Tag Archive | "income tax"

Punch and Judy Politics

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Punch and Judy Politics

Prime Ministers Questions was yet another example of the Punch and Judy style of politics that is so prevalent today. It is reminiscent of two schoolboys arguing over who’s dad is bigger or stronger, yet, these grown-up children in Parliament are the very people we are supposed to rely on to represent our interests. We are slowly becoming a laughing stock as our politicians consistently fail to represent our interests, whilst many are guilty of taking the public for a ride in terms of their expense claims. Even the Ayatollah Khamenei believes that he is entitled to sit in judgement of the people of this country based on his views of our political leaders.

Yesterday, Brown and Cameron swapped blows regarding the level of capital spending in the UK over the coming years. Brown is quite clearly guilty of a deliberate attempt to mislead the public. It is self-evident that capital spending is being reduced, even if this is as a consequence of this government bringing forward capital projects from future years, which inflates the current spend, but has the effect of reducing the amount available in future years. Some would argue that this is quite a reckless policy, especially given Brown will almost certainly not be in power when someone else has to deal with the fact that there is nothing in the kitty. Mind you, that has become a fairly common trait with Labour government, their spend, spend, spend policy invariably leaves a Conservative government to clean up the mess.

Meanwhile, whilst Cameron has Brown on the ropes, he lacks the courage to state the bloody obvious and that is, we have no choice but to reduce public spending. Tax receipts are down, public sector spending is out of control, the economy is contracting and more and more people are becoming an economic liability, rather than an asset as a consequence of increasing unemployment. I would have more respect for David Cameron if he was to demonstrate that he has the courage and moral rectitude to come clean with the public. Instead of highlighting Brown’s lies ( after all we all know that he is a stranger to the truth), Cameron ought to be outlining why there is a need to reduce public spending and how they intend to do it if elected. Instead, he is allowing Brown to dictate what the “10% Tory cuts” amount to, using the classic New Labour trick of emotional blackmail, less for pensioners, less for the NHS, less for the Police etc.

Apart from the fact that most people already understand that we are in for a tough few years, Cameron also has the OECD stating that the Treasury figures for the UK economy are at best optimistic, but more likely completely wrong. He has the rating agency Standard & Poor making veiled threats to reduce the UK Plc credit rating unless the government gets it’s house in order and puts in place a concrete plan to reduce public debt. And, now, he even had the governor of the Bank of England stating that “scale of the deficit is truly extraordinary” and usggesting that the government should be more ambitious with their debt reduction plans. In other words, Cameron has some very powerful people or organisations supporting the notion that our economic situation is dire and we need to reign in public spending, yet he still lacks the courage to take the bull by the horns. It is this lack of backbone, even when the odds are in his favour, that leads me to doubt Cameron’s ability to offer the strong leadership this country needs to get itself out of the mess created my New Labour’s social engineering project.

Apart from public spending cuts, there is also a need to look at whether we are getting value for money from our public services. For example, in spite of the fact that we have record numbers of police officers, the number of front line bobbies (I have excluded PCSO’s) is but a tiny fraction of the 156,000 officers that are employed. Crime is rising not falling and police openly admit that they consider their job to be the investigation of crime, rather than the prevention.

The NHS has received a massive increase in spending. To fund this all UK workers were surcharged an extra 1% on their entire earnings and employers were charged an extra 1% of their wage bills. This added £billions every year. This burden on employers and employees will increase by a further 0.5% shortly. Yet, in spite of the enormous amounts raised to invest in the NHS, new build was financed using PFI, a hugely expensive way of funding new hospitals, and much of the money went into higher wages, not improved services. Now that the NHS have identified that there may be a real term reduction in the NHS budget, we are threatened with ward closures and increased waiting lists. In other words, the NHS are holding us to ransom, instead of investing the money wisely, they simply spent it. There is a subtle difference in my terminology, but a huge difference in practice.

Take the money being wasted on spy databases. £billions have been committed to IT infrastructure projects, most of which have not been thought through, many have contracts that amount to a blank cheque in terms of costly overruns and to be frank, most are simply not needed. This is not a wise investment of our taxes at a time when the country can least afford a spendthrift policy. It is also worth noting that many of these contracts do not benefit UK companies.

