Society

Wednesday

Fergus Mcghee

Why Britain will have the world’s 4th largest top tax rate

Anyone arriving at Heathrow airport will see those HSBC adverts comparing the top rate of tax in various countries. The message is that HSBC knows the world, but the advert works because that airport is used by the world’s rich to hop between country to country, wondering where is best to live, work and declare taxes. The top rate of tax is a powerful symbol, as it tells what that particular country’s attitude to wealth creators. After April next year, only three countries on the planet will have greater top rates of tax than Britain – Denmark, Sweden and the Netherlands. Here is a selected list of the rest, as

James Forsyth James Forsyth

The Tory line on tax

The Tories have just released their Budget briefing. It includes this statement: Our priority is to avoid Labour’s tax rises that affect the many not the few, like the increase in National Insurance which is a tax on everyone who earns over £20,000 This echoes Phillip Hammond’s remarks straight after the Budget. But it is important to stress that it does not mean that the Tories are accepting the 50p rate. What it does mean is that the Tories will prioritise—both in political and policy terms—stopping the increase in the tax on jobs. This strikes me as sensible politics and not a surrender.

Matthew Dancona

Politicians against aspiration

James is right about the 50p tax increase being a diversionary tactic: its fiscal value is marginal, given the colossal debt figures that even the Government concedes are on their way. So what is the political content of this tax hike? After the Budget speech, Yvette Cooper told the BBC that the tax system had to “not only be fair, but seen to be fair.” This was a huge admission of socialist intent dressed up as a noble principle: the Chief Secretary to the Treasury declaring that the symbolism of taxes matters as much as the money they actually raise. In this case, the symbolism of the measure is unambiguous.

Daniel Hannan

Budget 2009: Darling is interested in headlines, not economic recovery

The figures have now become literally unimaginable. Britain will borrow £175 billion this year, £173 billion the year after—a higher total in two years than in the entirety of the 316 years since King William introduced the national debt. It’s hardly surprising, in the circumstances, that people snatch at the more comprehensible numbers, notably the hikes in higher rate tax. It’s a classic piece of Brownite prestigiditation. Higher levies on those earning more than £100,000 or £150,000 a year will generate little revenue. Indeed, they will probably cost more to administer fthan they raise: wealthy people, in order to avoid the new rate of income tax, will also start avoiding capital gains

James Forsyth James Forsyth

The Tories should step around the 50p tax trap

The 50p rate is a political measure not a fiscal one. In government terms it will raise peanuts. It is designed to stoke up Labour’s base and to split the Tories. Brown will be delighting at the bind it has put the Tories in. If they oppose it, Labour will try and paint them as friends of the rich etc. But if they accept it, they’ll be letting Labour get away with an attack on wealth creation that will leave the country worse off. On 45p, the Tories have neither endorsed nor rejected the proposal but instead tried to walk around the trap. It is tempting to say they should

Fraser Nelson Fraser Nelson

The growth lie

The first Big Lie in this Budget – and, frankly, I’d be surprised to find a bigger one – is that the UK economy will enter a sustained three-year economic sprint of 3.5% A YEAR from 2011. David Cameron instantly and brilliantly ridiculed this as the theory of the “trampoline recovery”. We journalists just had an on-the-record briefing with the Treasury where this was questioned. The Treasury official claimed that no one is really forecasting beyond two years, so there’s nothing to compare it against. Untrue. Five-year-forecasts are produced by, erm, HM Treasury (last one released here in February), and on page 23 we find the following: So where on

James Forsyth James Forsyth

The 50p rate is just a diversionary joke

Even the Red Book says the government will get more revenue from increasing the tax on jobs than the 50p rate.  The Red Book says that increasing the rate to 50p on income over £150,000 would raise £1,810 million in 2011-12. By contrast, raising employees’ national insurance contributions by 0.5 percent brings in £1,960 million in 2011-12 and the 0.5 percent rise in employers’ NICS would pull in £2,460 million. (In reality, the 50p rate will raise a lot less, as any proper dynamic model would tell you.) The 50p tax rate is a diversionary tactic, a political measure designed to divert attention from the fiscal mess. The idea that

Peter Hoskin

Labour’s debt crisis becomes a catastrophe

Debt, debt, debt.  That’s the real story of today’s Budget, as Brown has created an even worse mess than expected.  Sure, £606 billion of borrowing over the next 4 years isn’t all that surprising, but Darling’s optimistic growth forecasts are.  They mean that the Treasury is probably overestimating tax receipts for the next few years, and – in turn – that the real borrowing figures will be even worse than those in the Red Book.   Something tells you that the government knows this.  As Robert Peston points out over at his blog, gilt sales are forecast at £220 billion this year – well above the £180 billion or so

Peter Hoskin

Darling’s dodgy forecasts

Lightning does strike twice.  Following the dodgy forecasts in last year’s PBR, Alistair Darling has repeated the trick – giving growth predictions in the Budget that are optimistic to the point of madness.  Ok, you can quibble over whether the economy will start growing by the “end of this year”, but 1.25 percent growth in 2010 and 3.5 percent growth from 2011 onwards is dubious in the extreme.  As Jeff Randall said on Sky just now, “no-one in the City believes that.” The difference this time round is that the political fallout is further in the future.  When Darling made his PBR forecasts, he had to start backtracking – embarrassingly

