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Posts Tagged ‘tax’

Jack Lesgrin’s week: Government U-turns on Triple Lock and National Insurance, but still the young lose out

12/09/2021, 11:13:00 PM

by Jack Lesgrin

Double U-turn on Triple Lock and NI, but not on preferencing old over young

Last week saw two U-turns by the government. First, they temporarily suspended the Triple Lock for pensioners because of an unusual and statistically anomalous rapid rise in earnings caused by the pandemic.

The second U-turn saw Johnson finally putting meat on the bones of his famous pledge, delivered in his first ever speech as PM in Downing Street in July 2019, to “fix the crisis in social care…with a clear plan we have prepared”. Tuesday’s mini-budget announced a National Insurance-funded Health and Social Care Levy. Note the sentence that preceded this: “My job is to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care.”

The government made the levy apply to some share income and on state pensioners’ income if they continued to work, in an attempt to mitigate criticism that using the National Insurance mechanism makes younger people, by definition of working age, subsidise benefits enjoyed by the elderly.

Yet this was only a fig-leaf, covering the sensitive nether regions of our system of taxation: namely that we have for too long preferred to tax income from work over other forms of income derived from other forms of wealth. Labour’s Shadow Chancellor, the excellent Rachel Reeves, eloquently put it thus: “Which types of income will be paying no additional tax after today? They include those who get their income from financial assets, stocks and shares, sales of property, pension income, annuity income, interest income, property rental income and inheritance income… Some 95% of the revenue the government plan to raise from this tax bombshell comes from employment. What a contrast.”

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Posted in Grassroots | 18 Comments »

Labour needs to end its pathetic war on the media

12/04/2016, 09:38:50 PM

by Samuel Dale

Labour MP Angela Raynor is interesting. She is shadow pensions minister but despite a time of huge upheaval in both public and private pensions provision, she rarely talks publicly about her patch.

Instead, the former union rep focuses her ire on a vast array of issues beyond her brief such as the steel crisis or – the favourite of most Corbynite Labour MPs today – criticizing the press.

Last Wednesday, prime minister David Cameron admitted he had more than $30,000 held in an offshore trust that he withdrew in January 2010. It was a stunning admission after days of evading questions over the Panama Papers.

At 10pm on Wednesday, Raynor tweeted: “I bet the right-wing press will hardly cover Cameron confession, front page will be a silly non-story on an obscure topic #curseofcameron”

By 11pm, the front pages of all major newspapers had been published and the story was splashed on the Times, Telegraph, Daily Mail, Independent, Mirror, Daily Express and Metro. It also made the second story on the front page of the Sun.

Obviously she was completely wrong. But more importantly, it is typical in the party today. Even when Labour is getting good coverage, it is blinded by its hatred of the press.

On Friday morning, a reporter from LBC door-stepped Jeremy Corbyn to ask what he thought about the criticism around Cameron’s offshore holdings.

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We all owe the state for the lives we lead and tax is how we pay our fair share

02/11/2012, 02:00:03 PM

by Dan McCurry

I’ve completely changed my mind, thanks to Peter Watt. I used to agree with Peter’s position, that taxation is a necessary evil, not a automatic right of the state. Then I read his piece, on tax, Labour must remember: “it’s not our money stupid, it’s theirs”, and I’ve since reversed my position completely.

This is part of a wider debate about whether the state creates private business, that began with a gaffe from Obama. “If you’ve got a business, you didn’t build that. Somebody else made that happen.”

It was a gaffe, but the rest of the quote made sense of what he meant. “There was a great teacher somewhere in your life. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that.”

The debate re-emerged in this country during the party conference season. Miliband had described a Tory tax-cut with the visual image of David Cameron writing out £40k cheques to his mates. At the Tory conference Cameron responded, “When people earn money, it’s their money. Not the government’s money: their money. Then, the government takes some of it away in tax”.