The list goes on and on. That notwithstanding, it is so bloody obvious to most people what we need to do, that to tell us different is patently insulting. Unfortunately, our politician’s still believe that we are not grown up enough to be able to handle the truth, so instead they either lie to us, or avoid being candid. My message to politicians of all parties is to stop treating us like idiots. They must tell us how they see the situation in unambiguous terms, what they believe needs to be done and how long they expect the pain to last. They must tell us how they will ensure that we get value for money and what they will do to ensure that tax increases are only be considered after all other areas have been exploited. If the people of this country and its politicians are not to be looked on by other countries as a bit of a basket case, then we need a man (and a party) with a plan.

Posted in Conservatives, General, Lib Dems | Comments (3)

Budget 2009: New Labour have lost the plot

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Budget 2009: New Labour have lost the plot

New Labour has brought this country to the brink of bankruptcy and yet, even now, when everyone else can see it, they remain in denial. How on earth can any pollster find people that are daft enough to believe that Darling and Brown are best placed to get us out of this mess? Never have I felt such utter despair. Up and down the country, people are having to tighten their belts and reign in their spending, only then can they hope to get themselves out of debt or survive a period of reduced income. Ask anyone and they will tell you this is simply commonsense, anyone that is, other than a ‘New Labour’ MP or the recipients of New Labours redistribution of taxpayers money. New Labour believe that they have discovered the secret to dealing with reduced income and spiralling debt, just borrow more! If that were not enough, they elect to lie to themselves and their masters, by suggesting that things will get better by the end of this year and by 2011, we will be in the money again as a consequence of a boom, the like not seen since the ‘dotcom era’.

Our government tells us that the economy will shrink by 3.5% this year, whereas the International Monetary Fund suggests that it will be 4.1% and the the Centre for Economic and Business Research, 4.5%. Even taking account of the Governments hugely optimistic and unlikely forecast, they will have to borrow £175bn this year. In my view, the governments forecast is a lie and I believe they know it is, but rather than give it to us straight, they would sooner treat us like idiots. If the governments figures are wrong and most economists believe they are, then borrowing will be even higher, something our government, your government, doesn’t want you to know until it is too late to do anything about it. Even when it was announced that the economy shrank by 1.9% in the first three months of this year, the government still insisted that their figures were accurate, in other words, we (the government) are right and everyone else is wrong. Early estimates suggest that if the IMF figures are more accurate that those of the Government, then borrowing will increase by around £30bn per year, no wonder this Government doesn’t want us to know the truth.

Next year, the government is forecasting growth of 1.25%, yet in spite of this, they still need to borrow another £173bn. Once again, others, such as the IMF, suggest that the growth figures are vastly optimistic, suggesting instead a contraction of 0.3%. In spite of this, the government then tell us to expect a dotcom like boom in 2011, with a forecast growth figure of 3.5%. Utter fantasy, but even with this spectacular figure, the government will still need to borrow £140bn. Followed by £118bn in 2012 and £97bn in 2013. In other words, even taking this governments completely unrealistic contraction and growth figures, we still need to borrow more than £700bn over the next 5 years. Even to a Cabinet simpleton, this has to indicate that we, as a country, are living well beyond our means. It is also worth noting, that even before the property slump and the recession, we were still borrowing well in excess of our income, with further fancy footwork taking place to move other government debt, such as the Private Finance Initiative (PFI) off the government balance sheet. So, no matter what Gordon Brown will have us believe, we were heading for a fall even without the recession. If he denies this then he is either a fool or a liar..perhaps both! We must not be surprised that this government is lead by liars either, after all, it was they who made a manifesto commitment not to raise the higher rate of income tax and they who promised a referendum on the European Constitution and then denied us the right by falsely claiming that the renamed treaty was not the same. Two manifesto promises, two out and out lies, why should the electorate ever trust any party again over manifesto promises?

The government has decided that anyone earning over £113,000 per year must lose all of their personal allowances, which will cost them around £50 per week and anyone earning over £150,000 per annum, will face a tax rate of 50% on all earnings above the threshold. This governments justification is that these people have gained most during the boom years and should, therefore, pay more now. The truth is somewhat different. Over the past 11 years, the people that have benefited most from the boom, in relative terms, is the lower paid, funded in no small part by those on middle and higher incomes. This was as a direct consequence of the governments programme to redistribute wealth. The government has also said that those that earn more must pay more. But they already do. Someone on £113,000 per year pays, in cash terms, seven times the tax that an individual earning £25,000 per year does.

