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I have always wondered why nobody has proposed to increase the threshold for the top rate. It doesn't just hit the wealthy but many people on middle incomes and therefore potential swing voters. In 1979 the top rate tax threshold was (I think) 20,000 which is equivalent to about 67,000 in today's money. Yet today the threshold is around 30,000.

For the party to get into some sort of Dutch auction with the Lib/Dems on tax would be a disaster.
We must stick to our guns and say that tax cuts will not be put before economic stability and the public services. If we do that we will look responsible and sensible and like an alternative government and the Lib/Dems will look like they are just simply making it all up as they go along and are acting like a party that knows it as no chance of ever obtaining power.

New taxes are more unpopular than old ones - the LDs Green Taxation proposals along with Local Income Tax should be a good target. Our message is (pace the Torygraph) not confused; simplify taxes (removing means testing?), plan forward on reducing state expenditure as proportion of GDP.

Cut income tax by 2% but load on complex new taxes? How long before Local Income Tax takes any benefits from a 2% cut - anyway wouldn't that be better spent taking the lower paid out of taxation?

Ted @ 10.17: "anyway wouldn't that be better spent taking the lower paid out of taxation?" Hear! Hear!
What could be more equitable than to raise the basic personal tax threshold by sufficient to take everyone up to at least a bare susbsistence level? All tax payers would benefit, although the better off would hardly notice it.
Equally, it would start to simplify a very complex tax system and, at the same time, take a large number of people out of benefit.

Income tax is a very visible tax, but it would make better sense to reform, reduce or abolish those taxes which are expensive to collect or comply with, or bring in small amounts of revenue, or whose abolition would help the poorest most. Raising income tax thresholds (especially for the bottom rate of tax) would have a great impact on people but is politically harder to sell because more complicated. But resisting the siren call of lower income tax must be resisted!

There is an article in today's Financial Mail saying that the UKs high business taxes are forcing some larger companies to move off-shore, as well as putting off those who might consider investing here. Clearly there is a desperate need for a change to encourage investment. In three or four years time things might be a lot worse. Tax cuts, far from being irresponsible, may actually be urgently required by then - to generate some growth whose proceeds we could share with the vital public sector!

We'll have to wait until a bit closer to the next General Election to make any specific policy commitments. I think the current Conservative line of aiming for stability before anything else, and sharing the proceeds of any growth left in the economy in three years, is a good line.

If there is any room for tax changes, i'd love to see the lowest threshold increased, inheritance tax abolished, and corporation tax reviewed, with a view to a reduction.

We could just ignore the Lib Dem's mindless opportunism and intellectual shallowness and try and put our own message across succintly and clearly at every opportunity.

See this on the Lib Dem tax plans: http://fourthterm.net/plog/index.php?op=ViewArticle&articleId=273&blogId=1

From a Lib Dem (ie me):

This fight is not over. As the comments here suggest there is real poverty of the imagination in tax policy from all three parties. All start from the wrong assumptions about the functions of the tax system. And as a result all hope to make savings, or not, merely based on tinkering with known expenditure and waste.

I am looking for something far more exciting to come out of the Lib Dems' Tax Commission, and colleagues of mine have been working hard to get a measure of shifting tax away from incomes, capital, the profits of work and transactions and onto "real wealth".

Adam Smith, David Ricardo, Milton Friedman and others suggested that Land Values were the best specie of wealth to tax, since their value is generated by others (and in the discussion of taxation, most often the publicly financed infrastructure that goes into making a particular location attractive or merely fit for purpose).

Yes, you can make all the efficiencies you like in public expenditure, but only LVT automates the transfer payments system (social security and so on) by giving incentives for people and businesses to recolonise areas of low land value and tale their economic activity with them.

Even the IEA is talking about the idea seriously for financing public infrastructure.

PS - I'm sure I worked out that Lloyd-George's top rate kicked in at a whopping modern day c£200,000

Let's not forget that Income Tax is still a temporary tax. Brought in in national emergencies to help pay for wars and the like. Somewhere deep in the psychology of tax, we still believe that Income Tax is, or should be, some kind of a "last resort" that needs ratiffying every single year.

Oh, and BRTD - do you really believe anything on "Yellow Peril" unless you arote it? Besides, £27 per flight does not compare with the tax we pay every day in our ppetrol tanks. Why should we make it harder to get to work than to gad about the globe? The A380 will take the power of 3500 cars to get its maximum 800 pasengers to their winta-sun - of course it should be taxed. I do question however whether it is the sort of tax one can legitemately use to reduce more direct taxation. If a behaviour tax actually works and reduces the "offending" behaviour you run out of revenue stream. I have not actually seen this proposed tax mentioned in any figures about reducing income taxes as far as I am aware from Tax Commission papers, but if they are, I believe they are wrong.

