin Hood Tax“. Anyone would think Miliband was a little worried about his brother’s gaining popularity and is steering quite hard to the left. All good mood music to his party, but is an unconvincing shift in the direction of whacking up taxes really going to give him the keys to No. 10?

Vince Is Coming For Savers

The businessmen-funded Policy Diffusion group is drawing their battle lines over the proposed rise in Capital Gains Tax. This followed Cable around yesterday:

“This LibDem policy fails on every conceivable account. It discriminates against elderly savers, reduces economic growth, prevents the build-up of capital, discourages entrepreneurs and will even reduce government revenue rather than increase it, widening the deficit.” Policy Diffusion fought viciously against a hung parliament in April and despite the resulting coalition, they are back. And this time they have trucks…

Treasury Crowd Sourcing Budget

We are told that the Treasury is going to release a document later today designed to produce a “fundamental re-evaluation of the role of government”.

It will ask people to discuss whether the government needs to provide certain public services at all and whether someone else such as councils, voluntary organisations or companies, could do so more cheaply.

There are a lot of things the government does, supposedly on public health grounds, that are massively unpopular:- raising booze taxes such that a pint costs £5 of taxed income and the brewer is lucky to see a pound.  Guido thinks adults should make their own health choices. My guess is that they will ignore the the sound of the crowd, nevertheless, shall we give it a try?

Counting the COINS

If you have nothing better to do this sunny Friday why not take a look through the hundred odd gigabytes of tax and spending data just released from the Treasury. 24 million different transactions are a good start in opening up government. It doesn’t make for a fun read though.

Talking of taxpayers money, there is still no sign of the official SpAd list, and vitally their pay levels. Guido FOIed the Cabinet Office on May 7th for Coulson and co’s salaries. Nothing yet…

How Much Did You Make Today?

The Taxpayers’ Alliance have released this depressing little video highlighting the fact that from 9am to 1.21pm you are working for the taxman and from 1.21pm to 5pm you finally get to earn some money. Seems the plush new TPA office takes a starring role too:

If people realised just how much they are taxed at every opportunity throughout the day, Guido is convinced there would be more outrage about the daily mugging by the Treasury. A break down of cost and taxes on every receipt would be a very good start. Guido isn’t sure what the timing is in Ireland, but given it’s about eleven now, he hopes you all enjoy the next couple of hours feeding the state…

Thatcherism Redux

Even the Guardian made Cameron the winner of the TV debate and inside Steve Hilton something will have died. Last night the CCHQ team in the back room cheered heartily when their champion came off stage. Why?

There were no mentions of worthy ‘Big Society’ concepts, no vacuous ‘vote blue, go green’ slogans. Time worn, winning Tory messages were pitched; tougher immigration rules, tackling welfare dependency, lower business taxes, sound money and smaller government.   Result? Clear win for the Tory leader.

Labour were pinning their last hope on Gordon triumphing on the economy with his ‘substance’. He actually bombed on the substance of the economy – why Labour strategists thought the man who promised he had abolished ‘boom and bust’ could win on the economy baffles Guido.  Tractor stats don’t win votes.

At the time it was being spun the Hilton-Fink modernising agenda helped detoxify the Tory brand in the broadsheets and at the BBC, it appealed to the metropolitan media, the commentariat and most of those who shape the public discourse.  It succeeded in gaining the Tories a hearing they didn’t have for over a decade. It  played well to essentially the elite Newsnight watching class. On the doorstep it gets no real cut through.  The time worn, vote winning Tory message was once again on offer last night.

The attack on Brown for confusing the economy with the state was unanswerable, why hasn’t that line been pushed harder in the never ending public spending debate? Clegg was noticeably at his best last night when he stole Tory themes, like cutting personal taxes. The new old message and the revitalised perfomance of Dave himself may have been broadcast just in time to hold off the LibDem surge. We’ll find out this time next week…

Cleggmania and Punk Tax Cutting Outflanks Finkism


The YouGov daily poll this morning has the Lib Dems on 33%, the Tories on 32% and Labour on 26%.  The Guy News rolling poll of polls above is also reflecting the dramatic rise of the LibDems, if they hold their gains after Thursday’s debate it will confirm that this is no mere bubble. The same YouGov poll asked a number of policy questions including this one on the LibDem’s populist winning-on-the-doorstep tax policy:

Here are some proposals that have been made in the current election. In each case, do you support or oppose it?

