The increased complexity of taxation in this country is a disgrace. Complexity is good for accountants, but bad for the average hard-working person in this country. It is good for Mr Brown, yet bad for small business, the lifeblood of the British economy. Why aren’t we out there saying this?
Last night I watched closely as Channel 4 ran the story. Ed Balls could not contain his delight. Indeed, his very presence and manner should have been attacked on the programme as opportunist and misguided. Here was a man jumping at the chance to ‘have a pop at the Tories’ based on a document from a policy review group. It clearly was not (yet) Tory policy. Why was Mr Balls so eager? And why did the Conservative Party not put up someone credible and senior to highlight Mr Balls’ ill-informed glee.
The Conservative Party, I feel, should have been out there agreeing with the need to simplify taxation. It should have associated itself with the worthy priniciple of reducing taxation on the less well-off in society. Furthermore, the policy of removing stamp duty on share dealing, a move that would invigorate the economy for the benefit of all, should have been supported. Why are we so shy? To my mind the ‘average’ Briton feels overtaxed and swamped by bureaucratic demands from government. Saying you are going to address these two concerns is not only good for Britain it is also good politics.
On a more positive note, Mr Balls’ eagerness indicates an obvious fear of the resurgence of the Conservative Party’s electoral fortunes. Here is a man who is alarmed that his political career will be curtailed before it really gets going. For him to tour the studios desperately trying to paint Cameron’s Conservatives as just ‘old tax-cutting Thatcherites’ was pretty lame. We need to rise above this type of politics. Advocating reasonable tax cuts and, more importantly, simplifying tax law are admirable policies. Mr Balls could have been made to look scared and weak. We missed an opportunity last night.
October 19th, 2006 - 3:11 pm
So do you agree with the commission that tax cuts should come 1st and economic stability / public services 2nd? Otherwise where will you save money or what other taxes will you raise? Perhaps that is why Tories were scare to go on TV and defend this? If I were a Tory I would also be very aware that tax simplification plans were considered to be a major electoral liability to Angela Markel in the German elections.
October 19th, 2006 - 3:50 pm
Good afternoon Graeme. To have economic success, this country needs a low tax environment. Recent OECD figures indicate that the UK tax burden has climbed from 39% in 1997 to almost 43% in 2007 (projected). Across the OECD the average tax burden is projected to have fallen to just under 38% by 2007. This dramatic difference in tax take will hardly make us an attractive proposition for inward investment, particularly at a time of increasing global competition. Without economic success in this country we will not have the money to sort out public services. If we do not sort out our public services they will not have a viable future. None of us want that.
October 19th, 2006 - 4:05 pm
Was that Rainman on C4 News last night – oh no it was Howard Flight!
October 19th, 2006 - 4:15 pm
Yes, well what the OECD actually said is that tax take is increasing as a result of economic expansion and increased compliance with tax codes. Economies with greater growth and profitibility of corporations saw greatest increases. Increased profits and less evasion means more tax to pay. Interestingly income tax has fallen from 30% of total tax take in the UK to 25% and at 37.2% (OECD figuers)the total tax in the UK is just above the OECD average. The rise was the 3rd highest but that is what you would expect if profits increase. This is how economies work but that doesn’t the CBI doing its job and making a loud noise by complaining.The tax burden peak though, at 39%, was of course during the 1980s under Thatcher when we all had to pay lots of taxes (well not us Phil because we were at primary school) to pay for all that unemployment benefit.
October 19th, 2006 - 4:36 pm
Are you denying that the increased complexity of tax law introduced under this Labour government is hampering Britain’s economic competitiveness? Do you refute KPMG’s conclusion that “the general trend for the UK’s tax system in recent ears has been towards more complexity and less certainty, which is gradually making the UK a less competitive location for industry.”? Furthermore Graeme, I am surprised that you would not support raising the personal allowance and abolishing the 10% rate. How come?
October 19th, 2006 - 4:47 pm
Simplicity is great and not really a left / right political issue. The issue is what taxes will be increased to pay for £22 billion pound of cuts, or what public services cut or whether this is more important than economic stability and the fight against inflation. The other side of the coin is who pays those taxes and how regressive or not they are likely to be. All difficult decisions that will lead to winners and losers. I simply raised the question because you seem so keen on the tax cuts.
October 19th, 2006 - 4:57 pm
I am keen on tax cuts with specific aims. Support for young people and families – both in the form of income tax reduction and removal of taxes levied on property purchases – would get my particular support. Conservatives are only interested in a tax system that the country can afford. To my mind, for the sake of the long-term health of its economy, the country cannot afford to be in a ‘tax disadvantageous position’.
October 19th, 2006 - 5:10 pm
But income tax has been reduced and is also fairly simple and stamp duty doesn’t really effect the disadvantaged does it? The only point I was trying to make is that it gets very difficult when you suggest changing the fiscal balance of the economy and my own advice if I were a Tory advisor would have been to keep absolutely silent until it had all been worked through.