Will the Forsyth Commission water down its report?

The Sunday Telegraph revealed in July that Lord Forsyth's Tax Reform Commission's 150 page report includes a chapter devoted to flat tax. According to Allister Heath in today's Spectator, the proposals in the current draft amount to £20 billion of tax cuts, and that there is pressure to water them down. It's main focus is on:

• Reducing the basic rate of income tax
• Significantly cutting the rate of corporation tax
• Scrapping the 10 percent starting rate for income tax
• Aspiring to cut the top rate of tax
• Merging inheritance and capital gains tax

It doesn't include proposals for council tax reform or more green taxes. This is the TPA's take on it:

"this article strongly suggests that there is almost no chance the Party will commit to tax cuts at the next election - trying to have an independent report by a senior Party figure effectively re-written is a serious step to take and it won't have been taken lightly.The Conservative leadership seems to remain convinced that they can't make an effective case for lower taxes because people don't want to hear it. We think they are wrong."

It mightn't be in the Commission's Terms of Reference to look at lower taxes but it is the role of the Commission to look at "Britain’s ability to compete in the world". The Conservative Party's ability to compete in the elections is irrelevant, but if it is to be factored in then the TPA's recent poll should be noted.

Deputy Editor

Comments

[Ben Redsell]

I don't see why this will cause panic at CCHQ. If the plans are costed and clearly affordable, then they can't be criticised. The only concern I would have is highlighted by your article - It doesn't include proposals for council tax reform or more green taxes - and I think the issue of CT reform has to be a key debate for the party. Maybe our response to the Lyons Inquiry will be able to bite with a more detailed idea...

I personally don't like the stuff about merging IHT and CGT as I'd like to scrap IHT altogether. But you can't have everything.

What I would be disappointed in seeing is the usual suspects jumping up and down and allowing us to be portrayed as a one trick pony. In 2001 we were the anti Europe party, in 2005 we were the anti Immigration party, I don't want us to become a one trick pony on tax. We need to present a credible portfolio of ideas to the country, so all these things must be taken in the round.

Please Christina et al, give us a chance on this!

[Ben Redsell]

OK that's what you get for not reading the whole article before posting - rubbish posts.

In the round I think that tax cuts have to be paid for, and unfortunately unless Lord Forsyth says where the money is going to come from, how long do you think it will be before the Labour party try to tell us how many doctors and nurses will be sacked by the Tories.

That said, it might now be a harder argument to sustain, since most voters now know that Labour are sacking doctors and nurses left right and centre.

The problem is that the key messages from this (reducing basic rate income tax, scrapping lower rate) were both agreed as Lib Dem policy this week, but added to raising the higher rate threshold, something even Lord Forsyth hasn't said. But they don't know how they'd pay for it, and we have the same problem.

In the long run, this will have to be looked at hard. It is difficult to see how the leadership can agree to unfunded tax cuts. So the question really is - where is the money going to come from.

[Chris]

Ben, you are completely correct about how tax cut proposals could be mishandled, and viewing how CCHQ has taken some entirely sensible conservative proposals such as "Hug a Hoodie" and turned them into left wing laughter fests we do have to be cautious in our presentation.

Our best argument for tax cuts is going to have to be that they will encourage increased investment and productivity, like they have in Ireland. We're probably going to have to simply accept a budget deficit for a couple of years, until the effects of tax cuts come through.

Alternatively we can try and focus our efforts on public service reform so that the services become more efficient, and therefore could handle a cut in their budget. We all know the increased spending in the NHS has improved little, and there is no way that a Conservative government should accept the current mantra of throwing cash around in a vain attempt to improve services.

The thing is, no matter which route we follow, the PR is key. Many posters on this site seem to think that good ideas will win the public over no matter how they are presented... wrong. Policy announcments like "Hug a Hoodie" would brilliant if you read the policy in its entirety, the soundbites we gave to the media allowed them to paint us as a bunch of left wing, pro criminal fools. Never mind the policies, CCHQ just needs to learn how to handle the press in a decent manner!

[christina speight]

Golly Gosh! I agree that the proposals look sensible (sorry Ben), I agree we have to answer where's the lolly to come from and I agree that presentation - currently abysmal - is important.

But the cash? - - - first the NET cost of the EU is set nearly to treble from 2006's estimate of £4.3bn to £12bn. Why ? Because Blair was outsmarted at the EU Council by the French - again. We get NOTHING for that NET cost so there's a start. Then the NHS computer system's budget is as out-of-control as the system is too. Scrap that, please a lot of professionals, and save part of the £12bn cost (budget was £6bn) . Then scrap the ID fiasco and save even more. With those savings you could do SOME of what is proposed here AND also pay for Brown's defence unfunded timebombs! The rest will have to wait

[Mark Wadsworth]

Hmmm. I look forward to reading the report.

