Friday, September 28, 2007

Tories to abolish Inheritance Tax

In a move that will no doubt have various Lefties squealing, the Taxpayers' Alliance are reporting that George Osborne will announce that the Tories will abolish Inheritance Tax. Well, mostly, anyway.
The TPA has just been told by a high-level source that George Osborne will commit the Conservatives to abolishing inheritance tax in his speech at the Party Conference on Monday. This is great news. The TPA has long argued that inheritance tax is unfair, unpopular and unecessary and so we warmly welcome its abolition.

The plans as put forward by the Economic Competitiveness policy group and the Tax Reform Commission do envisage inheritance tax being replaced by a short-term capital gains tax, which would taper to zero after ten years and from which the main family home would be exempt. This does mean that some assets held for less than ten years will still face a tax on death, but according to the Tax Reform Commission, far less revenue would be raised under this system than from inheritance tax.

This is good news indeed although, having said that, I seem to remember John Major talking about doing the same thing, and that never happened, eh?

The reason that many otherwise sensible Lefties will squeal is because they see Inheritance tax as one of the few fair taxes, penalising, as it does, what they see only as luck. Actually, of course, if my father decides to save a load of his money, instead of squandering the lot, in order to pass it onto my and my siblings this is the precise opposite of luck: it is planning.

Now, you might say that, from my point of view, that it is merely luck and I will reply, "yeah. And. So. What? What a pity that your parents didn't do the same." The only thing that motivates such people is jealousy.

The fairest tax is, actually, a tax on work, since we all have to do it. In this way, everyone bears a proporational cost of maintaining the state: everyone, if you like, pays their bit towards society. Taxing inheritance is quite simply taxing those who have made sensible and far-sighted decisions rather than fecklessly wasting their money on precisely piss-all.

Bring on the tax cuts!

Except, of course, that the Tories have generally decided that any tax cuts will be revenue-neutral (at least for the moment) so don't get blinded by this piece of good news and remember to watch for Osborne's announcement of tax rises—or extra taxes (probably based on the AGW fantasy)—at the Conservative Conference.

9 comments:

Andrew Ian Dodge said...

Or like Davey boy's pledge about the EPP.

This shows how desperate they are... I remember a Cameroonie telling me that the whole issue was a "waste of time" and "minor".

Mark Wadsworth said...

Good riddance to IHT, but this short term CGT is a complete load of tosh, it will be nigh impossible to work out, CGT only raises £5bn a year or so, why don't they scrap that as well?

Harry Haddock said...

It also appears to fly in the face of the argument for simple taxes ~ let's just scrap it

Anonymous said...

All tax is unpleasant, but some taxes have greater flaws than others. Compared to other forms of taxation I think inheritance tax is one of the better ones. Tax on labour is incredibly intrusive - it requires the government to regulate the actions of even two people making a contract between each other, money in exchange for labour. In a corporate office environment this is easier to enforce, but for more manual labour, window cleaning, berry picking, removals, joinery, things which a very much a one man job, it can't be enforced very easily. It is in fact a tax on honesty. I would view people who get caught dodging their taxes as more unlucky than anything else. Inheritance tax only intrudes into private affairs very occasionally, it is simpler to collect as valuation of property or bank accounts does not require the knowledge of what people have being doing at all times of their life, and all dealings that they had with others, in case some of those dealings involved "income". Inheritance tax is one of my favourite taxes, along with import duties, land value tax and corporation tax.

Anonymous said...

I could never bring myself to steal from the pockets of a corpse, so I guess I'm not cut out for politics.

Alan Douglas said...

The fairest tax is a tax on SPENDING - entirely progressive in that the more you spend, the more tax you pay.

This also does not penalise people for earning, so they can work as hard as they like and be rewarded for it.

Have done no figures, but I reckon the government would be entitled to 15 % of all spending, and would have more than enough to pay its way.

Alan Douglas

AD627 said...

Inheritance tax is not one of the better taxes. It is almost as intrusive as labour taxes and it impinges on people at time of bereavement. It is a tax on the honest and the middle class, since the genuinely rich can avoid it relatively easy. It is ludicrously complicated, requiring the back testing of gifts in the years prior to death, and employing legions of accountants (who might otherwise have productive jobs), both in government and the private sector, to enforce it and avoid it, respectively.

Tax on labour is only “incredibly intrusive” and a tax on honesty, because it extends far too far down the income scale. If we had a sensible level of personal allowance (until the 1950s, an average worker paid no income tax), we would prevent the honest lowly-paid worker from losing out to his black economy counterpart. We could go further and introduce a flat tax with a high personal allowance, in which case the state wouldn’t need to know the levels of peoples’ earnings – it could simply enforce a tax on employers, based on their total wagebill and headcount.

However, given the consumer-spending boom that is about to turn to bust, taxing spending would make a lot more sense (at least once we begin to emerge from the coming recession). Extending VAT to all products and services would be a logical start.

Mark Wadsworth said...

ad627 well said. Is that a year or an alias?

Matt Pain said...

Alan Douglas, there is actually a tax on spending, it is called VAT. Your motivation for it makes it slightly more morally acceptable. DK there are actually no "otherwise sensible lefties". I think PJ O'Rourke's assessment is fairly accurate.