George osborne

Thursday

Matthew Sinclair

Why property tax rises aren’t the answer

From our UK edition

When Tim Montgomerie first started calling for new wealth taxes I was horrified. Sweden has only just abolished its wealth tax after seeing hundreds of billions of kroner leave the country in capital flight over a number of years. Other countries have found wealth taxes are associated with narrow bases, high costs of collection and often very unfair treatment for different classes of assets. We should not replicate that here. As his proposals have been refined though, it isn’t that bad. More bands would be a relatively reasonable way of making the Council Tax system more progressive.

Fraser Nelson

Why George should listen to Danny

From our UK edition

In the new Spectator, we back the Liberal Democrats’ plans to raise the tax threshold to £10,000 — provided that the money is found by cuts in state spending rather than the pensions raid they propose. It’s not top of my list of tax cuts, but we have to accept the realpolitik. It’s the only tax-cutting option that has advocates in the Treasury. There are plenty of proposals around to cut taxes and wake the British economy from its ‘lost decade’ slumber. The need to use tax cuts as a remedy to the deficit will be familiar to anyone who has followed the American presidential debate: every candidate, even Romney, has their own list of radical tax cuts.

Wednesday

Jonathan Jones

Your guide to all those tax cut proposals

From our UK edition

Nick Clegg, Ed Balls, Liam Fox, David Davis, the Centre for Policy Studies, the Centre for Social Justice and the Sun. It seems almost everyone thinks George Osborne should cut taxes in his Budget next month — the only disagreements are over how. Here’s a quick guide to the main proposals so far: There will doubtless be other suggestions before 21 March when we will finally learn which, if any, Osborne has chosen. UPDATE: The table originally gave the cost of the CPS' corporation tax cut as £8.5bn. This is their 'static' estimate of the cost, but a more realistic estimate, derived from the Treasury's ready reckoner, is £4bn.

James Forsyth

A taxing problem for George Osborne

From our UK edition

Today’s FT reports that additional council tax bands are being considered as part of the Budget process. But there are several problems with introducing new council tax bands. First, this would require a wider revaluation, something that the coalition has ruled out explicitly and that would almost certainly drive up council tax for most people.   A revaluation, as a parliamentary question from George Osborne’s former chief of staff Matt Hancock established, would cost around £200 million. It would also take two to three years to complete, meaning revenues from any new band wouldn’t start accruing until either very close to, or even after, the next election.

Tuesday

James Forsyth

50p tax rate is raising less than expected

From our UK edition

The Telegraph this evening has news that the 50p tax rate is, predictably, raising less than expected. A report from the HMRC on the effectiveness of the 50p rate should accompany the Budget. If that report indicates that a lower rate would raise more revenue, then it will be a real test of the coalition. Will they leave the rate in place for symbolic reasons or will they reduce it? The defence of the 50p rate has always been that it was necessary to maintain public support for deficit reduction. But it sends out an awful signal about Britain’s approach to success. Rewards for failure are—clearly—a bad thing, but rewards for success are a necessary part of a proper market economy. Obviously, lowering the 50p rate would have to be part of a wider tax reform programme.

Jonathan Jones

The Lib Dems step up their push for £10,000

From our UK edition

Set your TiVos. At 6.55 tomorrow evening, BBC1 will air the Liberal Democrats’ latest party political broadcast. For those of you who can’t wait, here’s a sneak preview: In the video, Nick Clegg describes his proposed increase in the income tax personal allowance as ‘a £700 tax cut for ordinary working people — that’s an extra £60 in your wages every month’. I’ve remarked before on the similarities in both rhetoric and policies between the Lib Dems and Barack Obama, but Clegg’s ‘£60 a month’ pitch is as close as you get to the way Obama sells his payroll tax cut extension as ‘about $40 in every paycheck’.

Fraser Nelson

Osborne accidentally makes the case for more savings

From our UK edition

Rhetoric aside, what’s the difference between left and right in British politics? You won’t catch either party quantifying it, because the answer embarrasses both. The ever-cautious George Osborne is cutting just 0.6 percentage points a year more from government departments than Labour planned to (see table, above). The great joke is that the difference between the two parties is actually within the margin of error. Government is a gargantuan machine that just can’t be controlled to that degree of precision: a billion quid is, to Whitehall, a rounding error.   Today’s public finances have demonstrated that.