Simple logic and maths tells us...

- if you can cut government waste and cut taxes, then the best tax cut is a large increase in the personal allowance. Everybody gets the same tax saving in £sd, so this is worth relatively more for lower earners; so wins more votes and is inherently fair.

- a large increase in the personal allowance is an important first step to integrating tax and benefits systems

- a large increase in personal allowance is an important first step to a flat tax system. Cutting the basic rate but not the higher rate moves away from flat taxes. Cutting corporation tax moves away from flat taxes - realistically in the medium term, 30% looks about the right rate for income tax plus NI burden, so why not leave corporation tax where it is?

- the articles don't mention NI. Employer's NI costs UK plc as much as corporation tax does. Cutting Employer's NI encourages job creation (saving more money by shutting down all these stupid job creation schemes and welfare payments), saves UK plc money and so BOOSTS corporation tax receipts. Cutting corporation tax just reduces corporation tax receipts and encourages avoidance (anybody remember the zero rate for corporation tax?).

- will people please stop holding up Ireland as an example to be followed. From a tax base of next to nothing, receipts have gone up only because other EU companies have set up finance and insurance subsidiaries (see the recent Cadbury Schweppes case in the ECJ), and they get MASSIVE subsidies from the EU, I am talking thousands of Euro per head per year.

Ah well.

[Richard]

A great way to appeal to middle income earners would be to raise the top rate threshold.

"and they get MASSIVE subsidies from the EU, I am talking thousands of Euro per head per year."

Ireland was receiving EU subsidies before its economy took off in the 1980s. Only after they cut taxes did the economy begin to grow rapidly. That said, the EU subsidies may have allowed for taxes to be cut.

In short, lower taxes tends to result in higher economic growth. We should be constantly pointing this out.

http://www.reform.co.uk/filestore/pdf/negativeimpact.pdf - check out page 6

[hf]

We need tax policies that attract the most votes.

Cutting business taxes has few votes. Cutting IHT and capital tax also has few votes.

Cutting income tax through raising the allowances is best and has the biggest attraction to voters.

Business and IHT cuts can come in 2nd term once we get in and have the ability to cut back the excessive spending.

[Jack Stone]

Personally I don`t see why we Conservative Party members should take lectures about how tax cuts should be paid for from traitors like Christine who writes booklets for our enemies.
The simple fact is that we will fall into the same trap Labour set for us last time about tax cuts if we start saying we are going to cut taxes because they wil simple say that to pay for them we will cut spending on public services.
If the party relly wants to get back to power it should forget about tax cuts for the time being and concentrate on putting forward proposals about how we are going to improve health and education etc so we can regain the public`s trust on public services which I don`t think we have at present.

[Ben Redsell]

Don't you find it interesting that the BBC Perception Panel listening to Mings speech showed that Conservative voters weren't all that bothered either way when he talked about scrapping the lower rate of tax and cutting basic rate to 20%. Both key aspects of this story. So if the idea is to use tax cuts to motivate the core Tory vote it's a bit of a damp squib.

Mind you the best way to motivate the core Tory vote is to remind them that a fourth term Gordon Brown government would be much more redistributive in tax terms...

[Wallenstein]

traitors like Christine

Yesterday I was warned by the editor for alleged "personal abuse"

Doesn't that also apply to the socialist troll "Jack Stone"?

Calling somebody a traitor is libellous.

[David Sergeant]

"Never mind the policies, CCHQ just needs to learn how to handle the press in a decent manner!"

Chris, The really important point in a nutshell. Trouble is CCHQ havn't been able to handle the press since 1993. In fact they give the impression of thinking its not their job.

[Ben Redsell]

Sorry Jack that's going too far. Christine may be irritatingly wrong a lot of the time in your opinion (and mine) but you can't call her a traitor. Not cricket dear boy.

[Mark Wadsworth]

Richard 17.26.

The domestic indigenous Irish economy is not growing at all. All this extra tax income is just people like Cadbury Schweppes setting up finance and insurance subsidiaries.

The Irish will shortly be losing this business to the Eastern European countries, just you wait, then the EU tap will be turned off (in favour of Bulgaria and Romania) and then it's back to potatoes all round!

I work in tax, if you don't believe me, read up on the Cadbury Schweppes case, multiply it by thousands of subsidiaries, think about relative corporation tax rates in Ireland and Latvia (or wherever, don't pin me down here) and make your own prediction of what will happen.

[christina speight]

Jack Stone - " traitors like Christine who writes booklets for our enemies."

Firstly that's not my name and secondly I never did anything of the sort so apolgies please. My FFPh was MINE and UKIP tried and failed to pinch it. And thirdly - my loyalty is to my country not to a party and I'm no traitor. And fourthly why not try answering my suggested tax savings?