Derek is right. Britain has become an investment fiasco zone. Companies won't invest here until Gordon Brown is gone.

Oil companies are allowing our oil and gas output to go down rather than risk further investment only to be windfall-taxed by Brown if the investment pays off. We are in energy deficit as a result.

Most of our big companies are being forced by GB to rebuild their pension funds (after his tinkering destroyed their value). They have cut back on investment now in their core businesses, and Britain's growth rate is tumbling a a result.

Our government is in chaos. Foreigners are giving us a wide birth. The world is opening up and there is more and more choice as to where to go.

We've got eurosclerosis and need to be set free if we are to rebuild a competitive economy - deregulation, low tax, efficient government and above all, confidence and trust.

Labour destroyed the Thatcher legacy.
Taxation policy flags to investors that government is serious about rebuilding our economy.

Without a convincing story to tell on tax, everything else is mere hot air. Trust and confidence are gone. Only the Conservative Party can rebuild them.

Jack Coates - taxes can be as intellectually satisfying in design as you like but people don't like being taxed and they don't like innovative taxes.

BTW going on your figures - A380 goes at least 8 times as fast as the average car does in average journey so 3500 cars/800 passengers = just over half the power per passenger as compared to car...travel pollutes whether its car, bus, train or plane. Aircraft are currently responsible for less than 3% of CO2 and the rubbish about this growing to 20% in a couple of decades is based on unachievable growth rates plus assumptions that CO2 targets elsewhere have been not only met but exceeded (not the case in nearly every Kyoto signatory).

There are many other more important changes we can make in power generation & distribution, in energy efficiency that matter more - a chip on the shoulder tax isn't a great thing to have as the centrepiece of your tax policy.

I thought I made clear I was pretty agnostic about aviation tax. Apologies if not. I just don't think it's a good idea to base long term revenue on something that in theory is meant to put people off flying and therefore not paying the tax. In any case, I'd hardly call it a "centerpiece".

LVT is not new incidentally. It was, after all, the main form of taxation for 800 years - you own land from the crown and you owe it some service in proportion to the land you own.

If I was a conspiracy theorist I'd have said that income tax was in fact the last victory of feudalism - shifting the burden of taxation off unearned wealth created by the proles needing somewhere to live and work and onto the incomes they create in doing so.

In an increasingly globalised world it will become ever more difficult (and thus illiberal) to rely on incomes as the base for taxation. Once upon a time each tax schedule was dealt with by a different department precisely in order that nobody in government should know what any individual earns or is worth. In future just in order to assess our income they're going to need to rely on Chinese style transaction police to scour the plethora of different possible transactions to determine which is and is not income.

By the way - there's no "e" in Coats, at least this one. Sam has one, but that's probably because he's English...:)

Oh - and it's Jock not Jack too, thank you....:)

That's a good one by the Lib Dems. "Ok people of Britain, we'll let you pay less income tax... but you'll pay more tax elsewhere." Sounds like a Gordon Brown scheme to me.

Last election Lib Dems proposed to raise maximum income taxes to 50%, now they want to lower income taxes, what a suprise the lib dems are flip flopping, somethings never change.

Now that we have (or should have) the technology to deal with huge IT schemes, has the idea of negative income tax (to replace tax credits) been considered again?

apologies Jock - went to school with a Jack Coates.

I thought the Sunday Telegraph editorial was spot-on, and very reassuring.

You'd expect anyone to go into any election promising to raise taxes if they didn't believe they could/needed to spend it any more?

Jock. If there's anything of interest in these plans ... then for goodness' sake get out of student politics and join a real party, ie ours, and discuss them with people who actually have a chance of implementing a tax policy.

:) As it happens, I joined the IEA the other week. Step one...:)

But seriously - I would probably be prepared to join any of the three main parties that looked as if they were going to take LVT remotely seriously. LVT is far more important to me than party labels. Clearly, though the Greens have LVT as policy they do not understand it or they would not be so anti-capitalist.

I cannot put my finger on quite why I am not drawn to joining the Tories. I suppose it could be genetic somehow (Scottish "wide dissenter" background..:)

It's astoundingly stupid that Cameron and Letwin are seriously planning not to offer tax cuts. This is the one area where the Cameron Project is really seriously wrong about the politics of the situation.

Hi again Jock -- we have the same genetic background! Seriously come to a Tory event & have a look. The thinking space is wide open in the party just now.

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