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Comments

TaxCutter

Inheritance should have been abolished years ago. Its double taxation, often of income already taxed at 40% and economically illogical. However, Tories forget that a large part of the voting population are never affected by it, and the most successful tax cutting election policy is to cut income tax for all, not IHT for some.


Dave Robbins comments used to be typical of CCHQ thinking. He's a nice guy but he ought to look at the experience of countries that have cut taxes a bit harder.

Jonathan

Abolishing IHT needs to be seen as part of a wider commitment to cleaning up the tax system, less "get out" clauses, as these benefit people with access to accountants and not the ordinary 'man on the street'. The current system where people are taxed 2 or 3 times on the same money is blatantly unfair and any political party should be able to come up with enough examples where it would help people and thus demonstrate it would be fair. Cutting down on paper work and the associated civil servants should save a billion or 2.

With regard to housing it seems that people having to sell the houses just to pay tax is a lopsided argument if ever I heard one.

How about making it harder for people to buy 2nd or 3rd houses or cutting down on the buy to let market which is so rampant because of the low interest rates (although that is changing)?

Central to abolishing IHT would be making the tax system fairer and making sure people are only taxed once.

Rodney S Lighthill

I am against total abolition but tax should be only payable on amounts over say £1m.

I suggest that abolition of capital gains tax should have a high priority.

anon

Arguments of pros and cons aside, a death tax is simply morally wrong.

Michael Van Clarke

Government spending must be curtailed and constrained. I think the most important first change should be to massively raise personal allowances. Why people on subsistence earnings are paying income tax and then having to go round the houses to claim benefits is incomprehensible.

Phil Stringer

So many people giving so many opinions which stray from the original discussion point - is IHT a fair method of raising revenue?
In essence, it certainly could have been, had the levels at least kept pace with house prices and inflation. This would mean that we wouldn't be looking at be looking at the majority of Londoners, most of Southern England and half the rest of the country being in the area of IHT but only maybe the top 10-20% of house owners. Which is where it was supposed to have been originally - a tax on the rich.
Please don't scream back " . . ah, but if you live in Wakefield or Salford or Upper Wallop . . ." the facts remain the same whether the percentages are right or even 20% out.
And, really, who gives a damn if the guy or woman who has gone out a grafted, sweated and risked everything to create a business or build up a valuable property gets to keep a bit more of it. The guy who said that 'inequalities are a fact of life' is spot on - so get over it and go and live in the real world. Stop shouting about how 'unfair' it is that other people earn more, or save more or even, heaven forfend, have social advantages over some scrote from a council estate in Liverchester or Nottingpool.
Vote YES to getting rid of it, even if it will subsequently be watered down to increasing the threshold to where it should be - probably double what it is now.
The money will come back into the economy anyway, as has been shown by so many other countries and administrations.

Darrow

The abolition of IH must come, but not just yet. It will be an excellent feature of a second Conservative term. A prority for the first term is to abolish the 10% income tax rate and raise the income tax threshold to £12,500.(half average earnings)
darrow

john graham

Put simply a tax on earned income that is already taxed is like being mugged twice and given that the low threshold affects so many people it should be abolished. 3.6 billion is considerably less than the gross ammounts literally wasted weekly by the government yet the uplift impact on ordinary peoples lives is immense, the cost versus direct economic benefit to ordinary people is worth it, remember also that the super wealthy are more able to avoid it anyway so massively uplifting the threshold is pointless, link it to public sector efficiency savings and its very easy to balance the books. Bizzarely it was Harold Wilson who said the little things matter- IHT is actually a little thing in the overall GDP tax take of government yet it impacts dramatically and viciously at a difficult time for citizens.

David Robbins

Tax Cutter: is your proposal therefore that we should promise to cut taxes and say this would pay for itself because of supply-side effects? Do you think people would believe that?

Adam

Steve @ 9:21am

I've heard it all now - abolish Inheritance Tax and pay for it through a rise in income tax!

I suppose it's slightly more credible than "abolish inheritance tax, I'm sure I can pay for it by cutting some (unspecified) spending somewhere...". If it's so easy to find the cash, please tell us eactly what you'd stop spending money on.