JS: - as usual doesn't know what he's talking about and just gets more wild and irresponsible.

[changetowin]

People on this site need to realise that being seen as tax obsessives is one of our big problems as a party. Too many on this site expend all their energy and passion talking about tax and Europe leaving nothing for health, education, the environment, global poverty etc. The British people want a party that gets as passionate about these issues as you guys do about tax.

That's why David Cameron is right not to make tax the centre of his communication. People get the message - Conservatives want to share the proceeds of growth between spending on public services and lower taxation. They know we like tax cuts! What they need to know is that we value other things as much AND that our motivations for cutting taxation are based on something other than greed.

[Ben Redsell]

Christina, I was in the unusual position of defending your honour earlier, but since you raise the issue of your supposed tax savings, perhaps you could explain how we can unilaterally reduce the spending on the EU by only the net amount, without withdrawing? Because of course withdrawal comes at a price...

[TC]

In national economic terms £20 billion in tax cuts amounts to little, but at least it's a start. Don't forget that the James Review identified £35 billion in public sector efficiency savings, and that was just the tip of the iceberg. A similar review of gov't spending by the TPA found £80 billion in potential savings. It's extremely disappointing that CCHQ is seeking to water down the findings of the commission - what's the point of these commissions if their recommendations are going to be overruled before they're even published. Should the report be 'moderated' I hope ConservativeHome will endeavour to publish the original, uncut version.

P.S. to anyone who thinks we lost the last general election because we proposed tax cuts: Letwin offered about £4 billion in tax reductions, a proposal which would have had next to no effect on anyone in the country. The TPA has made it very clear that people are receptive to the idea of lower taxes - if only we had the courage to make the arguments we all know are right!

[Mark]

The TPA has made it very clear that people are receptive to the idea of lower taxes.

The TPA gave people a list of taxes and asked them which they'd like to see cut, regardless of whether the cut was likley. The question was so meaningless and the answer so unsurprising that it really doesn't justify anything.

Efficiency savings may well be possible, but the electorate is so cynical about such claims that they're really not worth campaigning upon (which is not the same as saying they're not worth doing).

[Ben Redsell]

Sorry but who the hell are the Tax Payers Alliance anyway? They've done no proper polling, and they don't represent me - they've never asked me my views.

If you ask the right question you get the answer you wanted.

I believe in tax cuts, but I also believe in sharing the proceeds of growth. I can see the real pain that local Council's are in for instance, maybe it would be better to up the funding there (and allow Council Tax to drop) than cut income tax?

Equally I don't want to see so many ward closures etc in the NHS. Taking money out of it now is the wrong thinking.

[Chris]

Have to agree with Mark on the TPA polls. If you ask anyone whether they're a die hard, grey haired, army major, Conservative voter or a sandal wearing, cannabis smoking, CND member, Labour voter (Ridiculous stereotypes required for point proving) if they'd like to pay less tax, and they will say yes. The point where they start getting edgy about it is when you start mentioning how we will afford the tax cut. Abolishing income tax would be a real vote winner until we announce the abolition of the NHS and the state school system ;)

[Mark Wadsworth]

Changetowin 21.20, DC's Tories don't need to talk about health and education. Recent polls show that people trust the Conservatives more than Labour (albeit not by a huge margin) on health and education.

In other words, people aren't stupid! They have realised after ten long years that all that rhetoric, and all those £ billions and all those thousands of conflicting targets just aren't working.

What this rant has to do with tax I am not sure...

[christina speight]

Ben - You're quite right - We can't reduce what we give to the EU to subsidise our competitors by as much as one penny UNLESS we sign up to Better Off Out! That's why I gave two other massive savings as well :-)

The fact that the TPA hasn't interviewed you is a red herring. Random sampling works like that! What has to happen to the NHS - if anyone had the guts to suggest it - is to turn the whole monstrous bureaucracy into a state funded insurance system and let patients choose the help they need and pay for it with their fees refunded by the state. This would leave clinical decisions in the hands of doctors, choice with the patients and simplify the funding (to which one could add if one wished ) Other Europan countries do it; why not us?

[Geoff]

Reform are officially the worst think-tank.

Seriously - I am a private health professional, and their understanding of healthcare (and economics) is laughable.

[Chris]

Christina, the problem is that the NHS has become some sacred being, that must be preserved at any cost. The sad thing is, it like having someone on life support whose heart and lungs are irrepairable, and refusing to pull the plug.

We are slowly moving towards a more privatised NHS, but its not going to happen quickly. I'm a mere 18 years old and I'm not sure if it will even happen in my lifetime, no matter how desireable it is!