It is also worth noting that anyone lucky enough to earn over £100k per year has not been gifted it, they have earnt it through promotion, success, hardwork and/or entrepreneurial risk taking. No employer would pay someone over £100k per year if they weren’t worth it. It is also worth remembering that these people are resident here, which means that they spend the majority of their money in the UK, therefore, they will be contributing substantially to the economy in the form of other indirect taxes as well as helping to create employment through the purchase of goods and services. The money that the government takes from these people won’t be handed straight over to the poor as they imply, instead, it will be used to plug a huge gap in government finances…which has become something of a bottomless pit. I would sooner have the taxpayer keep more of their money which, if they spend on goods and services, will be the best natural stimulus this country could possible have. If the government could not fleece the taxpayer so easily, they would be forced, as the rest of us are, to ensure that available funds are spent wisely and are only used on what is necessary, rather than desirable.

The bottom line is, that the only way we are going to get ourselves out of this mess is if we reduce our spending, this is basic economics and most 8 years olds could tell you that. Increasing taxes reduces the amount of money in the economy and it is this that will prolong the recession. The government is asking us all to believe that it can spend our money better and more wisely than we can, is there anyone out there, other than those that do not contribute, that would agree with this statement? For those that believe this government has its priorities in the right place, then they should consider the following; According to the government, the increase in tax announced for higher earners is worth up to £7bn per annum, although other experts believe the actual figure is much, much lower, but taken at face value, this tax increase pales into insignificance when set against government spending on databases. The government intends to spend, in spite of the recession, some £105bn of our money over the next 5 years on databases and other largescale IT projects, that is equivalent to over £20bn per year, or half the defence budget. These databases are designed to allow the government to drive a coach and horses through our civil liberties, monitor our every move and spy on our every deed. How can that be a priority at anytime, let alone during a recession, the databases are far from an essential spend?

The government has failed to grasp the nettle of public sector pension schemes which now costs us £2.7bn every year and rising. Even though the government has hammered private sector pension schemes with a tax take amounting to more that £100bn over the past 10 years, they have done nothing to deal with the public sector pensions, where the gross liability has been estimated to top £800bn. This abdication of their duty is simply breathtaking. For those that are not aware and, in the interest of putting things into perspective, 20p in every £ of our council tax goes directly towards funding local government pensions (source: Taxpayers’ Alliance). With public sector pay now above the levels of those in equivalent jobs in the private sector and better job security, little wonder that questions are being asked. Some MP’s have been whining in recent days that they should not be expected to vote for less money in relation to their lavish expense allowances. Why not, the rest of us have not been given a choice?

Alistair Darling noted in his budget speech that there will be £15bn of “efficiency savings”. Note, these are not cuts, but efficiency savings. What I don’t understand is why they have only noted them now, any well run business would have an ongoing programme of efficiency measures designed to save money. If they are genuinely efficiency savings, then the government must hold its head in shame, because that is the equivalent of admitting that this government has presided over a massive programme of excess and/or waste. But lets call a spade a spade, it is not just efficiency savings that are needed, but cuts, real cuts. The Conservatives lack the courage to outline what they would cut, which leaves them open to any charge the Labour government wants to send their way, such as cuts in health and education. They (the Conservatives) should have the courage of their convictions and tell us what they will be, we know they are necessary, but scrapping the ID Cards system, whilst wholly sensible, does not cut the mustard. By contrast, the LibDems have highlighted some 8 or 9 areas they would cut. We all know that the LibDems won’t get enough support to form a government, but based on the fact that they are willing to put their stake in the ground and then fight their corner, they are demonstrating considerably more moral courage and conviction than their Conservative counterparts.

Because I don’t want to be accused of highlighting the problems, but not putting forward any solutions, the following would be my first port of call in terms of saving money. And, for the record, I would not be looking to increase direct taxation, since as I have already argued, the best stimulus this country could get, is the natural one provided by people spending their own money in the way they so choose.

