Tuesday, October 09, 2007

Taxing Tories

Some Tories have been getting themselves worked up over George Osborne's exciting tax cut.
On Monday, when George stood up and pledged to abolish the Death Tax for all except millionaires, you would have been able to hear the cheer from the top of the Pepsi Max Big One. Tyler screamed with delight, and Mrs T was only able to restore order by punching him in the face.

Why? What is it that Osborne has announced?

Fuck all. Very far from announcing the total abolition of IHT—with a fucking ludicrous tapering Capital Gains Tax—as the Taxpayers' Alliance anticipated, all he has done is to raise the threshold to £1 million.

Well, whoopy-fucking-do.

Let us remind ourselves of the figures: in 2006/07, the state spent £586.6 billion of our money: of that, £3.9 billion (0.6%) was raised through IHT. And Nibbled-Nose George won't even be losing all of that.

I have talked about his inability to point out these glaring figures on QuestionTime already, but what I didn't comment on was how he intends to raise that sum. After all, he is not changing the overall tax burden, oh no; the Tories won't do that for at least their first government.

George is going to put a set flat charge on non-doms—the betes noire of the moment—of £25,000. Nice. Let us make one thing absolutely fucking clear here: non-doms pay tax.

Non-doms pay UK tax on all of their UK earnings and savings. Non-doms pay UK Council Tax on any UK property that they own. Non-doms pay UK Fuel Duty on any petrol that they use whilst driving on UK roads. Non-doms pay UK VAT on any purchases that they make in the UK.

To see the Tories jumping on the bandwagon of demonising certain areas of society is both pathetic and worrying. Who's next, eh?

So, let's just summarise, shall we? Osborne is raising the IHT threshold to £1 million and then aiming to pay for this by levying an extremely regressive tax on people who already pay a legitimate amount.

And Tyler is excited by this? For fuck's sake.

The reason that many Tories have gone utterly over-the-top on this, fundamentally, is because they were losing the faith. Even those standing behind Cameron were really beginning to doubt that he was, in fact, a Tory—that he did believe in low tax and personal freedom.

This pathetically tiny tax "cut", leaked just ahead of the Conference, was not to put NuLabour on the back foot: it was a (miniscule) concession to the Tory faithful, to ease what might otherwise have been a somewhat sticky Conference for Cameron.

And it worked. Cameron didn't need to give away very much and the party leapt on it with gleeful whoops; yet the sheer paucity of talent and knowledge in the Conservative Front Bench was revealed in Osborne's extremely timid QuestionTime performance.

The Tory faithful will no doubt whine about how "Cameron can't be seen to be making cuts because the populace would get scared and would see the Tories as the nasty party helping the evil rich and fucking the poor up the arsehole without lube, blah, blah, fucking blah."


First, the populace were overjoyed at the sniff of a tax cut. As I have argued before, they are ready to hear the low-tax argument.

Second, if anything helps the rich—even if it is only the moderately rich (the really rich don't pay IHT: they can afford to find ways around it)—it is the raising of the IHT threshold.

Third, there is a way that the Tories could cut taxes and appeal to the very poorest sections of the electorate, including the Labour stalwarts that they so need to convert. It is a measure that would dispel the myth of the "nasty party" pretty comprehensively. Can you guess what it is?

It is a simple policy and it is one that is so important and so morally right that I would (probably) even vote Tory next time to see it implemented. Are you listening, Iain?—because I know that you'd love to convert me!

It is this: raise the Personal Tax Allowance to £12,000, thus removing those working full-time on the Minimum Wage, for example, from the income tax system entirely.

In 2006/07, Income Tax brought £152 billion into the Treasury but, by the time you have factored in the cost of collection and the benefits paid out again, I am willing to bet that the net income from those earning under £12k is either zero or even in negative figures. So, come on, Tory-boys, grow a pair.

If you want to make the poor richer and give them aspiration, stop taking their fucking money off them, you thieving bastard fucking politico cunts.

Compared to this very simple and vote-winning policy, the Tory threshold rise on IHT looks like the pathetic, symbolic gesture that it so obviously is. That otherwise sensible Tories should greet George's turd-in-a-bucket announcement as though it were the Second Coming is utterly lame.

Wake up, guys: you've been duped.


Anonymous said...

v.good points DK.

and bear in mind folks that our economy doesnt work in a vacuum.
THIS is what we're competing against.

also -Osborne never mentioned our staggerly high rates of corporation tax, which is a big disincentive to inward investment (and jobs)...

compare our 30% corp tax to
ireland: 12.5% , bulgaria : 10% , hungary: 16% and poland: 19%

Anonymous said...

unbelievable. C4 news right now and they're argueing about that 0.6 per cent rounding error - inheritance tax.

the Tory doesnt even mention the 500 billion robbed from us and pissed away each year. by comparision the inheritance tax take is chump change found down the back of the government sofa.

Anonymous said...

labour guy is allowed to get away with the no inheritance tax = less schools and hospitals fallacy.

nobody came back to him and asked - what about the ludicrous ID card scheme? or the 20 billion pissed away on the NHS I.T. system? or the multi-billion CSA i.t. system that's been written off?

Anonymous said...

alaistair darling has just pulled off a con trick.

he has NOT raised the IHT tax threshold.

its gone from £300,000 per PERSON to £600,000 PER MARRIED COUPLE. He's just made it easier for people to transfer their £300,000 on death - which most people do anyway via a trust.

so, in effect, no tax cut.