[Opinicus]

I completely agree that simply offering tax cuts predicated on bureaucratic efficiency savings a la Letwin in 2005 is no longer electorally attractive. But tax cuts are still our strongest card and USP. The challenge for the Party is to come up with alternative methods of financing the public services that preserve services but at lower costs.
There is collosal inefficiency in the NHS, where I work, where billions have been squandered on non clinical and alternative provision. PBC is showing up plenty of services that could be provided more efficiently. All those Guardian non-jobs would never be missed by the public.
We should be aiming for a really radical overhaul of tax and benefits so that it was almost impossible to compare before and after. Scrap NI, scrap income tax and replace them with flat rate taxes on income hypothecated to certain public services e.g. health, social security and local govt.
We are falling into the trap of debating Labour on its own terms. We believe in a smaller state and that people know better how to spend their money than the State. But we are foolishly accepting Labour's argument that any tax reduction means a loss of services, implying that all state run services are valuable. Only a complete overhaul of tax, benefits and service funding (health and education vouchers) cuts that Gordian knot.

[Opinicus]

There is also a straightforward 2p off income tax by ending the Barnet formula

[former tory voter]

If the Tories won't cut taxes, what is the point?

[James Hellyer]

People get the message - Conservatives want to share the proceeds of growth between spending on public services and lower taxation. They know we like tax cuts!

You're wrong. Polling at the last election (as well as the experience of many of us canvassing) showed that people didn't actually believe that Conservatives would deliver lower taxes. Basing your tax policy on one soundbite ("sharing the proceeds of...") will not change this.

[Joanna Yelf]

The lack of commitment to a radical tax-cutting programme is one of the things that's really disillusioning me about the Conservative Party at the moment.

I am an admirer of Michael Forsyth and I hope his full programme will be implemented.

If there's nothing to distinguish us from new Labour I ask myself what is the point of going on?

[Chad]

Save your breath James.

Despite all the internal work that showed that the policies were popular but the party unpopular, some will continue to deliberately misrepresent the Tory Party's own research and conclusions.

A passionate low tax agenda is essential for our future stability.

[hf]

The issue is not about convincing us political junkies, but how to resonate with the wider public. At present too much public spending is viewed as investment. That is the dragon we need to slay.

We have to first make the case that there is significant Govt waste. Ideally using evidence from other reliable sources. The revelations of £8bn of vat fraud (many times worse than other countries), is the sort of issue that if RELIABLE could be taken up as a leading example of both Gross Waste and Brown's incompetence.

I hope that George and his people are poring over the details to verify it. Working with the TFA on the issue, then George could be seen as St George slaying the Labour dragon of waste and create a sense of "public outrage".

Just make the points on one big issue and dont talk about other figures. Cutting fraud is something the public would welcome whereas "cuts" in public spending unfortunately has negative connotations in their eyes. George look to DD to see how to attack Govt ministers.

[Monday Clubber]

I have a lot of sympathy with what Joanna says.

At the moment there seems to be nothing to choose between the policies of New Labour and the Tories. It's an approach bound to engender public cynicism.

Tax cutting is one area where the Tories can prove that they are prepared to stand up for individual liberty. I would like to hear them do it. After all, wasn't George Osborne supposed to be in favour of flat-rate tax? Why so silent now?

One or two posters here seem to forget that the money that goes in tax is OUR money, not the government's. We earned it through our own hard efforts and should have the right to spend it as we choose.

Just because New Labour likes to pose as Lady Bountiful with other people's money doesn't mean we have to go along with the deceit.

[Jack Stone]

The simple fact is that whatever tax cuts you promise are irrelevant because they wiill not be implemented because if the party promises tax cuts we will not be elected.
We must prove that we care about public services and will improve them if we are to get back to power and the simple fact is that you will not be able to do that if you start promising tax cuts.
As for the nonsense about reducing spending in Europe. You will only be able to make such savings if you withdraw and that I am afraid Ms Speight or whatever your name is, is a policy that would damage the country and make the Conservative Party unelectable.

[Mark Fulford]

...showed that people didn't actually believe that Conservatives would deliver lower taxes

And there's the problem. It's wasteful (and possibly even damaging) to spend our limited airtime on a campaign message that the public doesn't believe.

Provided there's no loss of public service, we do not need a mandate to cut waste and tax. Who's going to complain when we succeed?

And there's the problem. It's wasteful (and possibly even damaging) to spend our limited airtime on a campaign message that the public doesn't believe.

Provided there's no loss of public service, we do not need a mandate to cut waste and tax. Tactically it would be better to highlight our relatively poor growth under Labour (helping to undermine the myth that Gordon Brown has been a good Chancellor) and show how we will improve growth by shift tax burden away from corporation tax.

[Mark Fulford]

Apologies for Groundhog Day.