  1. Scrap all database/unnecessary IT projects, including, but not necessarily limited to; the Communication Database, ContactPoint, the Travel Database, the NHS Database and the ID Card Scheme. Saving £105bn over the next 5 years. It is worth noting that over-runs on this Governments 8 largest projects total a staggering £18.6bn (source: Times & Computer Weekly). That’s right, this is just the over-runs, not the total cost!
  2. Scrap the ‘Tax Credit’ system and return to a simplified tax and benefits system that does not see people pay a higher rate of tax simply so they can fill a form in a claim it back as a tax credit. The same objective can be achieved by using personal allowances and a simple tax system. Minimum savings of £4bn per annum as a result of less fraudulent claims and errors (currently £2bn per annum), plus savings in process and administration.
  3. Can local council’s publicity machines, saving £430m per annum.
  4. Cancel the Child Trust Fund (Baby Bonds) programme, saving £470m per annum.
  5. Reduce International Development Aid budget by half. At this time, we can ill-afford to offer £billions in aid to other countries. Saving of £2.5bn per annum.
  6. Close down the Regional Development Agencies that have delivered little, if anything, for businesses in the UK. Annual saving of £2.1bn
  7. Reduce funding to the Scottish Assembly, the current ‘Barnett Formula’ is outdated and the amount paid allows people in Scotland to benefit from services that those in England cannot, such as free prescriptions and free care for the elderly. This is neither fair, nor equitable. The budget should be trimmed by at least 10% saving £2.6bn per annum.
  8. Withdraw automatic right to ‘sick pay’ for public sector workers. Savings £1.7bn
  9. Reduce the number of consultants used by various government departments by half. Saving £1.5bn per annum. Use the balance to recruit the skills that are necessary rather than pay inflated costs to outside companies.
  10. Reverse the increased cost of Quangos in the UK, which has risen by £41bn to £123bn. Saving £40bn per annum.
  11. Close tax loopholes which cost the UK Exchequer £8.5bn from High New Worth Individuals, £3bn from large companies and a further £7bn as a result of tax evasion and other activities. Total: £18.5bn

There are, of course, many other areas where our money is squandered, my particular suggestions would save approximately £70bn. Any halfway competent government, or government in waiting, could come up with a set of plans that could easily trim 5%-10% off government expenditure without necessary affecting front-line services. This could lead to savings of up to £60bn per annum. In fact, the European Central Bank found that if the UK’s public spending was as efficient as say, the USA or Japan, we could realise a saving of 16% without any cuts in front-line services, that is a whopping saving of £93bn per year. Throughout government there is duplication, waste, excess and abuse, this area should be tackled well before cuts in essential services are considered and this is what the opposition parties should be focusing on.

Posted in Conservatives, General, Labour, Lib Dems | Comments (4)

Budget 2009: Return of Old Labour

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Budget 2009: Return of Old Labour

Far be it for me to defend the so called “rich”, but I would like to make some pertinent points in relation to this governments’ decision to increase taxes on those earning over £100,000 and £150,000.

First if all, I am at a loss as to how anyone can describe someone that earns over £100,000 as ‘rich’, take a look at any of the newspapers that still have jobs advertised and you will see countless middle management jobs and sales positions which offer earnings of around £100k, including bonuses or commission. So, these are not all city bankers, many of them may be your next door neighbours, or perhaps your boss. These are people that have almost certainly earned their positions through merit, not spongers or low-lifes! Yet, when our members of parliament refer to them, it is as if they are the great unwashed. Yet many of these people are creating jobs for the rest of us, should they really be treated with such contempt and disdain?

When people stay on in further education, this is invariably because they want to maximise their chances of doing well in the workplace, because they want to aspire to be successful, in terms of position and earnings. Are those that are successful to be judged as one of the great unwashed if they succeed in earning over £100,000 per year? One of the things that I am always hearing is that those that earn more should pay more. I agree, but they already do, taxes are paid in cash terms, not percentages. Take an average person earning £25,000 per year, they will pay £5945 in tax and national insurance every year. They will also, most likely, be entitled to additional tax credits and other benefits which will further reduce their net contribution in taxes.

Now, lets take someone earning £113,000, this is the level at which the individual will lose all of his or her entitlement to a personal allowance. As a consequence, their net tax contribution will be £40,362 (rising to £43,304 from next year), which is between 6.8 and 7.3 times more tax that Mr and Mrs Average. Or to put is another way, in percentage terms, they will be paying twice as much as the average wage earner (38% instead of 17.7%). Yet, they will not be entitled to any tax credits or other benefits. It is also likely, that someone at this level will receive ‘private health insurance’. However, even though this reduces the burden on the state system, the individuals will actually be taxed on the cost of private health, as a ‘benefit in kind’. For anyone that things this is a perk, they need to be reminded that this ‘benefit’ is not provided because the employer is feeling benevolent, but because they need their employee back to work as quickly as possible.

