There's been a lot of nonsense in the press about the recent Tax proposals recommended by a Tory Party policy group. The Times reports that if all the proposed cuts where implemented they would amount to £21 Billion in tax cuts.
The thing is that isn't a lot of money.
I know that sounds insane, how can £21 Billion not be a lot of money? Well for a start and just to be absolutely clear it wouldn't mean cutting public spending. I repeat, it wouldn't mean cutting public spending. The £21 Billion would imply slowing the growth of public spending (i.e public spending would grow by about 1.2% a year compared to the 1.7% Gordon Brown is pencilling). Secondly, and I think this is more important, this is really taking off only about 1.5% of GDP. To put it another way, the Tax burden is set to rise further under the current Government, so if it evolves as the Treasury expects and the Tories won the election and implemented all of these proposals they would be slashing the tax burden back to the level of ... 2005/2006. Hardly radical.
3 comments:
Chris Dillow on tax:
'Here’s a question: Take a married couple with two children under 11 and pre-tax earnings of £200 a week. If they get a better job, raising their earnings to £300 a week, by how much does their net income rise?
£60? £50? £40?
Nope. £8.52.
Yes. £8.52. That’s a marginal deduction rate of 91.5 per cent.
The extra £100 this couple earns before taxes are swallowed up by higher income tax and National Insurance Contributions (£33); lower Working Tax Credits (£37) and less Housing Benefit (£19.50).
Higher earners face only slightly lower deduction rates. If a couple’s income rises from £500 to £600, they get to keep all of £23.45.
In the range £630-£710, the marginal tax rate drops to 23 per cent. But beyond then, it rises to 41 per cent.
[...]
For millions of people, it’s a bad idea to work harder.
Is this either economically efficient or a good thing for low earners?
Is this really the best tax system anyone can think of?'
Wembley: 'what (aside from the 33% NI & Tax) are that couple losing?'
Chris Dillow : 'The extra £100 this couple earns before taxes are swallowed up by higher income tax and National Insurance Contributions (£33); lower Working Tax Credits (£37) and less Housing Benefit (£19.50).'
Brown is an arse.
Here's why:
The Times reports that “Airline passengers face long delays at airports from February because check-in staff will be required to collect the increase in departure tax announced last week. More than seven million people had already booked flights before the announcement in the Pre-Budget Report that Air Passenger Duty will double from February 1. Those passengers will have to pay the extra tax when they check in for their flights.”
This blogger isn't impressed:
'This is a blatant violation of the legal principle that laws must be prospective. By applying this new tax ex post facto to airline tickets bought before the pre-budget report, it has denied purchasers to ability to make informed decisions knowing in advance how the Government would tax their activity. Those who have bought airline tickets in all innocence prior to the pre-budget report are now landed with extra fees that they could not predict – indeed, that they had every reason to assume would not apply, as ex post facto taxation violates the principle of the rule of law.'
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