The groundwork for a post-recession economy

Forlornehope

The problem is that the whole tax (including NI), welfare and pensions system is a mess. It penalises where it should incentivise and vice versa. A complete overhaul including both personal and business tax is needed. Anything less will just create another set of problems.

Unfortunately, in the real world that kind of overhaul will create some losers who will scream very loudly. Machiavelli had it right on those who wish to promote change and nothing has, indeed, changed in that respect. A new Conservative government might have the courage to drive real reform through but I am not holding my breath.

Ken

I have never, ever read the Sun before, having always believed it to be a comic for the mentally retarded. I think I'll start reading it now, although only on Mondays.

ken from glos

Oh so true.I am 60 plus with no debts and a very good pension.I dont pay N.I and also get a winter coal allowance.Next year god willing i get and old age pension as well!!

I am rolling in it and massive changed are required.Means test on pensions for a start!!

Ian Walker

What is yet to come is the realisation that the people who would kick-start the 'motors' are the very people who have left the country in the brain-drain exodus to the Continent/States/Antipodes.

The reasons for leaving are varied and different, but the net effect is Britain's traditional pool of talented and well-educated people have gone.

Chris Cook

I don't think Kavanagh goes far enough. What is needed is systemic fiscal reform.

Get rid of all current taxes, including corporation tax. Get rid of means tested benefits.

Then introduce:

(a) "Location Benefit Levy" - the tax on Land Rental Values which Milton Friedman, no less, described as the "least worst".

Simple and inescapable.

(b)a Carbon Levy or carbon tax on the use of non-renewable energy.

(c) Limited Liability Levy - a tax on the GROSS revenues of any entity with limited liability.

Collect all of these levies at the transaction/clearing level.

Then use the proceeds to pay for necessary services, and to pay a Basic Income - as of right - to all Citizens.

This simple, radical and efficient approach strips out the huge swathes of deadweight costs of the complex and costly system we currently have.

This approach could be seen as a series of taxes on privilege.
Is the Spectator for or against taxes on privilege, I wonder?

Paul B

Kavanagh is (as the great Lady used to say) "one of us" The man gets it and instinctively understands what is right and wrong policy wise.

It was the "SUN WOT WON IT" in 1992, with its famous turn off the lights front page, and although less influential now, it is still important.

Ken from Glos, why should pensions- by which I assume you mean state retirement pensions, be means tested - when the person receiving the pension has paid NI all their working lives to receive. Thats plain not right. If you haven`t paid NI or not paid enough,then you don`t receive a full retirement pension, but this is then made up I believe with a means tested state pension- pension credit I believe, is its current name.

This in itself iniquitous as it means those who are thrifty throughout their working lives basically end up with the same benefit/pension (frequently less)than those who have been more cavalier.

Incidentally, the thrifty pensioner is now getting screwed by Brown with the reductions in interest savings rates.

quadratus

Having now read the whole text on 'The Sun'website; it offers a challenging,optimistic indeed breath-taking alternative.The most sensible commentary that I have read. Maybe there are risks but if Cameron is to score he must pick up this ball and run with it.Remember, the first chap to do that bequeathed us a whole new ball-game, which is just what is required now.
This is a ball for Cameron to catch and run with it. Go for it!

Draughtsman

Ken - I bet you have worked your socks off all of your life, paid all of your taxes and taken little out of the system. Why shouldn't you and the many like you enjoy the fruits of your labours in retirement without some snooping government busybody prying into your private financial affairs?

Slim Jim

The problem is income tax cuts of any significance are anathema to Brown and his fellow traitors. It would require a substantial trimming of government spending, unless of course he borrows lots of money to pay for them...

seb

Anyone with an ounce of sense and moral courage would tell the nation the truth, that an attempt must be made to resurrect or build, even, a real economy rather than the doomed Brownian one that has bit the dust for good. Obama, I think, has a plan for a thousand dollar tax rebated. What do Brown's victims get? A further NI increase down the line. Brown's idea of how to help the least well-off has focused on tax credits. If this lame, confused and inherently contradictory system isn't certifiably insane, I don't know what is.

