Monday, Nov 30, 2009

A small step in the right direction?

BBC News: 'Radical' Lib Dem tax plans due

The Lib Dems will outline plans later for what they are calling "the most radical tax reform in a generation". The party will pledge to scrap income tax for four million low earners - those on less than £10,000 a year - if it wins the next general election. It says it would fund the measure by introducing an annual 1% tax for those owning homes worth more than £2m. The threshold for the "mansion tax" has been raised from £1m following criticism from senior party members. The Lib Dems will say they plan to use the revenue generated from this and other tax rises for the better off to help those on lower incomes. Crucially, they say they will raise the threshold at which people start paying income tax to £10,000 and they claim this will leave poorer families about £700 a year better off.

Posted by drewster @ 09:35 AM (1399 views)
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13 Comments

1. drewster said...

The BBC have revised the article since I started posting. Compare the original and revised versions - does anybody else notice a distinctly negative tone in the revised version?

Monday, November 30, 2009 09:37AM Report Comment
 

2. Crunchy said...

I will ignore this. EU Global taxation plans rule!

Monday, November 30, 2009 09:42AM Report Comment
 

3. mark wadsworth said...

Mansion tax is a good idea, increasing personal allowance is a good idea, but no way will the former pay for the latter, they're out by a factor of at least ten.

What is a better idea is reducing tax breaks for pension saving, which they are also suggesting.

Monday, November 30, 2009 09:55AM Report Comment
 

4. Renthusiast said...

the new mansion tax proposal would actually reduce revenue by approx. 35% over the original proposal http://bit.ly/5XmMah

Monday, November 30, 2009 10:28AM Report Comment
 

5. Jim Green said...

There is so much wrong with the world - why can't we make it a better place? The answer is, of course, that we can. Just that those in power in politics, the media and big finance control our opinions and expectations of what is possible. This revision of an article - presumably on the orders of someone higher up who didn't like the original - is just a small example of that control in action.

Monday, November 30, 2009 10:31AM Report Comment
 

6. the number cruncher said...

I listen to Nick this morning on the Today programme. When he mentioned taxing wealth instead of Income he was jumped on and side lined into defending why the change was from one-million to two-million.

It does make you wonder if there is a conspiracy in the beeb to never allow the mention of taxing wealth instead of work.

Monday, November 30, 2009 11:35AM Report Comment
 

7. Doahh said...

The two articles look identical to me, a copy and paste job.

Monday, November 30, 2009 11:52AM Report Comment
 

8. drewster said...

Mark,

On the subject of pensions' relief, the BBC's Nick Robinson has made a back-of-the-envelope calculation on his blog:
"How "rich" do you have to be before you lose out? Someone on around £50,000 who put 10% of their income into a pension would, I'm told, lose as much in tax relief as they would gain from the higher tax allowance. Of course, the less you put into your pension (and many put less than 10%), the higher income you could earn before you lose out."


number cruncher,

Let's not mix up the words here. It's a tax on property, not on wealth. If you tax wealth it flees to Jersey or Monaco or the Cayman Islands; but if you tax property it doesn't move. People are still free to invest their wealth in job-creating businesses.

Monday, November 30, 2009 12:37PM Report Comment
 

9. mark wadsworth said...

Drewster, tax breaks for pension savings are one of the worst targetted tax breaks ever. There will always be some people who live within their means and save; there will always be spendthrifts. So of the £50 billion a year they throw at it, only a small amount goes to those who wouldn't otherwise have saved. And all of it goes to the pensions industry in fees and commissions, so it's a negative sum game. I'd rather scrap it completely, hike the tax free allowance and lift the threshold for higher rate tax (or scrap it completely).

Number Cruncher - as Drewster says, taxes on land values are neither taxes on capital nor on wealth because land is neither capital nor wealth, it is a privately owned, state-protected monopoly right, unlike proper capital or wealth, which is education, patents, know how, plant and machinery, buildings etc. Taxing those would be little different to taxing income.

Monday, November 30, 2009 01:05PM Report Comment
 

10. Steve. T0wns3nd said...

Hmmm, let's hope for a hung parliament then.

2M threshold is OK as getting it in is going to be the tricky bit. But as soon as it is in, the thresholds could be reduced / rates increased to have more mainsteam coverage aka LVT. LibDems are not going to get a majority. The only way this will see the light of day is if we have a hung parliament and they do a deal where this headline policy is part of the deal (do the lib dems have any other policies?). Thereafter, the huge govt tax / spending deficit and woefully optimistic growth forecasts would necessitate the thresholds being be reduced / rates increased; no matter who was in charge thereafter. A long term play perhaps, but you never know.

Monday, November 30, 2009 01:46PM Report Comment
 

11. the number cruncher said...

Mark and Drewster

Nick actually started talking about taxing "unearned income" when he was cut off and talked over. It was accused of being a left of centre approach to taxation.

Listen to it. http://news.bbc.co.uk/today/hi/today/newsid_8385000/8385692.stm about 7 mins in

I was so upset as I thought Nick might have had a chance to discuss, in a widely listened to forum, the taxation of unproductive, monoploistic wealth as opposed to earned income/purchase tax.

The issues of Land Value tax are complex and many assets, not just land, are of a monopolistic nature such as mineral rights, utilities etc. LVT in its strictest sense is too narrow a concept for the modern economy.

I prefer the idea of selectively taxing the gifts of mother nature in all its forms, and not just land to fulfil social, economic and environmental aims.The majority of patents hinder economic progress as it blocks entry to the market place and is not in my opinion proper capital as they are monopolistic in nature.

Monday, November 30, 2009 03:16PM Report Comment
 

12. drewster said...

nc,

I agree with you, land isn't the only monopoly.

Airwaves: Ofcom auction the airwaves to the highest bidder. The 3G auctions raised £22.5bn, helped by dot-com euphoria.
Mineral rights: North Sea oil extraction rights belong to the oil companies (e.g. BP), but they are taxed heavily.
Air: The right to pollute the air is (arguably) taxed through petrol duty and vehicle excise duty.

Patents expire after twenty years, which works well. The main flaw in the patents system is that too many spurious ones are granted - look up the patent for "Method of exercising a cat".

Monday, November 30, 2009 04:22PM Report Comment
 

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