Having derided what KPMG wants from the Budget I guess it’s only fair that I publish my own wish list:
- A Green New Deal;
- A General Anti-Avoidance Principle in UK tax law;
- Minimum tax rates for those earning over £100,000, rising with income so that at £250,000 45% would equal 45% tax on all income, with no allowances given;
- National insurance on all investment income over £5,000 pa excluding pensioners;
- Capital gains taxed as income;
- Aggressive action from the Foot Commission on tax havens including sanctions on all UK dependent states that do not do full information exchange under the EU Savings Tax Directive;
- A requirement that the accounts of all companies that are members of multinational groups that are filed with tax returns include those group accounts stated on a country by country basis, including intra-group transactions;
- End of the domicile rule — funds to child poverty.
- Ending of the tax office closure programme and increased vigilance in tax collection.
I’m sure I could refine it a bit. That will do for starters. No time to do links.
I’m not holding my breath.
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Richard – reference your item 6 you may be interested in the following:
http://www.iomtoday.co.im/isle-of-man-business/39No-need-to-worry39-says.5178503.jp
Just as well you are not holding your breath, perhaps?
Richard, can you explain #4. Are you suggesting that someone who earns more than £5k per year interest from their savings (as well as other investments) should pay NI on the balance on the interest above £5k? But not for pensioners? Or have I totally misunderstood? If I have understood correctly, then:
(a) A very weathly pensioner would get NI relief where someone of the same or less wealth but under 65 would have to pay? Seems to be ageist rather then looking at ability to pay.
(b) If the principle of treating interest as NI-able is sound why have any threshold at all? Surely, it would be simpler to treat investment income as income, and take NI and tax accordlingly.
(c) I do not believe such a policy is sound. As interests rates rise (in the future) it would discourage saving altogether. Not paying NI should be seen as an incentive to save.
In relation to APhilosopher’s point (a), it is worth noting that 79% of the country’s wealth is held by pensioners.
AP
a) I agree – I am generous to pensioners. Some have said I should not be.
b) The threshold is pragmatic – the admin cost would be too high at lower levels. Savings of well over £100k would escape the net right now. There is no material disincentive to save as a result.
c) Nonsense – in that case you’ll argue next that tax should not be charged on investment income. Why not? A level playing field works best and discourages abuse. That is what this creates. It also tackles the massive distortion the self employed create incorporating companies and paying dividends. This is very significant.
Richard
Pete
I doubt it
Pensioners and pension funds might. Not the same thing at all
And since pension funds only own about 15% of the stock exchange I think that pretty unlikely.
Richard
Richard
I am surprised that you left off the abolition of the VAT threshold for imported goods from your wishlist.
I left that for the Pre-Budget Report
Thought it would be an early Christmas present then
Richard
@Richard Murphy
Hi Richard,
(A) I don’t feel you’ve seriously answered this point. If someone, say, earns £250k in invesment income then they would pay would pay no NI but when they turn 65 they do. However we define our terms, it is a tautology that a rich pensioner is still rich, a poor one still poor. So why the exclusion? My suspicion, Richard, is that this is a whiff of a political sweetener. However, if I’m wrong I know you will quickly put me right.
(B) (i) Right now, with interests rates at record lows, £100k may be the savings threshold but in the future this figure can only lower, catching more people and highering the admin costs. But (ii) I do not see why the admin costs would be high – can’t this be caught by SA? Again, your experience and insight would be appreciated because I don’t see why the admin costs would be high and higher than treating capital gains as part of income (#5 on your list). The point I’m making is that #4 smacks of just a wealth tax that will, probably, be avoided by the wealthy. If investment income is being treated as income, then it is surely just we should do all add interest to our income and pay it. Would bring in a heck of revenue but is probably a vote loser and would be seen as a disincentive to save.
(C) Certainly, Richard, you may be inviting someone to say let’s get rid of the tax on savings then! A vote winner, surely, and possibly even justifiable as we need to rid ourselves of the debt culture. But ignoring this: (i) Right now some people are (rightly in my view) avoidng investing in pension funds and managing their own cash funds and would be caught by this (and remember do not get the benefit of tax relief on pension contributions). (ii) Ah! You’ve shown your hand. I genuinely didn’t realize this was your proposal for I35 V2.0. Apologies, I was slow on the uptake. However, this raises the spectre of IR35 and the issue of the Tax Fundamentalism that has dogged us over the last 8 years. Perhaps this is not the forum to debate this now. All I would say is that I think everyone, even ardent divident payers, would agree about “level playing fields” and (to borrow from the lexicon of the government) that “everyone should pay their fair share of tax”. The problem is agreeing what the playing field is e.g. what benefits different types of employees or contractors get and so on, how their pension is funded and so on. To me mind, Rihcard, the problem has been cowardice from the Treasury in tackling the problem: the employer. The employer gains from employing someone on a contract without pension payments and other benefits. I guess if “No taxation without representation” was the cry of the American revolution, then “No taxation without benefits” may be the cry of the anti-Murphy lobby wrt to #4.
Very generous of you. For one moment I thought you were mellowing!