Last week you asked George Osborne a number of questions, he answers a selection of them here.
Aaron (1): In a new Conservative Government, what would be the long term economic policy and intended effects?
The goal of our long term economic policy is to enable rising living standards for everyone. That means preparing Britain to compete in the new global economy with emerging giants like China and India.
We’ve set out a number of ways that we’d do that, including a broad programme of tax reform, a triple-lock on economic stability, and sharing the proceeds of growth between real increases in spending on public services, and lower borrowing or taxes.
I’ve highlighted the need to enhance innovation, not by top-down Government initiatives, but by strengthening the framework for business then getting out of the way. My recent trip to Silicon Valley highlighted the need to update our intellectual property laws and improve education standards so that we can compete in an age where knowledge will be the key driver of success.
Aaron (2): Can you make any suggestions as to the housing market boom - why has there been such an increase? Has it had economic benifits in the wider context? How can we go about ensuring young people can afford to join the ladder?
Unaffordable housing is a key priority for most families in this country. Whether young couples who can’t afford their dream of owning a home, or parents who can see no way for their children to get on the property ladder, the lack of homes we can afford affects us all.
Labour’s response is wrong. Their planning system prioritises building on gardens, hospital grounds and school playing fields, just because these valuable green spaces are labelled “brown field”. And John Prescott’s top-down targets leave little discretion for local communities.
So we’re setting out a new policy direction for housing that will give local communities power over new building, and gives them the incentive to build enough sustainable, beautiful homes, in the right places. We must build the homes we want and need.
James Maskell: Why are the Conservatives so worried about the idea of discussing tax cuts?
and
Matt Davis: I am sure that you will agree that one of the biggest stumbling blocks we have faced at the past three general elections was that we had lost our reputation for sound financial management. So what can, and will, you do to restore the Electorate's trust in us as a party with regard to the nations' finances?
Both David Cameron and I have repeatedly said that Gordon Brown’s tax rises make it more difficult for Britain to compete, in an increasingly competitive world. That is why we have said that we will share the proceeds of growth, so that as the economy grows, and more money flows to the exchequer, some of it is used for real increases in spending on public services, and some of it used for lower borrowing or lower tax.
But we have also said that we will put economic stability and fiscal responsibility before tax cuts. That is exactly the right thing to do. We just don’t know what the state of the public finances will be in 2009 or 2010, but we’ve got a clue: the Budget documents show that Brown plans to borrow £27 billion in 2009/10. So we cannot promise up-front tax cuts now.
Annabel Herriott: "Will you abolish stealth taxes? And promise not to land us with any new ones? Give us transparancy? We are not idiots, no matter what G. Brown thinks.
Also make sure new taxes hit the target, not some poor sod with a limited income that had not crossed GB's radar!"
I find it extraordinary that after nine years with Gordon Brown as Chancellor, the poorest fifth in our society pay the highest proportion of their income in tax. His stealth taxes must take some of the blame for that.
Instead of stealth taxes, I have commissioned the Tax Reform Commission to look at how we can reform the tax system so that it is simpler and fairer. That is an incredibly open and transparent way of reforming the tax system.
Huntarian: "As part of your commitment to simplify taxation, will you pledge to raise the tax thresholds to take everyone on the minimum wage out of tax completely, at the same time abolishing Brown's massively complex tax credits?"
The independent Tax Reform Commission are looking into reforming the tax system, and will consider this specific question on raising personal allowances. The complexity of the tax credit system is staggering, exposes the taxpayer to fraud, and hits the most vulnerable in our society hardest. We support the principle of the tax credits system, but we want them to work.
Og: "What do you do with your time, nowadays?"
When not doing my job as MP for Tatton and Shadow Chancellor, I am at home with my family.
David Banks: Do you find your relative youth is a disadvantage in Westminster?
No. It means, I hope, that I am always open to new ideas.
William Norton: "Do you support the call from the TaxPayers' Alliance to establish a Dynamic Analysis Division within HM Treasury to investigate the positive effect on incentives and growth of a reduction in the tax burden ?"
The TaxPayers' Alliance are right to highlight the issue of the dynamic effects of tax cuts. The current Treasury model assumes that any change in the level of taxation will lead to an exactly equivalent change in revenue. They fail to take into account the broader economic consequences of tax changes.
It is difficult to know exactly what those dynamic effects are – how big they are, and when they impact on tax revenues. So I welcome the Tax Payers’ Alliance’s interesting idea, and I look forward to hearing Gordon Brown's reply.
Jonathan Powell: "You have spoken favourably about the idea of a "Flat tax", but recently you seem to have downplayed the idea. Have you read Hall and Rabushka's book on this topic, and do you agree with the main ideas, e.g. by having all income taxed at the same rate it is easier to tax business income, so that the tax base can be increased and thus the rate of tax can be low, hence increasing incentives?"
Yes, I have read Hall and Rabushka’s book. But as I have always said, the concept of a pure flat tax is not without its problems. Flat taxes have until now been introduced into former communist countries with undeveloped tax systems, rather than mature tax systems like the UK. There are lessons we can learn from the success of some flat tax economies, about the impact of taxes on incentives, and about simplicity of the tax system. And that’s why I set up the Tax Reform Commission.
Chris Hughes: Why do you insist on sticking so firmly to what are essentially Marxist economic attitudes?
Dear comrade, I take my inspiration from the Wealth of Nations to Das Capital.
