A framework for shelving tax cuts

mat

Use the monies raised by non-dom status changes to reinstate 10% rate instead of funding inheritance tax changes. Then let GB try and criticize the U turn

Lady Amelia

make all tax cuts aim to take the lowest paid out of tax bracket altogether. at least in the first two years. its impossible for labour to argue against that - and impossible for them to explain why they didn't do it first! its simple, its cheap to administer and its the fastest way to boost income at the lowest levels of earnings. oh, and abolish tax credit system from top to bottom - its just a giant job creation scheme.

Suki

Worth reminding ourselves of how easy it is to get rid of this deficit. The only thing that stops it from disappearing at a stroke is vested interests from people with their nose in the trough.

"The sad thing is that closing the budget deficit is a simple matter. The public sector is overmanned on a massive scale. The public sector should be stopped from advertising or using consultants. Public sector flexitime should be abolished – many government buildings are empty on a Friday. The two-week sick pay regime should be halted – many public employees take them as holidays. Their pay should be looked at closely – it is almost certainly 30pc higher than in the private sector.

"Since few parts of the public sector work well, why do they get bonuses? I wonder what revelations we would find if the public sector's expenses were exposed. In addition to all that, just closing the quangos would save £130bn a year – not one of them does anything of any value or use. Sorting out the budget deficit is as simple as the last seven sentences."

http://www.telegraph.co.uk/finance/personalfinance/comment/5696818/Raising-tax-is-economic-madness.-Slash-the-public-sector-instead.html

If we put every quango out of business tomorrow we'd be out of this mess.

Dave B

At one of the 'post bureaucratic age' thingies at the CPS, Mr Cameron talked about a desire for 'sustainably low taxes', and 'reducing the demand for state action'.

Promoting marriage, by tax and other means, is also a long term attempt to reduce government spending.

oldtimer

Conservative policy on taxation should consider, as its starting point, what are the upper limits for taxation as a percentage of GDP. Hamish McRae has pointed out is is c38% over time. Beyond that people either don`t bother to work harder, take active steps to avoid tax, or like many businesses they will move abroad to lower tax regimes. We are seeing that happen right now as more and more businesses relocate out of the UK and the very high paid look elsewhere - even top paid Premiership footballers are doing it or thinking about it as they contemplate 50%+ tax rates.

The second step is to consider the structure of taxation. The key issue is how to encourage wealth creation and retention for both individuals and businesses for that is where sustainable jobs growth will come from. In my view that includes raising thresholds at the bottom of the tax range, a 40% upper limit, and higher thresholds for CGT and IHT. Taxes on consumption should increase. Such measures should help the private sector to pay down its excessive levels of debt - an essential precondition to future growth - and provide funds for business investment.

Government spending needs to be adjusted to live within the money that actually can be raised by taxation and to pay down debt. Government spending has risen so fast and so high over recent years that it is sure to include much unnececessary and/or inefficient espending.

The only encouraging rumour of recent weeks was the suggestion that the civil service itself was looking at how to cut 20% from government spending - presumably so that they could present the next government with plenty of painful options. Let us hope that this rumour is correct and that the next government acts without delay to mend the nation`s finances before national bankruptcy overwhelms us all. It is the issue that matters beyond all others.

Denis Cooper

Suki - "If we put every quango out of business tomorrow we'd be out of this mess".

A proposal which is so reckless that it borders on insanity, and makes me seriously wonder whether we can take the risk of electing a Tory government.

OK, so tomorrow all those employed by quangos are called to meetings where they're told that their quango is shut down with immediate effect, and they're all sacked.

That'll be at least two million instantly added to the dole queues, I suppose.

Then the private sector suppliers and contractors to the quangos quickly realise that without that business they're in desperate trouble, and another million or two are added to the dole queue.

Whereupon, the government discovers that while shutting down all the quangos has nominally knocked £130 billion off its spending, it has also knocked a chunk off its tax revenues, and instead it is paying out more in social security benefits, and so the net reduction in its deficit is only half of that £130 billion.

In the following weeks and months, the millions who've been thrown out of work find it impossible to pay their rent or mortgages, and as the level of defaults soars the lenders start to go bust and have to be bailed out by the government; while the collapse in consumer demand sets off another round of redundancies and bankrupties across the whole economy, until finally the demands placed upon the government budget become insupportable and government itself faces bankruptcy.

Of course eventually the free market would respond, taking advantage of the massive pool of unemployed workers, and the depressed wages and asset prices, to start up new businesses and set the economy on the path to recovery.

Unfortunately the important word there is "eventually" - which could mean just five or ten years, or could mean decades, during which protracted period conditions here would be not much better than those in a third world country.

TrevorsDen

Perhaps the debate should concentrate on the option of a 'big bang' approach were cuts (in spending and tax) are introduced in one fell swoop rather than over a period.

We should not lose sight of why we need spending cuts. It is to create space for tax cuts which will encourage real growth which will result in sustainable tax revenues which will underpin sane government spending.

uk Fred

The most important aspect is to incentivise those who have most to lose, the people who have a marginal rate of 70.5% between tax, NI and Tax Credits. simplifying the personal tax system and doing away with National Insurance would be a start, evem of it does mean headline rate of income tax of 30% or even 40%, depending on what happens to tax credits.

mat

not a tax cut, but cost control. All new state employees should be provided contributory rather than final salary pensions. As % people employed by state increases, this liability needs to be controlled and this cannot be done if final salary pensions are retained. We can realign salaries without this skew it creates

Stephen

Jim Hacker had the idea in Yes, Minister of refusing honours to all civil servants who failed to make a significant cut in spending (in that instance, 5 per cent, I think). What a good idea. Only make it 10 or 15 per cent. Everyone outside Government has to manage on fewer staff and lower non-pay costs - why can't they?

Gianni

Dennis Cooper faffing about the damage cutting all the quangos would create. Unless cuts are made, real meaningful cuts, then economic melt down will happen anyway. The basis of our economy is out of kilter, we need to move away form tax and spend to earn and save.

THX1138

Dennis Cooper Good Post - Suki Isn't a Tory, just another fringe right wing nutter who has read too much Ayn Rand.

Ian Walker

I'd like to see a "Brown Tax" - a 5% levy on top of all other taxes, that stays in place until the debt is paid off.

You can then manage the economy as you like, while leaving the blame squarely at the door of the culprit.