The exodus of talented people has been ongoing for a generation and is a disaster. Another term of Winston Brown ought more or less to put the final nail in the coffin, leaving the UK needing life-support and being unable to find anyone stupid enough to provide it to us.

ken from glos

True i have worked hard and paid my dues BUT i can do without the old age pension. That should be given to those that need it.Other countries means test pensions already.Why cant we?

Kevyn Bodman

Ken,
You are fortunate, and if you want to give away money that you have earned then that's up to you.
Others will want to keep the money they've earned and/or want to spend it on themselves.That's up to them. Long may that remain the case.

Howard Kirk, sociologist

Let's not get too carried away. The Hutton Report was leaked in advance to Trevor Kavanagh who trumpeted that only a handful of conspiracy theorists and cranks could disagree with its findings.

Nick Kaplan

The suggestion of raising the starting rate for tax is certainly strong on both economic and moral grounds, moreover it helps high end tax payers at least as much as the poor and so should appeal to everyone. Reduction in business taxes certainly seem to be a good idea too, supply side reform is the only real way of increasing employment and wealth in the long-term. Brown’s attempts to boost aggregate demand will (as always) be costly and futile.

On the issue of changes to taxation however I think much more wide-scale and radical change needs to be considered. There was an interesting article in the Sunday Times the other week under the ‘Think Tank’ section (I forget who it was by). This detailed the ludicrous way in which we tax the middle-class, pass the money around between some bureaucrats, and then give the money back (minus £400 or more, if I remember correctly) in the form of benefits and services.

It seems far more sensible to radically reduce the amount of tax paid by such people, encourage them to get private health-care or education instead (the rise of new markets would surely lead to huge increases in the supply of such goods and thereby reduce their costs) and then ensure the government performs what should be its role; providing services (on a means tested basis) for those who cannot actually afford them. This way we could wean a whole generation off the state and that is certainly a goal worth aiming for.

Slim Jim

Ken from glos - are you happy to have your savings taxed too, especially with the current rates? Your pension just might help to bridge the gap! I receive an occupational pension, but I'm not old enough for a state one (yet). When I do receive it, I'll be quite happy to spend it and help stimulate the economy...there's no pockets on a shroud.

Lou Dacht

Kavanagh's is a very convincing line of argument.

His '5 million on benefits' rings much truer than the pared down figures banded around by others. What matters is not the title and basis of the particular claim people make but the fact that all such claims pull on the public purse.

Also, he rightly raises the case of those who cannot afford their own pension provision - to read most other commentators, with their constant nagging that we are somehow irresponsible, just confirms how far out of touch they are, with people on low pay ie most of us.

ken from glos. How refreshing to hear someone big enough to shun the "I want it all" crowd.

TGF UKIP

Why can hacks like Kavanagh in the Sun and our own dear F Nelson in the N.O.W. be so punchy when the Cameron Tories are so lame and limp-wristed?

PS The influential and always readable David Smith of the Sunday Times Business section is worth a visit at timesonline for his dismissal of the Tory Boys and Osborne in particular.

anonymous

I give away my state pension which thank God I do not need. I give it to 2 separate people in their 80s who would not otherwise be able to afford to heat their house. It isn`t difficult to do. I got the names via my GP surgery. No confidences are broken since it all gets done via the GP too. No names on either side are known. If that is what you want to do, Ken, go and see your GP and suggest they find a couple of people for you. You then get the cash out of the bank monthly and take it to the doctor`s. They pass it over anonymously, also monthly. Costs nobody anything.

Ian C

I spent much time advising retired people on investing their savings and almost every one who became a client could afford to live without their state pension.

Our tax nad benefit system is stupid and wasteful and in need of radical reform and the Tories (I have said this many times before on these pages) can now be much less timid in saying becuase the economic sh*t has hit the fan. It is a classic opportunity for radicalsim that is best announced in advance because by the time they are in power it will be too late to raise this particular piece to the agenda.

Kavanagh is right - his means of delivery is awful.

Hysteria

kudos to anonymous - free enterprise behaviuor by a free people at its best - and no need for the state to get anywhere near it.