The following are key extracts on tax from today's speech by Ed Balls:
And for the 400,000 disabled adults forced to pay the Government's perverse and deeply unfair bedroom tax, this Tory plan has failed them absolutely. And that is why in our first Budget the next Labour government will repeal the bedroom tax.
More a benefit reform, but we all agree it's a tax in effect.
But a fairer approach to deficit reduction means we will also crack down on tax avoidance , scrap the shares for rights scheme and reverse the tax cut for hedge funds.
Only the middle one is specific.
We will fund this by a repeat of the tax on bank bonuses and by restricting pension tax relief for the very highest earners to the same rate as the average taxpayer.
The first is obvious: it has to happen. The second is, presumably, a move to basic rate relief only. Or is it? Is some compromise (30%?) on the way?
And Conference, to move Labour on from the past and put Labour where it should always be — on the side of working people - we will introduce a lower 10p starting rate of tax.
Conference, a tax cut for 25 million hard-working people on middle and lower incomes.
And we will pay for it by introducing a mansion tax on properties worth over £2m, introduced in a fair way, so that foreign investors who buy up property in London to make a profit will finally pay a proper tax contribution to our country.
A 10p starting rate is fine - but is only a crowd pleaser and has some real complications implicit in it e.g. for savers and pensioners. A bit like the mansion tax: a tax on the capital gains of non-resident owners would be as easy, as would extending the council tax bands. Why make it hard?
So I can announce today, the next Labour government will increase the bank levy rate to raise an extra £800m a year.
Fine. And logical. as is this:
Following Sir George Cox's review on short-termism, we will change takeover rules, and corporate incentives and reform our tax system to stop short-term asset-stripping and support long-term investment.
That's an attack on corporate shareholding tax exemptions which just saved Vodafone up to £12 billion in tax. It was a Labour idea though....
The deficit down fairly. Tax cuts for millions — not millionaires. Reforming our banks. The minimum wage raised. Our NHS saved.
Tackling tax avoidance. Rail fares capped. The bedroom tax scrapped. Building the homes we need.
This what a Labour government could do. Let us together make it happen.
That was the rallying cry. The problem with it was this line:
We won't be able to reverse all the spending cuts and tax rises the Tories have pushed through.
And we will have to govern with less money around. The next Labour government will have to make cuts too. Because while jobs and growth are vital to getting the deficit down — something this government has never understood — they cannot magic the whole deficit away at a stroke.
Which is where the lack of conviction showed.
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You are 100% right that a mansion tax is going to be an expensive and complicated undertaking that will raise less money, and be less fair, than simple CGT reforms.
I’d suggest two changes: (1) abolish the odd – and unique to the UK – loophole that means non-residents aren’t subject to CGT on UK real estate; (2) abolish the principal private residence exemption for houses over say £2m. You have to do both – if you just make non-residents subject to CGT then many will start claiming their UK residence is their principal residence, and this would be very hard to disprove. Both changes have the big advantage of being simplifications of existing rules – no new complexity, no new loopholes being created.
Is the problem that this is politically a less easy sell than a beautifully named “mansion tax”?
Also agree a 10% rate is unnecessary complication – better to take people out of tax by increasing allowances, and then moving the higher rate band so higher earners don’t benefit.
One would hope the politicians would have got the message by now that simplicity in tax goes a long way…
I agree. Just had an argument with Chris Leslie about Mansion tax, It will never be implemented. I was trying to convince him of the huge benefits and potential revenue from taxing land values: £200bn pa. Basically they haven’t got the Balls.
I fear you are right
Wouldn’t non-residents claiming main residence relief become residents anyway? Certainly a wealth tax would be fairer than an arbitrary “mansion” tax especially as it would hit everyone – individuals, companies, trusts and partnerships – in respect of residents on all assets and non-residents on UK assets. For UK residents tax would be chargeable on total gross assets in excess of, say, £1 mil in London and £0.5 mil outside. The rate would depend on the total amount needed to be raised. The higher the rate the more other taxes could be eliminated and/or reduced. Also, to encourage longtermism, CGT on chargeable assets held for over 10 years could either be abolished or reduced.
They don’t need to claim main resident relief
If non-res they don’t pay CGT here
There would be no need for Ciaran Davis sensibly suggesting non-residents pay CGT if they weren’t exempt now. The main residence relief could not, by definition, apply to non-residents – that was my point, not an ignorance of CGT rules. Another point – Labour must look at is replacing Inheritance Tax with a Gift Tax so that all gifts to other than “spouses” and charities would be taxed at the time of the gift with annual and lifetime/death aggregate exemptions.
Sorry!
Get you now
Agree on gift tax
What convinced me there was no real point in voting Labour was this line “So let me be clear, in tough times — when there is less money around and a big deficit to get down — there will be no blank cheque from me as a Labour Chancellor for this project or for any project.”
Absolute nonsense in any country with its own central bank. It appears all Balls is interested in is maintaining the status quo so we’ll continue to be robbed by the banks whoever gets in, Labour or Tory or LibDem. That’s why I’ll be voting Green, not because I imagine for a moment they’ll get in but because hopefully money reform will start to be discussed in mainstream circles again.
It’s a fair point
We need an abstention option on the voting slips! Clearly labour is not going to abandon the neo-lib lite project. The housing fiasco will continue as will casino banking and the bloated financial sector – and no sign of LVT!
There is an abstention on the voting slips. All you need to do is spoil your vote by writing “none of the above” on the slip.
At least it shows you went to the polling booth and have thought about it.
Or vote for the National Health Action party to show you want to keep the NHS.
As I tried to point out to Ed Balls and Jack Dromey this evening, they could reduce the average price of homes by 63% (RCIS figures) if they implemented LVT. The housing crisis is less about supply and more about affordability, although LVT would also increase supply by freeing up land and forcing land banks into production or on to the market.
Whilst I agree that the housing market is out of control I cannot see anybody voting for a party that adopts a policy to reduce house prices by 63%. Surely that would push millions into negative equity?
Bill I completely agree with your comments. Balls is a neoliberal through and through. He recently visited Washington and was pleased to announce that he was discussing policy with Larry Summers of all people. Summers was forced to withdraw from the possible Fed chairmanship as his many critics pointed out that he was one of the main architects of light regulation. Until Miliband sacks Balls I fear that the Labour Party is unlikely to bring forward policy in the best interests of the majority, rather than the minority, of UK citizens. Tinkering around at the edges of neoliberal policy will not result in the real changes that we as a nation need to embrace. We need to recognise that the state has a most important role to play in our future economic development. The market and the private sector can not achieve meaningful growth without the underpinning of an active state.
After the hundreds of billions magically found to bailout the banks and the hundreds of billions of printed money to keep them propped up proved to me that the notion of never enough money is laughable!
The government can borrow from its own central bank, save itself billions in interest payments, and the economy can grow naturally instead of and explosion of interest laden, bank created money!
Crumbs of comfort cast out to the poor sparrows that currently struggle to survive from the slim pickings available under horse manure economic policies!
Where’s the vision fitting for the One Nation rhetoric?
Finally a Labour MP cuts to the chase:
https://twitter.com/kitty_donaldson/status/382130425575264256
So, a continuation of the core Tory/neo-lib project both substantially and rhetorically but with a few bells and whistles to distract us. They might be some nice bells and whistles (assuming that we actually get any of them) but Balls has shown that Labour are really still New Labour.