Sunday

Jonathan Jones

The tax debate at the heart of the Budget

From our UK edition

The run-up to last year’s Budget was all about fuel duty. This year it’ll be all about direct taxes. The Lib Dems are determined to put their manifesto pledge of raising the income tax personal allowance to £10,000 front and centre. They already managed to turn this promise into government policy in the Coalition Agreement, and last year’s Budget announced that the threshold would rise to £8,105 in April this year. But Nick Clegg’s made clear that he wants to go ‘further and faster’ on this. The Conservative response at the Treasury – according to today’s Telegraph – is simple: ‘how are they going to pay for it?

Fraser Nelson

Balls the tax-cutter?

From our UK edition

‘Balls urges tax cuts’, we’re told. Has he had a Damascene moment? Has the borrowed penny dropped? Nope, this is his longstanding and cynical campaign to cut VAT. Under the Labour years, when Balls was encouraging Brown to adopt a ‘scorched earth’ policy to the public finances, he urged against raising VAT to 20 per cent as Alistair Darling wanted. Not because he didn’t think it was necessary, but because he knew that if Darling didn’t do it, Osborne would. So VAT could be an election campaign tool, and then a stick with which to beat the wicked Tories (and the Lib Dems, who dropped the ‘VAT bombshell’ that they warned of). There is also politics: Tories prefer taxing consumption to taxing income.

Wednesday

Peter Hoskin

Post-Moody’s, King backs Osborne

From our UK edition

Moody's doubts might not be making much difference to the actual economy, but they could make a good deal of difference to the political battle being waged over it. George Osborne, of course, is citing this as further proof of the need for fiscal consolidation. Ed Balls, meanwhile, is redoubling his call for a ‘change of course’ — and somewhat misleadingly too. But what does Mervyn King think? Thanks to his comments in a press conference this morning, we don't have to guess.

Tuesday

Art Laffer and Others

How to kick-start the economy

From our UK edition

This morning's news is a stark reminder of the desperate need to get the UK's economy growing faster than the 0.9 per cent it managed in 2011. So far, George Osborne's seemed short of ideas in this area, so, back in November, we asked a select group of economists and politicians to suggest some for him: Cut the 50p tax Arthur Laffer, Chairman, Laffer Associates Reducing the burden which government places on the economy, through tax cuts, is the surest way to promote growth. I have never heard of a country that taxed itself into prosperity. Yet Britain last year raised the top rate of income tax from 40 per cent to 50 per cent. For more economic growth, and more tax revenue, this rate should be lowered immediately.

Fraser Nelson

A warning for Osborne and his economic agenda

From our UK edition

Why did Moody’s downgrade Britain to AAA with a negative outlook, but leave other countries on AAA? One crucial factor is the scale of our debt increase: 60 per cent over the parliament. You won’t find it mentioned much today. The Chancellor is talking about austerity, helped by Balls who talks about his harsh deep cuts. Osborne today swears to keep ‘dealing with the debt’ — but his definition of ‘dealing with debt’ would even make an Italian blush: As Balls said on the radio this morning, the plan isn't working. But Balls' narrative — that Osborne is cutting harsh and deep — is untrue, as Moody's knows.

Peter Hoskin

Labour’s plan would have cost us our AAA rating

From our UK edition

For Ed Balls this morning, there is only one conclusion to be drawn from the news about our credit rating: ‘A change of course is needed.’ But to what? Balls no doubt means a shallower course of deficit reduction — less far, less fast. But Moody's are clear that we have been placed on a negative outlook because of doubts that our fiscal consolidation will continue strongly enough. Specifically, they say that, ‘Any further abrupt economic or fiscal deterioration would put into question the government's ability to place the debt burden on a downward trajectory by fiscal year 2015-16.’ So how would Labour have fared? We already know that they didn't propose to put debt on a downwards trajectory back then (see my post here).