Frankly, if there's £4bn going spare there are plenty of better places to spend it than getting rid of inheritance tax - cutting corporation tax for example (you know, something that would actually affect our competitiveness and improve economic performance).

John Price

Two simple suggestions
First Get rid of REVENUE CAMERAS They are costing lives rather than saving them.. Drivers are watching their speedometers INSTEAD of the road! But of course they are generating huge revenues for the Government!

Second Set Inheritance tax at a REALISTIC Level.. I worked hard for my £300,000 bungalow and it is not my fault that commuters and holiday home owners have forced prices so high that my children cannot afford to live nearby!

You are ALL the same you make promises you have no intention of keeping... Is there such a thing as an HONEST POLITICIAN?

David Watt

It seems wrong that a "voluntary tax" like inheritance tax should start at a punitive 40% rate.
It would be much better to apply say a 10% and a 20% band before the higher 40% rate, This would reduce the penalty on the least wealthy payers and be more likely to be considered "fair". It might even work out at being tax neutral as the need to take risks in avoidance would be much reduced.

Denis Cooper

It's nonsense to say that IHT is "double taxation", or that it's a "Death Tax".

In effect it's a tax on legacies (legacies the legatees may or may not deserve), but in its present form it's designed for convenience of collection, not for fairness.

In fact both the various advisers in the financial services industry, and the civil servants in the Inland Revenue, feed and grow fat upon its irrationality and patent unfairness and the complexity of attempts to circumvent it. Far better to reform it or replace it with a "legacy tax", retaining the sound principle that people who accumulate large legacies may be subject to taxation, but on a proper basis.

Family businesses could be given special exemptions, and so could works of art and buildings of historical significance, beneficiaries with recognised disabilities could be given extra allowances, and maybe there could be an exemption for any part of a legacy which the legatee puts into a fund for his own old age.

There are many possibilities, but only once the liability for taxation has been transferred from the estate as a whole to the legacies actually received by the individual beneficiaries.

anon

Surely we should try to reduce taxes on income and expenditure in preference to taxes on wealth?

I agree with the other commenters who would rather cut income or corporation tax.

Paul Kennedy

It might be worth noting the follow question that appears at the end of the proposal:

"Do you approve of this policy in principle?"

So actually I would have thought most if not all conservatives would agree with the policy in "principle". The practicalities and timing of it is of course another matter.

Brian J. Edwards

Inheritance tax is yet another tax which discourages prudence and savings.
If I had spend my money as soon as I earned it, or given it away to my children, as a pensioner I would now be getting various supplements to my pension and paying no tax. As it is, I pay tax on any interest from my savings, and get no additional payments. When I die, because we own a house, my executers will have to pay a large chunk of tax.
No wonder my daughter and son-in-law spend their money on luxury holidays and have no savings. They propose to used their home to release capital when they retire, thus ensuring that they avoid inheritance tax.
Over the years, from being a tax on the rich, inheritance tax has now spread to virtually everyone who owns a house. It is disproportionately expensive to collect compared with other taxes, as well as costing the deceased's estate a fortune in solicitor's and accountant's fees.

legal eagle

It would be a better idea to raise the threshold in my view and focus on serious tax cutting in other areas. With the Lib Dem's new policies on tax we cannot afford to be seen as cutting taxes for the rich but not the poor.

Just a small point liz spencer @ 3.29pm- "It hurts to whomever you leave you estate, be that a charity, friends or your children and relations." Charitable dispositions are IHT exempt.

Cllr Tony Owen

Petts Wood & Knoll (London Borough of Bromley) councillors in a leaflet entitled 'Taxed to death' advocated the adoption of this policy over 3 years ago. This was circulated to (amongst others) Theresa Villiers, then leader of London conservatives in Europe, now an MP

Denis Cooper

This link describes the Capital Acquisitions Tax in Ireland:

http://www.oasis.gov.ie/death/taxation_issues/capital_aquisit_tax.html

I don't say that we should follow the Irish example in every detail, but the crucial change of principle is stated in the first paragraph:

"Capital Acquisitions Tax is really two taxes - Inheritance Tax, which may apply when a person dies and leaves assets to another, and Gift Tax, which may apply when a person during his or her lifetime gives a gift to another. Both taxes are payable by the person who receives the gift or inheritance. The relationship between the giver and receiver is important."

