The Greens, UKIP and SNP all presented tax proposals yesterday in the run up to the election.
The Greens suggested a wealth tax on those with assets of more than £3 million a year. Its targeted, tackles a real and growing issue of social concern in the form of wealth inequality that is doing so much harm to the UK, and for the first time, because of automatic information exchange with tax havens, is plausible.
They also proposed a financial transactions tax, which I would welcome. Eleven countries in Europe are now operating one and in the UK such a tax would help break our dangerous dependence on the City and would encourage innovation in the rest of the economy. That has to be a good thing.
UKIP suggested a tax on the turnover of large businesses. This is bizarre, and wholly unworkable. First, the problem is that Google, Apple, Microsoft and so on do not have UK turnover: they sell into the UK, and not in it. That means that straightaway this tax would miss its real target. And second, such a tax assumes that all companies make the same profit rate. This is not true. Apple makes 40%. A supermarket makes less than 5%. Apply the same tax rate to both and the economic problems are obvious, as is the fact that supermarkets would pass this straight on in a price increase as if this was VAT (which in effect it is). As an exercise in proving a lack of tax credibility this one takes some beating.
And the SNP announced plans for a tax rate 3% lower in Scotland than the rest of the UK. Which, of course, they can. Except this is firstly an issue for the Scottish parliament and not Westminster so what it has to do with this election is hard to work out.
Just as it it is hard to work out how Scotland will make good the resulting shortfall in the Barnet formula funding allocation to Scotland that will automatically follow from this, straightaway, when any increase in tax revenues resulting from this policy (and I stress the word any, because I suspect there will be none) will be a very long time in coming.
I'll leave aside the disastrous consequences for tax competition inn the UK that this policy creates. Suffice for now to say that whilst the SNP proposal is considerably more credible in tax terms than UKIP's offering it's economic consequences for Scotland really do need to be spelt out so people understand them, because they are pretty ugly. Exercising the right to choose on this one comes at a considerable price that I would not wish to pay. I would instead be demanding other, more realistic tax powers be devolved to Scotland. And if you want a suggestion, I'd make it employer's NIC. That has a real chance of pricing Scotland into work, and if something that could be demanded from Westminster after 7 May.
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Please explain Richard how exactly would this reduction price Scotland into work? Is by means of creating a competitive advantage or is it an absolute benefit? (Or is it press delete and run away again?)
I have no idea what your question means
What price are you referring to?
“a wealth tax on those with assets of more than £3 million a year”
wealth per year? how does that work? not sure that’s right.
I am so sorry to have slipped up
I will now whip myself and resolve to do better in future so that your sensibilities will not be offended again
All three proposals are absurd.
So speaks the voice of the elite
No reasons given
Just dismiss
That’s the only sort of debate you are comfortable with, isn’t it?
The problem with the green tax is that it targets the aspiring wealthy not the rich. The rich will pay this tax and the mansion tax. But the hard working families will be affected.
Shall we not be silly here
Very few ‘hard working families’ have £3 million in assets and if they do they can afford the tax
Interesting how the ‘hard working families’ Tory ‘meme’ keeps being parroted out. It is an utterly patronising and disingenuous expression because we know there is no objective correlation between hard work and wealth -if the were the case then the agricultural workers of the 19th century would have had wealth beyond the dreams of avarice.
The expression is designed to be a fig leaf covering the rapine of the rentier economy which forces people onto a treadmill of flatlining earnings while the rentiers syphon wealth out of housing and other bubbles.
Deep sigh
“And if you want a suggestion, I’d make it employer’s NIC. That has a real chance of pricing Scotland into work”
To which I asked “how exactly would this reduction price Scotland into work?”
By reducing the cost of employment
Deeper sigh
What is the SNP’s new tax proposal here? Is the 3% cut the same cut in corporation tax outlined in the white paper, in the run up to the referendum?
Corporation tax currently isn’t devolved and wasn’t in the Smith Commission.