Tax: Scrap income tax on earnings of less than £10,000 a year. The £17billion cost of this will be paid for by a tax on bigger houses, a tax on airline flights, restricting tax relief on pensions savings for higher-rate taxpayers, and attempting to clamp down on tax avoidance.

  • Support: 66%
  • Oppose: 20%
  • Don’t know: 14%

Danny Finkelstein and Guido had a bit of Twitter spat about this last night. Guido holds Fink responsible for accepting the Balls/Brown dividing lines and helping to foist on the Tories their “no tax cuts” position.  A policy position that Guido sees as cowardice in the face of the enemy. Relying on the momentum for “change” and making the election a referendum on Gordon left one huge exposed flank – they had forgotten the other “change” candidate and they have now been outflanked not just on change but also on what was once their politically Unique Selling Point – tax cuts.  Don’t say Guido hasn’t warned Fink publicly and repeatedly, as far back as November 2008, that what he advocated allowed the Tories to be outflanked. Clegg himself even told Fink that he was wrong saying “I’m not sure I’ve ever been called a “punk tax cutter” before. I quite like the label… Danny Finklestein is wrong, and cutting taxes is right… Growth is what we need now.” Fink still hasn’t justified his ridiculous over the top claim that the economy would be destabilised by tax cuts with a single historical example of this ever happening.

More real-time polling from Google trends shows what people are searching for online, it suggests people want to know more Nick Clegg:

On the weekend a disappointed Tory insider told Guido they had searched through Clegg’s expense claims from his days as an MEP –  “He wasn’t on the take.”  Instead they are going to attack Clegg for being a former lobbyist – is that really wise when they are also led by a former lobbyist?

Quote of the Day

Nick Clegg wrote in 2008 that…

“Danny Finklestein is wrong, and cutting taxes is right, and here are some reasons why: Danny thinks that offering people on low and middle incomes a tax cut is a ‘con’- a short term promise intended to fool voters…. Growth is what we need now. Funded tax cuts help give us that. Without growth there’s no earthly way we’ll be able to balance the books over the economic cycle. Far from being irresponsible, as Danny alleges, tax cuts at a time of recession is the responsible thing to do… Why does Danny think it’s impossible after a decade of spiralling Whitehall spending to find 3% of that money that could be put to a better use? That’s what Gordon Brown says – the Government knows best, and the rest of us are not allowed to question the way he spends our money…. this isn’t about the media. It is about being clear and bold on what is needed at a time of growing economic distress. I may have failed to persuade Danny, but I suspect time will prove me right.”

Tories Should Have Called it a 'Marriage Credit'

Odd that in the same press release from Labour today where they have a go at the £3-a-week tax break for married couples proposed by the Tories, Yvette Cooper* boasts about the £4-a-week tax credit for working parents. Labour is spinning “as if anyone would get married for a £3-a-week allowance”.

Those of you who are unmarried and/or without kids may have to trust Guido on the following point; having a child is a far bigger commitment and cost than getting married.  As if anyone would have a child for a £4-a-week tax credit…

*The taxpayers pay a marriage credit to Mrs Ball’s household of £300,000 a year – for now.

Tory Evasiveness On VAT Invites Attack

The “we have no plans to raise VAT” formula of words that Tory spokesmen keep spinning is weak and actually suggests the opposite. The LibDems have rightly seized on this to launch their own attack poster – in a style which imitates past Tory posters from the days when they won elections on tax cutting manifestos. Guido won’t believe the Tories don’t expect to raise VAT unless they rule it out in the manifesto on Monday. It isn’t hard is it?  “We will not raise VAT in government”They will have no mandate for a VAT hike if they are not honest with voters…

The Shortest Tax in History

Yesterday the Cider Party was launched with the intention of fighting seats in the south-west on the issue of the cider tax hike. “”I thought we ought to start a political movement. The Americans have got the Tea Party movement so I thought, well, perhaps a cider party,” it’s leader said. Well late last night the tax was dropped. The quickest concession anyone has ever got out of this government.

Quote of the Day

In 1962 John F. Kennedy said…

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

Taxes Suck Demand Out of the Economy

Alistair Darling, Ed Balls and Gordon Brown claim that the Tories will take money out of the economy by cutting government spending, the Tories skirt round the issue by saying they will actually cut waste and undo the government’s proposed N.I.[…] Read the rest

+ READ MORE +



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Quote of the Day

Via the FT’s Jim Pickard: Seumas Milne’s idea for Labour election catchphrase:

“The Tories are the real extremists.”

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