Further:

"You may receive certain gifts and inheritances up to a certain value without incurring any Capital Acquisitions Tax liability. The amount involved depends on the relationship between the donor and the recipient and on other gifts/inheritances received. Jointly owned property becomes the property of the survivor by virtue of joint ownership and may be liable to Capital Acquisitions Tax.

Thresholds for 2006

There are certain thresholds above which Capital Acquisitions Tax applies. The appropriate threshold depends on the relationship between the donor and the beneficiary. Gifts and inheritances between spouses are free of Capital Acquisitions Tax. A threshold of 478,155 euro applies to gifts/inheritances made by a person to his/her child..."

As I've heard that this is the system which the EU wishes to impose in the long term, I'm making a huge personal sacrifice by nevertheless recommending it.

The other change I would recommend is that the revenues should no longer go to the Exchequer possibly to be frittered away, but instead to a free-standing British Educational Trust for the educational benefit of children from poorer families, and in particular to provide the brightest with university scholarships.

At least then if we had to pay tax on a legacy we might feel that it will do some good for the disadvantaged of our society, while strengthening both its unity and its future economic potential.

SANDRA

I.T. should be scrapped, or , at the very least the starting rate doubled. We've worked hard all our lives , why should we be suddenly made to worry in our old age simply because house prices have been allowed to rise at such a rate ? At the same time our children -- mine being in care work looking after autistic young adults--- cannot afford to get onto the housing ladder..! So, they live at home, and help care for me, as I'm disabled. Should I die, then at that very upsetting time, they would need to sell our home to pay the I.T. bill.....crazy, and immoral.

Simon

Please don't have separate discussions on single item of tax. It is a completely futile exercise. I agree that £3.6 billion is a lot of money. But in the context of £552 billion - btw it is written like this in figures: £552,000,000,000.00 (which is what HM Treasury collected last year), this is a mere drop in the ocean. You need to argue that you can run the UK with far less - say £ 350 billion, in which case, we can all enjoy massive tax rebates/cuts.

william

Corporation Tax should not be cut except for companies that increase employment. Companies that grow employment at 20% in one year (or more) should be exempt. Companies that grow employment at 10% should pay half. GRowth at 5%, 75% of the full rate etc.

These 'cuts' would self liquidate. Once the company stops growing or shrinks, the full rate applies.

Steve

Adam at 4.23pm.

Yes if necessary put a couple of pence of income tax to fund abolition of IHT. It immediately removes the charge that it can't be paid for.

In fact, this is a ludicrous charge since the amount raised is so trivial (even after being ramped up due to overpriced houses), I expect the loss of the revenue could easily be covered elsewhere.

Yes, an alternative to IHT abolition is to cut corporation tax, income tax, NI contributions or raise allowances. But the amounts involved would be so slight as to be almost unworthy of comment.

Whereas, the abolition of an entire tax (a double tax regardless of the semantic arguments on here about legacies) would be immediate, well understood, removed dozens of pages of the tax code, and be appreciated by thousands of people whose votes we are trying to attract.

Gildas

"Tax Cutter: is your proposal therefore that we should promise to cut taxes and say this would pay for itself because of supply-side effects? Do you think people would believe that? "

I understand that supply-side effects would not be believed by people as a whole right now, but they might be believed if someone actually stood up and made the argument for them, rather than conceding the false premise that cutting taxes costs money.

Especially given that right now, Laffer has been proved right again in the US by the increase in Federal Tax Revenues since the Bush Tax Cuts.

(Whether there would be any supply-side effects from cutting IHT is a separate question altogether, but frankly I think that the way IHT intrudes on families at a difficult time is a good enough reason to abolish it).

Kevin Moss

The only reason a Government needs IHT is to fund a profligate public spending exercise. The very fact that they are taxing assets built up from taxable income, and which have given rise to a lifetime of income tax and capital gains tax is an indication of a "tax, tax and tax again" philosophy. And as the TaxPayers Alliance have proven, the Government doesn't need THAT much tax - providing that revenues are not being wasted continually.

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