Peter Hoskin

Budget statement live blog

1232, PH: Darling’s started.  Stripey tie and gloomy face… 1233, JGF: Darling looks nervous and uncomfortable.  His tone is sombre. 1235, PH: Darling expects the economy to start growing “by the end of this year”. 1236, PH: Darling’s giving the global spiel, letting us know how much exports have fallen in Germany and Japan… 1237, PH: He claims that the £20 billion of “help” announced in the PBR is “coming through now”. The Tories’ “Labour isn’t working” attack denies that. 1238, PH: Now Darling’s taking credit for the “independent” Bank of England’s interest rate cuts – “cheaper mortgages and loans”. 1239, PH: On the G20 summit: “We agreed to take

Peter Hoskin

PMQs live blog | 22 April 2009

Kicking off any minute now… 1201: And we’re off.  First question from David Simpson, asking what scrapping the Barnett Formula would mean for the regions.  Brown says spending allocations “based on need” and that he thinks that’s right. 1203: Derek Twigg pushes Brown to “ensure” that all information relating to the Hillsborough disaster is released as soon as possible.  Brown says “we will look very carefully at what we can do”.  1205: Cameron leads on today’s unemployment figures.  He asks Brown to confirm whether what “we’ve seen this calendar year is the fastest rise in unemployment in our history.”  This keys into the “Labour isn’t working” theme.  Brown responds “That’s

Peter Hoskin

Calling on CoffeeHousers

You know the score by now – Alistair Darling’s Budget statement will barely represent what’s actually in the Budget.  Even the Red Book itself will try to hide all the Brownian ruses and deceits, great and small, in the fine print and appendices.  Here at Coffee House, we’ll be doing our best to catch the Government out, but we’d appreciate any insights that CoffeeHousers can proffer. The Budget will be available to download from here once Darling’s made his address, so – if you have the time and inclination – please do flick through it and let us know in the comments section to this thread if you’ve spotted any sneaky

Martin Bright

Geoffrey Robinson in The Times

I was delighted to see Geoffrey Robinson’s letter in The Times today where he clarifies that my departure from the New Statesman had nothing to do with my sometimes critical attitude towards the Prime Minister and his government.  Here is the letter in full in case anyone is interested: Sir, Paul Staines (“Guido Fawkes”, Opinion, April 17) is off the mark in his account of Martin Bright’s departure from the New Statesman. Before some mythology develops about Martin being a victim of his courageous writing critical of Gordon Brown and his Government, we wish to set the record straight. The views expressed by our former political editor about the Prime Minister

James Forsyth James Forsyth

Time for discipline

Hamish McRae, one of the few economic commentators whose reputation has been enhanced by the current crisis, has a fantastic column in The Independent today. In it, he argues that to get out of the economic mess of the 1970s we had to work out how to produce monetary discipline and that we now have to find a way to ‘impose fiscal discipline on governments’. Indeed, the real test of the Tories in government on economic policy will be whether they are able to do this. If the Office of Budget Responsibility has real teeth, then it could be one of the most important changes to the institutional framework of government

Peter Hoskin

Will Darling’s forecasts have investors running scared?

Of course, Darling’s big forecasting error in the PBR was his claim that the UK economy would start recovering by the third quarter of this year.  But, ahead of today’s Budget, it’s worth highlighting the borrowing forecasts he’s made.  As Robert Peston indicates in his latest blog post, a year makes an awful lot of difference: “In the last budget, a year ago, Alistair Darling projected public-sector net borrowing for 2009/10 of £38bn. Come the autumn and his pre-budget report, he projected that net borrowing for that period would be more than three times greater, at £118bn. And today, just a few months on, he’s expected to say he’s understated

Toby Young Toby Young

Boris Johnson’s art of war

‘The thing about Boris is that he really, really wants to be President,’ said an Old Etonian contemporary of his. This was back in 1984 when we were all at Oxford together. ‘Yes, I know,’ I replied. ‘He’s already announced his candidacy.’ ‘I don’t mean President of the Union,’ he said. ‘I mean President of the United States.’ Could that possibly be true? Boris was born in New York in 1964 so he isn’t disqualified on those grounds. But wasn’t it a tad ambitious to think he could become President of the United States? I checked with his sister, Rachel, who was then a fresher at New College. As expected,

Alec Russell

Dinner at the club with the Zulu Mr Everyman

On a blustery southern winter’s night last year, Jacob Zuma hosted a small dinner in the Rand Club for a dozen sceptical guests. Founded by Cecil Rhodes, the dark-panelled club in the centre of Johannesburg was in the old days the preserve of the white English-speaking business establishment. In the early years of majority rule, senior officials of the African National Congress were wary of admitting to membership, fearing headlines insinuating they had become the new ‘Randlords’, the old nickname for Rhodes and his peers. But 15 years into the new era the new guard are feeling rather surer of themselves. None other than the Rhodes Room, a private dining-room

Matthew Lynn

Can mercenaries defeat the Somali pirates?

Jim Cowling has chosen the right moment to launch his new business. An experienced security consultant, he has just set up a company called Shipguard, with a small office in Clerkenwell. The product: providing the men, the know-how, and if necessary the weapons, to defeat the pirates that are the scourge of Somali waters. ‘We’re one of the groups throwing our hats into the ring,’ says Cowling. ‘This is going to be the next Iraq in terms of where mercenaries are going. Iraq is being wound down, and guys are looking around and latching onto piracy.’ He is far from alone. In the past year, as pirates have menaced the