[hf]

Here's what the Independent reports on the £8bn fraud in 12 months.
"VAT fraud is costing the British taxpayer four times official estimates, according to the BBC. The BBC's Panorama programme says it has obtained information that shows VAT fraud was £8.4bn between June 2005 and June 2006. This is five times more than the amount lost to VAT fraudsters by any other European Union country, the programme's makers say."

http://news.independent.co.uk/uk/crime/article1696741.ece

A quote from Shadow Paymaster and...... is there going to be a full assault?

[Valerie]

"If a political party cannot or will not tell you how it will tax, then it does not deserve a single vote" - Ming Campbell yesterday.

[david]

If you tell the British public, that if elected, you will substantially cut their taxes, national insurance etc. and then the British public will be required to make private provision for the 'things' that the state has alway provided, they will believe you! If you tell the British public, that if elected you will substantially cut their taxes, national insurance etc. but the state will continue to provide all the 'things' that it always has, they won't believe you: simple really!

[Jonathan Mackie]

There is a growing concensus among the electorate that taxes have risen too far and that the public services are fundamentally flawed. People are prepared for radical responses and we shouldn't be shy about proposing them.

One of the reasons that the Labour Government has pushed up taxes on individuals, their income, consumption etc is that their commercial tax take is lower than otherwise should be at this point in the cycle. That is because the VAT free public sector is a greater proportion of our economy.

We need to reinvigorate the private sector so cuts in corporation tax and a reveiw of the capital gains taper is ideal.

Income tax thresholds need urgently looked at. But abolition of the 10p band and reduction in lower rates must be looked at alongside the tax credit fiasco.

Higher rate taxation bites at too low an income level.

Personally I am all for a flat tax, with the abolition of reliefs and rebates. Economically and morally it is the right approach. We should bite the bullet and propose it.

[christina speight]

Chris 0032 - The NHS. My grandson, a final year medical student, says that his year can see no jobs for them. Most are enquiring about the job situation in Australia. So the doubt that "it will ever happen in my lifetime" may be misplaced!!

My brother - a very eminent doc (VP of the RCP) - told me 12 years ago that the NHS could not last. He was working on alternatives when his own hospital couldn't take him in an emergency and he was out-of-action for the rest of his impaired life.

[Adam]

Interesting point of high levels of tax fraud. Might it have something to do with the Treasury keeping on sacking tax inspectors in order to lower the headcount, and hence be more 'efficient'?

[David Belchamber]

Going back to Mark Wadsworth @ 17.09:
" if you can cut government waste and cut taxes, then the best tax cut is a large increase in the personal allowance. Everybody gets the same tax saving in £sd, so this is worth relatively more for lower earners".
As Mark points out, that would be an excellent vote winner and I only hope we make it our policy before Gordon Brown unveils that as his policy just before the next election.
Under Nulab, the rich have become richer but the lot of many poor people has not improved at all. If you add in NI, as soon as someone earns £7,186 p.a. and over, they are paying tax at 33%.
That is hardly an incentive to get off benefit and to take a job.
If the threshold for personal tax were to be raised to the subsistence level, that would take millions (?) out of tax altogether and also many off benefit, so there would be some significant savings in administrative costs.

[christina speight]

former Tory voter "If the Tories won't cut taxes, what is the point?"

It's the will and guts that are lacking. I've listed 2 mega projects which would save billions plus the EU!!. There's the (see Jonathan abve) Barnet formula too! There's the already published report of potential savings.

" too much public spending is viewed as investment" WHAT? ID cards and the NHS failed IT scheme? Ignore Jack Stone's balderdash!

ALL of these are plain to see and a determined Tory party would have them in the centre of their sights. Most of the savings are on things which are unpopular anyway. But the Cameroons are like a rabbit faced with a snake - paralysed.

Tax reform and cuts should be central to our thinking. There's excellent thinking on most of this thread - I hope Osborne is reading it! ???

[Jonathan Mackie]

Christina - you're right of course, tax and economic reform should be central to our thinking.

The fear about announcing tax cuts is really a legacy of past elections. We should focus on fighting the 2009 election not the 2001/05 elections. The public whilst perhaps shocked by Labour's tactics then of "tax cutting equals public sector meltdown" and "the end of life as we know it", there is ineluctably a groundswell of opinion that tax is too high and the public services need wholescale reform.

Brown has produced a taxation system of unimaginable complexity. Too many reliefs and rebates are being used to shape people's attitudes rather than help the economy prosper. There is fertile territory here for the Party if it is willing to grasp it.

[James Hellyer]

And there's the problem. It's wasteful (and possibly even damaging) to spend our limited airtime on a campaign message that the public doesn't believe.

