| Sensible tax policies |
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| Written by Tim Worstall |
| Monday, 08 September 2008 06:03 |
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Proving that there might be hope for us all even now two politicians have started to make encouraging noises about better taxation systems. David Cameron says: In an interview with The Sunday Telegraph, the Conservative leader sends a strong signal that he would seek to introduce tax reductions to reward those who "put their backs into the British economy", although he stresses that these must be affordable. Not exactly the strongest of pledges but at least a start. Nick Clegg also seems to be getting the point: Nick Clegg has told The Sunday Telegraph that he is reviewing his pledge to cut 4p from income tax with a view to offering a much bigger cut for "middle earners". Perhaps in their excitement to gain from the likely implosion of the Labour vote at the next election they might start to leapfrog each other in their commitments to such tax cuts? We can but hope, eh? However, there are two more things I'd like to see. The minor one is that the justification for such cuts is that money left in the pockets of the populace will fructify making us all better off over time. The second and more major one is where those tax cuts should be concentrated. The biggest problem we have in our tax system is at the lower end of it, where too many of the working poor are sucked into the tax system while they're earning almost trivial sums of money. The interaction of this and the benefits system means that millions face marginal tax and benefit withdrawal rates of 70, 80, in some cases even over 100%. This is clearly an inanity. While we may not yet be able to get the implementation of one of our ideas, a flat tax, at least we can point out to the competing tax cutters that the best bang for the buck will be achieved by concentrating tax cuts on raising the personal allowance. We now only cut taxes for all this way, we also reduce those insanely high marginal tax rates which drain all ambition from those caught in that world of low paid work and benefits reliance. Comments (5)
Tax cuts
written by MarkE, September 08, 2008
I come at this question from the other side; I want to get the government out of my life, and if government does (much) less, it will cost less, thus allowing for tax cuts almost as an incidental benefit. As Cameron is my MP I have raised the matter with him on a couple of occasions, but we seem to be speaking different languages. He simply cannot grasp the concent of government getting out of people's lives and leaving them alone. This does at least prove that he is indeed heir to Blair.
UKIP?
written by Anonymous, September 08, 2008
UKIP is attempting bring in flat rate tax system with personal income tax allowance of 9,000, copy of tax policy can be found at http://www.ukip.org/media/pdf/...policy.pdf
Re: Cameron, tax cuts and credibility
written by Daniel Earwicker, September 08, 2008
> In addition tax cuts are meaningless without corresponding talks about cuts in public spending. If you just get the one - tax cuts - then public borrowing will necessarily rise which, in essence, is a tax by another name.
And yet... http://www.adamsmith.org/80ideas/idea/67.htm
To MarkE written by not an economist, September 09, 2008
Its worth reading John Redwoods' blog about this. One of his posts in the last two days discusses the issue of tax cuts and reducing govt expenditure. Redwood talks about sharing the proceeds of growth in the context of tax cuts. Although its all in terms of waste. If the size of govt is to be reduced long term we need to talk about changing the role of govt itself not just eliminating waste. I mean lets get rid of this govt's free concessionary fares scheme for elderly people for a start. In my view its one great financial millstone wrapped around the kneck of every local authority in England. They can't control it and so are vulnerable to unexpected surges in public demand for the service and at the mercy of the bus operators.
Also, I don't know how much influence Redwood has in Cameron's cabinet. Write comment
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To my mind Brown and Labour have mishandled the economy over the last 10 years. But Cameron's Tories still lack credibility for me. In the past he has talked about sharing the proceeds of growth and talked down tax cuts while also supporting Labour's spending plans (i.e., promising to match them). So i take his new found belief in tax cuts with a shovel of salt by my side.
In addition tax cuts are meaningless without corresponding talks about cuts in public spending. If you just get the one - tax cuts - then public borrowing will necessarily rise which, in essence, is a tax by another name.