Tax cuts are popular? Who knew!
Guido hasn’t seen this reported anywhere else in the news, the PM’s forward promise to move the 40% threshold up to £50,000 means that the rate will kick in at the boundary level last seen in 2009/10 under Gordon Brown. In 2009 the 40% rate kicked in after £37,400 of taxable income and under a Conservative government in 2020 after a decade in office it would kick in at £37,500 (£50,000 – £12,500). A move in the right direction of £100…
Confused? Well the threshold drag has been a hard-to-headline stealthy massive tax hike by this government. With no other deductions and no change in the N.I. rate – which Guido suspects will be abolished in a final Lawsonian type reform towards which Osborne is ideologically inclined – the net take home figure would only be improved by some £2,100 for a £50,000 earner in 2020 compared to 2010 – a 4.2% relief. Whereas someone on minimum wages making £12,500 in 2020 compared to 2010 will see nearly a 100% improvement in their net take home pay…
(Thanks to bean-counting co-conspirator Q97 for help with the sums.)
Guido has never seen a tax cut that he does not like so Cameron’s speech today was certainly lively. The hall loved it and Dave hit their sweet spots in a way he has not since before the last election. Personal allowance up, the threshold for 40% rate up from £41,000 to £50,000. More money kept in the pockets of millions of voters, but…
Having said that, whatever happened to that last tax rabbit that the Tories plucked from a hat when in a tight spot? Inheritance tax threshold up to a million? 2007? Ring any bells? Guido will believe it when he sees it…
It may unravel and billions in cuts will have to be found to pay for it all, but in terms of strategy it’s exactly what the Tories needed to do. After last week’s eighty minute snoozefest from Ed Miliband, it’s tough to see how Labour can avoid responding to these pledges directly. UKIP and the LibDems will moan that their ideas have been lifted, which will further please the blues. Over to you Ed…
A crass attempt at token Labour-vote stealing communism announced at UKIP conference today. A 25% tax on luxury goods such as £200 shoes, £1,000 handbags and £50,000 cars. UKIP sources are calling it the ‘Theresa May tax’. Claws out for the kitten heels…
Both the BBC and Channel 4 News last night reported that Labour will pledge to pay for an increase in NHS funding with a ‘mansion tax’ on higher value homes. Last year Ed Miliband committed to spending the revenue raised from a mansion tax on the return of the 10p tax rate. And the 10p tax rate isn’t the only thing they have pledged to spend the mansion tax money on.
Just yesterday, Rachel Reeves told the Daily Politics that the money raised would go towards paying down the deficit. Fast forward to 1:30:
AN: “You’re inheriting a deficit of £75 billion.”
RR: “Child benefit is not the only thing that we’ve announced. The tax on properties worth more than two million pounds, repeating the bank bonus tax, increasing the top rate of tax back up to 50p, the winter fuel allowance not going to the richest pensioners, you add all those up, that adds up to several billion.”
Labour have now pledged to spend the mansion tax cash three times already. It’s the bankers’ bonus tax all over again…
Discussing the fact that Britain’s poorly costed second aircraft carrier will see active service after all, Dave told the Commons earlier:
“In a nutshell really, that’s the difference between a socialist and a conservative. They dream about having money, where we raise it and spend it.”
Really, Prime Minister? Being a conservative is about raising tax and spending? Think that line might need a little work…
“There’s no link [between Mr Umunna and Signature Tax]; there are Labour supporters in all walks of life who share the values of the party and donations do not influence policy. The donation has been made and declared in the normal way, in accordance with the rules.”
“No link between Mr Umunna and Signature Tax”, apart from the £2,500 they gave him. Chuka’s spinner says of the donor: “there are Labour supporters in all walks of life who share the values of the party”, Guido wonders if this refers to their penchant for offshore tax arrangements.
Incidentally, Signature Tax itself has a rather odd whiff about it too. No one answers when you call their phone number and their website could have been designed in five minutes by anyone with a laptop. Yet they found £2,500 to bung to Labour’s Shadow Business Secretary…
Chuka Umunna has received a £2,500 donation from a firm which advises its clients on how to swerve HMRC rules to help them avoid tax. Signature Tax paid the sum two weeks ago, with the money “received through the Labour Party to support the office of Chuka Umunna”.
According to their website, Signature Tax specialise in “non-DOTAS tax schemes”, structures designed to avoid HMRC’s Disclosure of Tax Avoidance Schemes regulations, which require those using tax avoidance schemes to inform the taxman. Accountancy Age explains how non-DOTAS schemes offered by Chuka’s donor bend the rules:
“Some of the (tax avoidance) promoters who used DOTAS numbers as tacit approval from HMRC initially, are now promoting schemes outside the DOTAS system. Some promoters are looking hard at their product lines and designing versions that escape the rules. Those rules have become so prescriptive, advisers say, that the longer they become, the easier they are to find holes in. For example, class action group Rebus claims to know of at least two promoters looking for non-DOTAS versions of old products.”
Signature Tax’s website also offers advice on “off shore” tax arrangements. Chuka has been a staunch opponent of such schemes, famously grilling former Barclay’s boss Bob Diamond over his bank’s offshore subsidiaries and urging him to close them down.
And who can forget when he called “on the chancellor to close in on tax avoidance, close in on tax loopholes and deliver greater tax justice.” Adding that: “It is time to close in on tax avoiders, recoup public money and ensure everyone in society pays their fair share.”
In light of this new information about his donor, will Chuka give the money back to avoid any allegations of massive hypocrisy?
Labour’s latest proposed tax on fun is a 5% compulsory levy on Premier League football TV revenues, announced by Harriet Harman this morning. The Premier League tell Guido that they already contribute £1.3 billion in tax revenues to the government annually, so it is inevitable that the cost will be passed on to fans.[…] Read the rest
The BBC claims that the licence fee poll tax is justified because poor people watch more television than better off households. With Director General Tony Hall appearing in front of the DCMS select committee this week, the Beeb’s Director of Policy James Heath blogged that a flat rate licence fee is fair on the poor because they watch so much TV:
[…] Read the rest
“The argument for a uniform fee is that there is a direct link between the level of the service received by everyone, and the level of the charge made on everyone.
The last PMQs before the summer break is one of the most important of the year, as it leaves a lasting impression about the leaders before MPs disappear off for the summer to stew. Poor Ed.
Miliband was just ambushed by Cameron on Harriet Harman’s comments to LBC that she thinks middle income earners should pay more tax.[…] Read the rest
Question-dodging Margaret Hodge chaired a panel discussion in parliament this morning on tax transparency, wasting no time in piling into the ‘Big Four’ professional services companies for failing to use “copper bottom schemes” to prevent tax avoidance. Awkward then, that sitting two seats along from Hodge the Dodge on the panel is Shadow Exchequer Secretary Shabana Mahmood, who has just hired a new technical support analyst paid for by Big Four firm PriceWaterhouse Coopers.[…] Read the rest
Over the course of a year, the average British household pays more in tax than it spends on food, clothing, housing, fuel and power. As illustrated by this chart from the Taxpayers’ Alliance:
Forget the cost of living crisis, Britain is facing a cost of taxation crisis…[…] Read the rest