Except they had good reason not to believe the message in 2005, because despite the promise of "lower taxation", we were actually offering deferred tax increases. As the Institute of Fiscal Studies noted, taxes and the tax take would rise under Howard's Conservatives, albeit at a lower rate than under Labour.

Offering genuine reductions and making the case for them would, by contrast, have the credibilty those promises lacked.

Provided there's no loss of public service, we do not need a mandate to cut waste and tax.

Should the state be supplying all the "services" it currently provides?

[johnC]

'Should the state be supplying all the "services" it currently provides?'

No. Built To Last included the excellent principle that services should be guaranteed, but not necessarily run, by the state. The party needs to explain how this principle might work out in practice.

[Jonathan Mackie]

JohnC - The Right to Supply research papers published during the last parliament detailed how market entry to public service provision could be facilitated.

[Goldie]

It's simply pathetic that Cameron and Osborne are so afraid of cutting taxes after almost a decade of Gordon Brown.

That's all you can say about it.

[Mark Wadsworth]

David Belchamber 12.39 22/9

There is little danger of the Cyclops raising the personal allowance, it's too simple and too fair. He explained his objection to doing so in his 2006 Budget Speech thus...

"I have examined which tax decision could do most for families. We are raising the personal tax allowance from £4,895 to £5,035.

One option would be to raise that personal tax allowance further. Spending £500 million on a family tax cut in this way would give a two child family on median earnings of £24,000 a year, £22 a year more, 40p a week.

However, using the same resources to raise the child tax credit will give that same family a family tax cut worth £140 a year more, over six times as much, £2.70 a week.
So the best way to do most to help low and middle income families, the best family tax cut, is - as I will do today - raising the child element of the child tax credit."

Whether you look at this from a left or right wing perspective, it is complete rubbish.

[Given Up]

For some bizarre reason too many people are scared by the idea of proposing tax cuts.

Is it because they are scared of having a Paxman or Humphries demand which service they would cut to pay for them, just as El Gorgo Brown would.

If so then they don't understand the Laffer Curve...every time Tax cuts have been introduced the result has been MORE revenue not less. This is no longer theory it is cold hard fact.

Gu'mint revenue is not a zero sum game, if cuts are made that invigorate the economy, the gu'mint will recieve more in tax, as people/business make greater profits. You do not need to cut any services to pay for them, that is entirely a scare tactic from people who love to tax and spend.

Blair and Brown have shown that showering money onto gu'mint run enterprises is totally useless, their ridiculous experiment will be used in the future as a classic example of how gu'mint is incapable of spending money productivly.

That all Cameron can come up with, is that he will "share the benefits"....later needless to say, shows that he has absolutely no knowledge of how tax in an economy works. It also has the enormous presumption that he can run an economy succesfully, with all of 4 yrs as a PR spiv, as experience.

It may sound nice and keep Paxman and Humphreis happy, two people who live off the taxpayer, but it will do damn all for the economy, there will be no benefits to share, as growth will stagnate or worse.

http://www.opinionjournal.com/extra/?id=110006842

PS G W Bush's( he of the "simplistic" foreign policy) tax cuts are producing increased revenue in the US, as we speak.

It's official — Arthur Laffer wins. New data show federal revenues surged in the first three quarters of the current fiscal year. Corporate tax receipts are up more than 26% over the same period last year,

http://www.nysun.com/article/35673

[Wallenstein]

Is there any chance of the Wets at least singing from the same hymn sheet?

According to Eurofanatic Jack Stone the public won’t vote for us if we support tax cuts

But according to Mark Fulford the public don’t believe that we will deliver tax cuts, so it’s hardly likely to affect their voting pattern.

Maybe they’d better get together and make up their minds. Both are wrong anyway.

The overtaxed public are crying out for tax cuts. They want the freedom to spend their money as they see fit, not in accordance with the wishes of politicians and civil services.

Early withdrawal from the EU needs to be another keynote Conservative policy. The huge “Withdrawal Dividend” will offer our public services the shot in the arm they need after years of socialist mismanagement.

[rallie]

We do not need to say that we are going to cut taxes.

It is a joke to claim that all government spending is efficient and important. We need to start saying that departments are wasting money, all the quangos that we will shut down, all the politically correct brigade working on the public payroll will be removed the billions that we give to the EU will be stopped.

All that is needed to be told by Dave is all the money we are going to save by being elected. Tax cuts will be implied.

This will stop Labour claiming cuts to nurses and teachers if we did say tax cuts, but having to justify there own spending where we say we will stop the spending.

[Mark Wadsworth]

Given Up at 15.52 22/9 has overlooked the Ricardian Theory of equivalence, which is a common sense theory that says that the dampening effect on the economy is the same whether gu'mint spending is funded by borrowing or taxation - the basic model assumes that the gu'mint borrows from its own citizens.

