Now I’m a policywonk/nerd/geek, so when I say ‘rather good’ I do not mean ‘they agree with me, unlike the evil/stupid/captured by the capitalist discourse people who don’t agree with me’.  Perhaps I am not political enough.  I mean it is a good report; full of useful details, some excellent arguments, some clear proof that they rise above political bias from time to time, and the usual hundreds of footnotes, some of which are actually handy.

Find the report here.

I don’t agree so wholeheartedly with scrapping 50p, and certainly not with their call to reverse restrictions on pensions relief.  That we are giving 40p per pound back to the rich, and 20p to the poor, is nuts.

But there are many points in there that I do like.  Broadening VAT makes sense; compensate the poor through the benefits system.    They agree with many of us that recognising marriage in the tax system is unnecessary and inefficient, and expose the Tories thusly:

It has been claimed that Britain is one of the “very few countries in the Western world” that does not recognise marriage in the tax system. Most countries, however, do not recognise marriage in the personal income tax system. Where marriage is recognised this tends to be through the provision of credits or reliefs for income from activities such as the sale of the family home, and many countries make no recognition of marriage in their tax system at all

I had totally fallen for the Conservative line: ‘The UK is an outlier here’.  No we are not, it seems.

They powerfully oppose an early cut in corporation tax.   And expose another Tory myth – the one about us becoming dangerously uncompetitive in this area:

Race to the bottom myth
Evidence suggests that the notion of a “race-to-the-bottom” in corporation tax competition has been overstated. A 2007 report by the OECD concludes that while “there is some evidence that increasing mobility has had some impact on corporate tax rates”, the relentless race-to-the-bottom type of corporate tax competition predicted by some economic theories has so far “not been observed in OECD countries.

As the table above shows, the UK still has a very competitive tax rate compared to similar-sized economies. Within the G7 nations, Britain has the second lowest corporation tax rate, more than ten percentage points lower than the American and Japanese main rates.

The Conservatives think they can blow a corporate tax whistle and have business running.   As William Morris of General Electric showed recently, this is not the case:

Will Morris, senior international tax counsel at GE, defended the existing 28 per cent corporate tax rate as “actually pretty competitive”. He said the Conservatives’ proposal would undermine certainty and potentially increase effective tax rates, hit earnings and weaken manufacturers’ balance sheets. “So I’m afraid that doesn’t say to me that Britain is open to business.”

You may not agree with all of it, but this Reform document is worth having to hand as the debates unfold over the coming months.

Advertisements

4 thoughts on “Reform have a rather good tax report out

  1. ‘We'(who is this ‘we?) are not ‘giving’ anyone anything. Rather taxpayers are not having their income taken from them in such large amounts. It’s all the difference in the world

  2. If you are a 40p taxpayer when earning and in retirement, “giving” 20p and then taxing at their marginal rate means getting negative total tax relief if you save – a bizarre idea

    1. Surely it is still 20% better than ordinary saving? \They are still getting back half the income that has been taxed from them. Surely the starting point for their calculations is “I’ve been paid £60 (of my £100 extra income). I can either put it in a pension and turn it into 80, which then produces income at some point in the future, or I can save it in an ISA< in which case it is worth 60, or I can spend it, in which case it is worth 60". Is the incentive to put into a pension not still there?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s