Peter Hoskin

Moody’s puts UK’s AAA rating on negative outlook

From our UK edition

‘It's now clear that Britain's economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now ... For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.’ So said George Osborne when S&P placed Britain's AAA credit rating on a negative outlook in May 2009, when Labour were in power. But guess what? Another credit-rating agency — Moody's — has just done the same to our rating this evening. Given how much Osborne made of Britain being a ‘safe haven’, it's rather a tricky one for him.

Sunday

James Forsyth

Warming up for the Budget

From our UK edition

The Budget negotiations within government are now underway. The quad of Cameron, Clegg, Osborne and Alexander held a meeting last week to discuss their priorities for the Budget on March 21st. They’ll continue this conversation over a working dinner tomorrow night. Already, we know that the Liberal Democrats main priority will be to get the personal allowance as close to £10,000 as possible. As The Sunday Times reports, they’re suggesting paying for this by taking away various reliefs for higher-rate taxpayers and closing some of the loopholes in the tax system. I also understand from Liberal Democrats close to Clegg that they’re also interested in some new green taxes.

Thursday

Peter Hoskin

Cameron’s quotas: a policy or a threat?

From our UK edition

We've heard enough about David Cameron's woman troubles to regard anything he says about the fairer sex as a naked pitch for votes. But I reckon his comments today, about getting more women into boardrooms, are just as much motivated by concerns about the economy. ‘The drive for more women in business is not simply about equal opportunity, it's about effectiveness,’ is how he put it earlier, ‘It's about quality, not just equality.’ It's a claim that reflects both the thinking of Masters of Nothing — a book by two highly-regarded members of the 2010 intake, Matthew Hancock and Nadhim Zahawi — and its continuing influence in Cameroonian circles.

Tuesday

James Forsyth

Osborne defends ‘rewards for success’

From our UK edition

George Osborne’s speech to the Federation of Small Businesses tonight tries to offer some reassurance that the coalition isn’t caving into the anti-business zeitgeist. Referring to the recent rows over executive pay, he deplores rewards for failure before saying ‘a strong, free market economy must be built on rewards for success. There are those who are trying to create an anti-business culture in Britain – and we have to stop them.’ How reassuring business leaders will find this remains to be seen. As Robert Peston reported yesterday there’s a lot of grumbling from them about the government’s handling of the Hester bonus and other matters.

Wednesday

James Forsyth

Labour vote to the Tories’ benefit

From our UK edition

Labour has just marched into the trap that George Osborne set them and voted against the benefits cap — again. As one gleeful Tory says, ‘we’re going to make sure everyone in the country knows how they voted on this.’   I suspect that in every Labour-held marginal that the Tories need to win to get a majority in 2015 the benefit cap will feature prominently on Tory literature. Labour MPs will be faced with the unenviable task of explaining why an able-bodied household where no one works should receive more in benefits than the average wage.   The cap chimes with the public’s sense of fairness — as the huge support for it shows.

Peter Hoskin

Your six-point guide to the Green Budget

From our UK edition

As promised earlier, here's my more detailed supplementary take on today's IFS Green Budget. I've distilled it down into six points, but obviously there's much, much more in the actual document itself. I'd recommend that you read the chapters on public sector pensions and pay, the 50p rate, and child benefit, in particular, if you're so minded — as they're very good summaries of some complicated fiscal areas. Anyway, here are my points: 1) The scary graph. As it does every year, the IFS has produced what I call the ‘scary graph’. It shows what our debt/GDP ratio would look like for decades hence under various circumstances.

Peter Hoskin

The view from the Institute for Fiscal Studies

From our UK edition

It's the halftime coffee break here at the launch of the Institute for Fiscal Studies' Green Budget, so I thought I'd send CoffeeHousers a quick update. But first, just to be clear, that's green meaning green, not green meaning environmental. This is the IFS's annual, different-hued version of the Treasury's Red Book. It's their overall take on the economy and public finances. So far, there has been little that will surprise or disconcert George Osborne as he prepares his own Budget: the picture is expectedly grim. As John Walker, chairman of Oxford Economics, put it in his warm-up routine on the general economy, 2011 was ‘disappointing’ and 2012 will be ‘another difficult year’.