Election 2010: Crystal ball time for tax policy

The election result remains unclear but regardless of the final result, there will be tax increases predicts Simon Sweetman.

So, at this point in time (Friday morning), as the Lib Dem dream melts away like it always does, it looks like we will see a Cameron government with a less than overall majority. What can we expect?

Michael Portillo recently said this:
"I suspect at the end of the day there will be a lot less cutting than politicians are saying right now and a lot more tax increasing that politicians are also saying right now. And that’s simply because cutting is very, very hard. It’s only been done twice, after the first and second world wars, and unless the state of sterling requires it I can’t see it happening again now".

He is, of course, right. Cutting public expenditure is not only very hard but all the parties rely on “efficiency savings” that they know cannot be realised. Some of them may also realise that big cuts in public expenditure now will plunge us into the dreaded double dip....

Continued...

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Comments

Yawn

thomas34 | | Permalink

"The private sector (in Northern Ireland) has no large businesses left because (Lady) Thatcher killed them off and nobody wanted to relocate there". A decent article spoiled by political fantasy.

Efficiency savings? Off course

Anonymous | | Permalink

 Efficiency savings not possible?

Disagree. 

No ID cards saves £100 millions, cutting non-jobs like diversity officer, cutting translations into 14 languages (South Africa with 12 official languages only uses 3!!!) stick to English only - after all its the UK!, get rid of management consultants, stop knee jerk initiatives from politicians (Actually why are they trying to manage the day to day activity - GB Stalinist management style?) we have civil servants who can and should run things under policy directives from politicians. Cut the huge salaries and cut salaries of others who have jobs from which they cannot be fired even with gross incompetence.

Run the country like a business and you are guaranteed to save 10%. Cut the waste introduced by Labour and you probably could get another 15% watered down to 10% by Tory/Libdem waste.

Its possible. 

Political Fantasy?

Anonymous | | Permalink

Not quite. (Unless Simon has some very strange fantasies)

But if this was a murder trial you'd expect the chief suspect to be acquitted ot at least get off with manslaughter. It's true she has 'form' and the murder weapon can certainly be traced back, but the motive is doubtful and there are no witnesses willing to testify!

CGT

brianheg | | Permalink

Capital gains tax rates must be ripe for increase. Also, a back-door method of public sector pension reform such as the "Pension Levy" introduced in Ireland would have increase the tax take without damaging the private sector.

reforms needed

Anonymous | | Permalink

Generally agree that cuts can be made.  But don't get rid of consultants, just implement what they suggest for once!  It's easy to do things if you have the will - get rid of the non-jobs, limit benefits to £x per year, no benefits for new comers unless they have worked for a year (like in France), public sector pension contributions and aligning the salaries to BELOW those of the private secor would help, as well as paying for their car parking, etc.  Cut public sector by 10%, and regionalise benefits.  Why should somebody in the north receive the same benefit as somebody in the expensive south?  and cut out transfers to Scotland.  We can't afford it any more. 

Yawn 2!

Michaelr205 | | Permalink

At last a financial professional who is prepared to go on record about the economic disaster that was Thatcherism!

Who are you taxing?

DavidW878 | | Permalink

"it would seem right that those who have become very rich over the last 30 years might be asked for rather more".

This is lazy thinking.  If you impose a high rate of tax on income from, say, 6 April 2010, then you are - guess what? - taxing people who earn lots of money after 6 April 2010.  But there's no real reason to suppose that they are the same people who have "become very rich over the last 30 years" : they're just people who are unlucky enough to be at the height of their earning power at a time of confiscatory rates of taxation.  If you really want to tax those who have filled their boots in the boom then what is required is either a wealth tax or a retrospective raising of Income Tax rates (neither of which makes much sense).

If you want to tax high earners because they are high earners, fair enough.  But don't kid yourself that you're targeting anything other than high (current) earners.

   

 

Land value tax then

NeilW | | Permalink

Looks to me like a good argument for a Land Value tax - possibly set at the current rate of inflation.