Previously I was very much in agreement with David Cameron on this one, but reading Peter’s article got me thinking. If it were the case that the state acts as a hindrance to wealth creation, then why do millions of enterprising and ambitious young people, from the developing world, risk their lives to enter the western world every year? Surely if our top heavy state was standing in the way of business, why don’t they stay in their own country and make their fortune there?

As Obama pointed out, we have an infrastructure allowing fast and smooth transportation, as well as an advanced rule of law. We have an educated and healthy population who are available both as workers and as consumers. The state provides conditions that allow enterprise to flourish.

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Labour needs to stop moralising about tax

02/08/2012, 07:00:40 AM

by Peter Watt

Is paying tax a moral duty? It is the sort of question that has those on the left and right frothing at the mouth.

The question has recently come to the fore once again with row after row over tax avoidance by some of the rich and famous. On the face of it the case is obvious.

At a time when budgets are being squeezed and services cut there are people who are really suffering. Jobs are going and much valued support services to some of our most vulnerable are being cut so that we can reduce the amount we are borrowing as a country.

We all need to do our bit by paying our taxes and if you choose to deliberately avoid paying yours then what does that make you? Selfish? Unfair? That’s certainly the common view; and with George Osborne and Ed balls united in a desire to clamp down on such “aggressive” schemes it seems that there is a degree of consensus; paying tax is our moral duty.

But, on the other hand I have an ISA that means that I don’t have to pay tax on any interest I accrue. I take advantage of duty free (tax free) shopping when I travel abroad. I took advice on planning my pension and made sure that my arrangements were tax efficient. And I am hardly alone, millions of people do it. If you have to undertake a self-assessment then you don’t start the process trying to maximise what you have to pay you look to minimise it.

It may not be in the same league as the Jersey based K2 scheme made famous by Jimmy Carr, but it is still tax avoidance.

And companies rightly look to make tax-efficient investment decisions. Their duty is to maximise returns for shareholders and part of that is to legally minimise the tax that they have to pay. Paying less tax means that they can maximise reinvestment in innovation and jobs; which will in turn generate more tax.

Bigger profits mean better returns for shareholders, many of whom are millions of people with savings and pensions schemes.

When the Labour party bought a London property a few years ago, it used a company to buy it. The party did that so that when they sold the property it would be more tax efficient and indeed, when it was sold it saved tens of thousands of pounds as a result. Quite right too!

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The twelve rules of opposition: day two

26/12/2011, 12:01:56 PM

by Atul Hatwal

Rule 2: Use the government’s tax and spending plans as a bridge back into the argument

All oppositions start their lives with a trust deficit on the economy.

Defeat at a general election is the most stark demonstration of voters’ lack of faith. It is the public sending a clear message that they do not believe that the party has either the policies or the capability to deliver on their promises of a brighter tomorrow.

The pre-eminent requirement for an opposition is to bridge this trust gap, as quickly as possible.

But deprived of power, and the ability to demonstrate how alternative policies would have been more effective than the government’s, the options are limited.

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The seven-year itch: a cautionary tale of tax, cuts and debt

18/09/2011, 12:00:14 PM

by Rob Marchant

There was this bloke. And there was this girl. They met, fell in love, got married, usual story. It was a big, special wedding, everybody went. A match made in heaven, everyone said. People came out of their houses to wave as they went to the church. The kind of wedding that fills everyone with hope for the future.

She was popular, always a lot of boys round her. But she was smart, knew what she wanted. Sometimes it looked like she wasn’t paying much attention, but she did when it counted. Didn’t stand for any nonsense. He, on the other hand, was a bit of a tearaway. Heart in the right place, but not very together a lot of the time. And a drinker. A long history, in fact. Lots of girlfriends, but in the end, they all went, because of the drink. But not this one: this time it’d be different.