Even the Torygraph was fooled

Anonymous said...

after reading some more on this , this IHT "tax cut" is nothing of the sort.

currently each individual can pass on up to 300k tax free to their children.

under the new proposals a married COUPLE will be able to pass on 600k.

but thats no different to the current arrangements where dad can pass on 300k and mum can pass on 300k.

the individuals IHT exemption is still 300k.


the actual tax cut is the removal of CGT taper relief, to a flat rate of 18 per cent. so buy-to-let properties sold quickly will now incur not 40 per cent, but 18 per cent CGT.

Anonymous said...

Good post.

There's a rich vein for satire here based on Noel Edmonds' new programme Are You Smarter Than a 10 Year Old? whereby leading news journos fail to spot what a 10 year old would realise in a matter of seconds. Perhaps I'll suggest it to the Eye.

Mark Wadsworth said...

1) DK, it's 'minuscule', apart from that, totally agreed.

2) Mr Scruff, why does everybody yap about corporation tax? It is not particularly high and it raises £50 bn per annum. VAT is a totally c***ish tax, imposed by the EU, which raises £80 bn per annum from less than half of businesses. Sort out VAT first.

Anonymous said...

At last an unequivocal debunking of Tory tax cut BS. The faithful have sold themselves really cheap on this one. A raised PTA and flat tax for the rest, now that would have been real meat. But the way they're carrying on over on ConHome you'd think Osborne had trumpeted the second coming or something. And as for the "One Speech" they think the next election is in the bag on the basis of that, talk about credulous. How long I wonder before all this new found "unity" in the Useless party fizzles out and normal service is resumed? Any advance on a month?

AD627 said...

Completely agree that the most moral tax cut of all would be to raise the personal allowance substantially. This would restore personal responsibility and freedom from state interference to many millions of Britons. It would save billions currently spent on extracting money from the working poor, then redistributing it back among the poor. It would increase the incentives to work and go some way to mitigating the effects of the welfare trap. It would end the current farce, where income tax is effectively a tax on the honest poor, since those working in the black economy – as cleaners, minicab drivers, handymen, builders etc – are able to avoid it. Perhaps most amazingly, it would do nothing more than return us to the position in the 1950s – before our pernicious politicians really got into their stride, when the average blue collar worker paid no income tax.

Also agree that the Tory IHT proposal does not go far enough. Raising the threshold simply risks reducing the target take, but maintaining the (already ludicrously high) compliance costs, because it is the genuinely rich that are most able to avoid IHT. It should simply be abolished.

You are overly harsh in attacking the proposal of a pro rata tax on non-domiciles as highly regressive. These people are not Britons, so we do not need to consider whether the tax we impose on them is regressive. If they don’t like it, they are welcome to leave. However, I suspect that those that contribute most would regard 25k as good value for the right to reside in the UK.

Anonymous said...

"Mr Scruff, why does everybody yap about corporation tax?"

because its precisely what the government investment lobbyists of Ireland, Bulgaria, Estonia etc yap on about to American and Japanese investors.
It is a KEY PLANK in their argument.

The opening gambit in their sales pitch so to speak.

Anonymous said...

we could abolish 7,500 quangos (what the fuck do they do anyway?) , abolish the DTI ( who are fucking useless compared to the IDA in Ireland) and have enough savings to completely abolish corporation tax to zero, and bye bye IHT as well. Non doms - no tax whatsoever, please do come in and spend your money here.
and probably a few more too. like lower petrol tax.

we are on the edge of a cliff facing a major recession, and the nobheads in parliament are argueing over 0.6 fucking per cent of government expentiture - which is IHT. its a fucking joke.

we need a good kick in the gonads to kick off the british economy. trouble is our politicians are too fucking dumb to see the obvious.


Anonymous said...

what i used to do on a lower wage 5 years ago:

buy a computer magazine once a week
buy a cd once a month
go out with Mrs Scruff for a nice meal once a week
have three holidays abroad
buy a new car every two years
drive to work every day
buy a newspaper every day. and one in the evening
work in london, commuting in

thanks to tax rises i don't do any of the above.
i drive to work about 1 to 3 days a week - work remotely instead
i dont work in london anymore, avoiding the punishing public transport costs
given up on buying newspapers.
its once every 6 months for that meal out with Mrs Scruff.
haven't bought a cd in years - i download to save money
haven't visited Blockbuster in years. I just use the BitTorrent video store instead.

this is just a small snapshot. an average look at Mister Scruff, but i wouldnt be surprised if that's also applying to everyone else.

And before you scream "mortgage" , Mr and Mrs Scruff don't have a mortgage, since Mr Scruff paid off his mortgage thanks to various investments that went well in the 1990s.

So, if I am tightening my belt, then by god is something happening in the UK economy. Mr Scruff, being mortgage free is probably more able to sense the decline in living standards.

Roger Thornhill said...

One day the Poles working here will begin to realise that they should incorporate in Poland and then bill us here, so avoiding our huge taxes.

Result: Poland gets richer, the UK gets poorer.

Corporation tax should be cut drastically, IMHO, to encourage more companies to come here and file. Ideally we suck the corporation tax revenue out of Europe.

chris said...

They should have gone for Income Tax first, and raised the starting level to at least 60% median income. VAT is next on my list (necessarily after getting out of the EU of course). But personally I will take any tax cut I can get ... then demand some more.

chris said...

Thinking about it further National insurance comes even before Income tax, like Income tax it is a tax on working, it is regressive and it is a tax on employment.

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