I can’t seem to find anything released from the SNP yesterday about tax policy.
Thanks
I relied on the FT
The blog makes that clear
I have read the article linked, it doesn’t state that there were any proposals presented from the SNP yesterday.
I was wondering if I had missed something?
I misread it then
“when any increase in tax revenues resulting from this policy”. Not sure I understand this. Surely commonsense tells us that a reduction in a tax rate will lead in a reduction in tax revenues? Or is this what you mean when you stress the word “any”? Are the SNP explicitly claiming that the current tax rate is already on the downward slope of a Laffer curve? Or that they will poach jobs and industry from somewhere else (England?)
The belief is a lower tax rate generates increased PAYE because more people are employed as a result of profits reinvested
There is no evidence to support that view, in my opinion
I don’t mind too much that your core belief is that the state should be big and that this means more taxation, and that this should be levied on the better off, even if I don’t fully agree. What I have more problem with is the support for any form of increased taxation, however unsustainable in the widest sense of that word. Wealth taxes are a nonsense…if you want to tax people more, do it on a realisation basis only. So get the top rate of tax on income up to 60%, remove PPR relief on homes sold (when they are sold) for more than £1m (say), increase stamp duty further; again, tax more if you want, but only when “wealth” is actually realised. (And whilst we are talking about this, inheritance tax is the ultimate wealth tax on a relisation basis). A blanket wealth tax ignores that many people may be asset rich and cash poor, which is why New Labour is going to have to start providing carve outs for exactly those people, and add it to their IHT bill. Saying that you would support a 60% (or higher) top rate of tax on income over £100K, 20% stamp duty (say) on homes over £1m, abolition of PPR relief on houses over £1m, etc, would be more honest, surely? And I’m surprised that you knock UKIP on their policy – I thought you were a big supporter of bank levy (which is a tax hit no matter what the profits, and much like any wealth tax idea is fundamentally unsound as a result, even more so given that it is a tax which specifically targets an annual take, irrespective of whether banks have shrunk their balance sheets and taken longer term liabilities to make them less of a liquidity risk).
What I mind is that you blatantly misrepresent the truth
You say I support all tax increases when I rubbished such a proposal from UKIP
Misrepresenting the truth just reveals you case has no substance to it, at all
Wow, so lower costs to employers means employees get “priced” into work. This has profound implications for issues like the minimum wage, the living wage.
Thank you. (Just press delete again Richard)
It has no such implications
This is an employer obligation
Maybe you have not noticed
In the meantime you promote poverty whilst I promote work
I suspect that many would philosophically oppose anything coming out of UKIP, and maybe rightly so; they are only marginally more credible than the Liberal Democrats on taxation. But leaving that aside, out of interest would you support higher taxation on income and realised gains, rather than wealth taxes? Or do you think wealth taxes are more effective and fairer? Or maybe neutral? Be interested in your views, and how much wealth tax (if you prefer that) should be imposed (rate and threshhold), or what rates of tax on income and capital gains (if you prefer that) should be imposed.
I am not repeating in an answer here what I have written on many of these issues or in my forthcoming book
What I will say is we need broad based taxation, and that means we need wealth, income and gains taxes. Without them all we get massive disparities that are destructive to society developing and we are seeing that now
I think wealth taxes should start somewhat below £3 million but be progressive in rate and not single rate
They should also be taxed only on wealth above a limit of course: there should be no hurdle
Wealth would be net wealth but measures would be needed to prevent abuse
It’s not these are better than income and gains taxes – it’s like asking would I play gold with or without any drivers – I need them as well as irons and a putter + wedge
If we had citizen’s income – which i would wish for – income taxes would reach 60% + but NIC would go
Gains should be taxed as income with a small annual allowance to save admin – a lot less than now though
And enbtrpreneur’s releif is just bizarre and has to go as does substantial shareholding relief for companies
Richard, will the Greens’ wealth tax tackle the wealth that people lock up in trusts and companies?
If I designed it then it would: yes