So, on the day they married, he promised to her that that was it with the drinking. And it was true. Never touched a drop. Day in, day out, he would walk home past the pub, think how lucky he was to have found her, and kept straight on walking. Life seemed charmed. (more…)

Posted in Uncut | 9 Comments »

The Tories have got tax right: they’ve just got marriage wrong

26/04/2011, 07:00:13 AM

by Peter Watt

My youngest sister just got married in South Africa. About 30 of our large family went for a holiday of a lifetime to celebrate the big event. We had an incredible time and it made me think once again about the importance and influence of our family. We provide each other with friendship, informal social care, safety, emotional support, counselling, nurturing, parenting and parenting advice, financial support and of course a sense of belonging. Of course, we aren’t alone in this. The family has to be one of the most important influences on everyone’s life.

It is for this reason that “supporting families” is something that all political parties claim as central to their social policy. At the last election, the Tories emphasised their flagship policy of recognising marriage in the tax system.

Rightly, Labour argued that this was not only simplistic but also discriminated against families that do not include a married couple. But we lost the election. And the budget saw the Tories take their first small steps in implementing their approach. There is no doubt that over the coming years they will continue to use the tax system to aggressively demonstrate their intent.

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When it comes to tax, it’s the politics, stupid.

01/03/2011, 12:00:46 PM

by Rob Marchant

Not content with the questionable strategy – not to mention gift to David Cameron – of our insisting on the extension of 50% tax band indefinitely, Ed Balls has now indicated in a Progress interview that he is also thinking about lowering the threshold of the band. It was one of his leadership campaign pledges.

Doubtless, we could usefully use the money to invest in public services. But before we get into the classic Labour argument of how much money you can make, or not make, by taxing the rich, let us pause for thought and consider the following argument.

It. Doesn’t. Matter.

The question now is political, not economic. It is about perceived competence. About being in opposition, not government, and its impact on the way we do things and, most importantly, about our electoral future. These are things that both Blair and Brown keenly understood, and that is why they were successful. (more…)

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The unholy alliance destroying the country (no, not that one)

31/01/2011, 07:45:12 AM

by David Seymour

It is the last resort of a desperate politician to fall back on denouncing judges as unelected. Michael Howard was at it the other day, complaining that the courts should not be asked to decide whether it was lawful for the government to snatch away million of pounds promised to councils as part of the “building schools for the future” programme. (Yes, that’s the same Michael Howard who was overturned 27 times by the courts when he was home secretary).

If the only people who could decide anything had gone through an electoral process, we would be in a situation in which an administration supported by less than a quarter of the electorate (as most governments in the past decade have been) could do what it liked.

What really gets me agitated, though, aren’t the attacks on judges by politicians and right-wing journalists (can’t recall many of them being elected), but their acceptance at the same time of certain unelected and self-appointed individuals and bodies who exert an overwhelming influence on decision-making.

Take Sir Andrew Green and migration watch. Where did they come from? He was a retired diplomat who founded a body which has been at the forefront of terrifying the British people into thinking we are being over-run by foreigners. (more…)

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Child benefit and middle class single mums: the sums, by Lesley Smith

07/10/2010, 12:39:34 PM

Much guff has been talked about the effect of the loss of child benefit on the so called aspirant middle class. Yes, a family with one earner taxed at 40% and one at 0% will be hit. And, yes, it’s a grand less towards the school fees. But the tax system already looks after happy couples. (Two people, two tax allowances). And Cameron and Osborne knew that there was little appetite to defend them.

So who does lose out? And does it matter? Well there’s not much sympathy for working single mums who’ve managed to go up the income scale. Sure, they’re not the worst off. One blogger points out that the median income for working single parent families is £21,035 a year (compared with a median of £32,158 a year for a two parent family with one worker.) (I’m assuming this is gross.)

But single parents earning £45k aren’t an urban myth. And nor are they leading the life of Riley.

Unless she has stumbled on a lottery ticket, a single mum on £45k is out at work and shelling out on childcare, paid out of already (higher) taxed income. (Funny that an accountant is tax deductable but a nanny is not.) So her net income is far, far lower than that of the couple who generate the same income but only pay 20% of it to the tax man. (And she’s up half the night cooking and cleaning as she hasn’t time in the day or money to pay). (more…)

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