Not so in GWB-land, all the borrowing is from abroad, so he gets the boost to the economy at the cost of borrowing from abroad. When this has to be repaid (out of future tax revenues), the reverse effect will kick in. Whether in the long run they are still better off is difficult to say.

Anyway, I've had a quick scan through HMRC Ready Reckoners (Tables 1.6 and 1.5) and increasing the personal allowance to £7,100 and having ALL income taxed at 33% would not be far off revenue neutral.

In other words, roll up PAYE income tax and NIC into 33% tax, scrap higher rate tax, scrap Employer's NIC, increase corporation tax to 33%. Remember that half the cost of relief for pension contributions is to higher rate taxpayers, but there wouldn't be any higher rate taxpayers, so the cost of that would come down automatically by £10 bn at least.

If there's scope for another £20 bn tax cuts on top of that (see TPA government waste research), bearing in mind Laffer effects, upping the personal allowance to £9,000 seems a good idea.

How about that for "simple, fair and economically efficient"?

From there on in, it's just a question of shaving 1% off the standard rate every year until we get where we want to be.

[James Hellyer]

Built To Last included the excellent principle that services should be guaranteed

Which doesn't address the question as to whether all those "services" should be funded by the state (or more properly, out of general taxation).

[Mark Fulford]

Is there any chance of the Wets at least singing from the same hymn sheet?

Wally, to say this you presumably sing from a hymn sheet yourself. You should try unprejudiced, free, rational thinking - it's really quite liberating.

Rallie, btw, is quite right. We have got to nail Gordon's reputation for prudence.

[Mark Fulford]

Which doesn't address the question as to whether all those "services" should be funded by the state (or more properly, out of general taxation).

I am highly sceptical that the Commonwealth Office and the DTI provide any value, let alone value for money. What services do you have in mind James?

[EML]

In my ideal world there would only be the need for one tax: a poll tax levied by local councils.

The problem is that the current situation is a million miles away from this ideal, and we have to work with the political and economic landscape we see before us. This calls for the legendary character of Pragmatism.

I like the overall message of sharing the proceeds of growth, but this can only work if it is supplemented by an identification of what taxes would be reformed or cut (if there is any growth to play with), as well as a detailed look at how the public services can be better managed and financed so that they actually serve the function they are supposed to.

I look forward to what the Shadow Cabinet come up with.

[Wallenstein]

>>Wally, to say this you presumably sing from a hymn sheet yourself. You should try unprejudiced, free, rational thinking - it's really quite liberating.<<

No problem Mark.

I'd be more than happy to shelve my approach in favour of Rallie's excellent and far-thinking proposal, which you also endorse.

It would be interesting to see if some of the more fanatical members of Dave's praetorian guard share our open-mindedness.

[Mark Fulford]

I'd be more than happy to shelve my approach in favour of Rallie's excellent and far-thinking proposal, which you also endorse.

Your enthusiasm makes me suspicious that I’ve been hoodwinked! But no, the only caveat I’d add to what Rallie wrote is that, without EU withdrawal (which you know I oppose) reducing our EU contributions to zero is unrealistic.

[David Belchamber]

HF @ 09.17:
"We have to first make the case that there is significant Govt waste. Ideally using evidence from other reliable sources. The revelations of £8bn of vat fraud (many times worse than other countries), is the sort of issue that if RELIABLE could be taken up as a leading example of both Gross Waste and Brown's incompetence".

I think that there is a job here for DC's presentational skills. I suggest that the tories embark upon a campaign in the media to saddle GB with the soubriquet "Gordon Waste-a-Lot" and back it up by producing a breakdown of GDP to include (authenticated) items, such as HF mentions above.
Let us have lines showing e.g. estimated government waste, estimated losses from VAT fraud, estimated savings from the abolition of quangos and public sector jobs that contribute nothing to the good of the nation etc.
If we could translate that into a statement such as: "Under Nulab, approx 3/10ths (or whatever) of all taxpayers' money is wasted", the message might start to get through.

[David Belchamber]

ConHome's Alternative Opposition manifesto is beginning to shape up quite nicely.

Shadow Chancellor, Mark Wadsworth @ 16.51, outlined the first element of our personal tax policy, which has the merit of greatly simplifying the existing system while remaining roughly revenue neutral:

"In other words, roll up PAYE income tax and NIC into 33% tax, scrap higher rate tax, scrap Employer's NIC, increase corporation tax to 33%.
Remember that half the cost of relief for pension contributions is to higher rate taxpayers, but there wouldn't be any higher rate taxpayers, so the cost of that would come down automatically by £10 bn at least".

Our Shadow Europe Minister, Christina, proposed withdrawal from the EU on another thread:

"The case for leaving the EU needs the imprimatur of a major party to succeed but if the Tories would give that lead I believe the effects would be dramatic.

Of course the route is via demands for major EU reforms which we make a condition for continued membership. France would lead the veto to that request. We would then set in motion the procedures for leaving and call their bluff. But the real point is that we make those demands ones that are popular here with Britons and thus take a majority with us into the show-down.

Either way we win".

Other policies will no doubt evolve over the coming weeks.

[Given up]

Mark Walford.

What has Ricardian Theory got to do with the Laffer curve.

By cutting taxes the Laffer curve has shown time and again that revenue increases, due to the stimulitive effect on the economy.

Both borrowing and taxation are fiscal drags on the economy, the exact opposite.

Sure one can discuss which of each has the least mal affect, but both are negatives.

A succesfull tax cuting programe will reduce both, as long as the gu'mint doesn't squander that increased income, thus rendering the theory useless/superfluous.

[Mark Wadsworth]

Given Up at 20.12;

I suppose our agreed starting point is Rallie's comments at 16.37 (yes?)

I do not dispute Laffer effects or dynamic effects of tax cuts, taken in complete isolation. I work in tax and have a gut feeling that we are on the wrong side of Laffer curve.

The point is, Ricardian equivalence theory says that reducing taxes WITHOUT reducing gu'mint spending means the dampening effects of extra (domestic) borrowing cancels out positive effects of tax cuts.

(We have to contrast domestic borrowing with borrowing from overseas like the USA are doing, in which case Keynesian theory applies - for a given level of tax, government borrowing boosts economy, but it all goes into reverse when it has to be paid back)

Back to Rallie at 16.37, getting value for taxpayers' money or "sharing the proceeds of growth" (the PC terms for cutting government waste) is the economic and indeed electorally promising starting point.

If you get from current gu'mint spending of 45% of GDP back to 37% of GDP where we were a mere six years ago, that means HUGE scope for tax cuts and simplification, from where on in we get a Laffer/dynamic virtuous circle, as you have outlined.

So I suppose we all pretty much agree on where we want to be and why, even how, where we are bickering is on how to explain this to the long suffering voter (yes?)

(On a PC note, the tax cutting example to quote is the JFK tax cuts of the sixties, not the Thatcher tax cuts of the eighties or the GWB tax cuts of the noughties)

[Opinicus]

David Belchamber @18:47
That may be ConHomes's consensus alternative manifesto but this Party's shadow chancellor and Europe Secretary would rather be found dog-tied to the Pope than say any such thing.

One of us is in the wrong Party and I am coming to the conclusion that its me.

[Given Up]

Mark Wadsworth

The Ricardian Theory you speak off assumes a constant non dynamic situation. ie if you cut taxes, you must increase borrowing, it ignores the fact that tax cuts creat greater income, so that while in the very shart term, borrowing will increase, in the longer run it will decrease. As long as gu'mint spending is roughly constant.

The evidence is clearly there that tax cuts work, for any politician to not embrace them says that their ideology is more important than reality.

[rallie]

We all agree that the current tax burden is not sustainable. We all agree that what most of our taxes are paying for is neither essential nor required, but there are parts of public services that need more funding. The scope for savings should be astronomical; to say otherwise is to capitulate to Brown.

However we are in a bind, as it has been said we have lost elections, not because we said we will cut taxes, but that the public did not believe us. We had no policy of saying what savings we will make. This has given Labour the silver bullet of telling the public they will loose their hospital or school, teachers and nurses will be out of jobs (quite ironic really).

As I have said earlier, we should not mention tax cuts, we don’t need to. But there is also the problem of our supporters wanting tax cuts, I have spoken too many of my friends and what they do mention is a promise of tax cuts, and the lack of one, therefore not differentiating ourselves from the other parties.

This is a serious problem also, but it can be solved in a quite ideal way, also being able to support the low paid in the workplace, and therefore also persuading the unemployed to join the working.

We now have a minimum wage, £5.35 I last heard, but if you work a basic 37 hours you are paying income tax on most of your earnings, personally I find this appalling, we have a minimum wage, yet the government is taking a substantial cut of this. Why not make it that if you are paid the minimum wage you don’t pay income tax. This will persuade a lot of low paid people who are bearing a substantial brunt of Browns tax rises to either not support Labour or even hopefully support us. Obviously this will be expensive, but it helps a lot of people who deserve helping and also hopefully reducing the benefit they need.

This way we mention no tax cuts keeping it out of the election. We can say for a fact, and be easily explainable to people how we are going to take less of their money that they have worked hard for. It will also stop Labour screaming tax cuts for the rich, because they will benefit little from this policy. It will also leave Labour having to explain why people who only earn the minimum wage should be taxed.