It is all very well deriding those people that have achieved success in their careers, but it is also worth remembering that these same people provide the exchequor with the same amount of net tax as 7 people on average earnings. Yet, they do not get seven times more pension, nor do they get seen by their doctors seven times faster, instead they are actively and unfairly targeted for yet more money. They are not rich, they are successful, they are achievers and this country would be a much poorer place economically, commercially and intelectually if we did not have people like this. Take a look at what ‘brain drain’ has done to some African countries where their skilled people left in droves following a change of government, some have never recovered, do we really want that here?

I dislike envy, as much as I hate greed, both are destructive in their own way. In the USA, they have always heralded success, placed people that have achived on a pedestal, here, we invariably look on with contempt. The politics of envy assume that these people have got ‘rich’ at the expense of their employees, rather than accepting that they are more likely to have been directly or indirectly responsible for creating jobs and wealth. I remember one of my former bosses saying that he never had a problem paying out large commission cheques to sales people, because it meant they were generating business, profit and security for the company and its employees.

There is a very real risk that, by removing all personal allowances for those earning £113,000 or more and, increasing income tax to 50% for earnings in excess of £150,000, many successful people will look to take thier skills, trade, entrepreneurship and money elsewhere. There simply has to be a limit to what they will accept. If they do leave, how many jobs will be lost as a result of the skills shortage? White collar workers are no less skilled in their trade as, for example, an electrician, coach builder or car worker. Anyone who suggests otherwise is naive. If these successful people spend their money in other countries, how many jobs will be lost as a consequence of the comparitive downturn in sales?

I believe taxation must be fair and equitable. From a moral perspective, it is okay to say those that earn more, must pay more. But it is not acceptable to state that those that earn more must also be hit with a penal rate of tax as if they were not part of the human race. Remember, many are already contibuting in cash terms, more than 7 times as much as the average worker. This country is in a mess and we will all have to accept that public services will have to be cut and taxes will have to rise, but it is, in my opinion, fundamentally wrong to target one section of the workforce for special treatment in the form of penal tax rises. Especially when so many companies and genuinley rich people are still using loopholes to avoid paying income or corporation tax.

I know that my comments will annoy many who are struggling to pay their mortgages, it will also irritate some that believe people who have been successful in their careers are not deserving of higher salaries, but this country needs achievers and to keep them, we must reward them. With the exception of bankers and the public sector, I don’t know of any business that will pay more than an employee is worth, nor a company that would be prepared to keep someone on that was not delivering results. If they are paying their taxes, even if this is as much as seven times that contributed by the average worker and then spending the money in our country, why should so many people judge them so harshly. These people also have mortgages and commitments, the only difference is scale.

I do not earn over £100,000 per annum, but my sense of fairness is what motivated me to write this post, plus I suspected that those that do earn over £100k would be roundly condemned. I am unusually indifferent to those that disagree with me on this issue because I have seen first hand what happens when countries start to lose key skills in what has been dubbed a ‘brain drain’. The country, the economy and the people all suffer in equal measure.

Posted in Conservatives, General, Labour, Lib Dems | Comments (7)

The unpublished cost of the shorter working week

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The unpublished cost of the shorter working week

As the recession bites, there has been a great deal of publicity surrounding the fact that workers, in fear of losing their jobs, have accepted a shorter working week and/or a reduction in their wages. However, there appears to have been little or no coverage of the cost to the taxpayer associated with these reductions.

Gordon Brown is keen to tell us that there are 500,000 jobs in the UK, even though he will be only too aware that some 40% of these vacancies are for part-time work. My concern is, that a shorter working week or even a reduction in salaries may keep the unemployment figures lower, but there is almost certainly a cost associated with the reduction in income which is not being considered. This relates to income support and/or benefits.

As we all know, the Labour government has introduced a raft of income support benefits and various other allowances that are available to people that fall below a pre-determined threshold. It is, therefore, highly probable, that many of these workers that have had to make a financial sacrifice on their take home pay to remain in work, will now be eligible for some form of benefit payment or income support. It is not my intention to focus on whether or not they should be entitled to these benefits, but whether or not the government is being candid about the additional cost to the taxpayer. Because, whilst the workers will not be registered as unemployed and therefore in receipt of job seekers allowance and benefit payments, they will in fact, be entitled to a taxpayer funded subsidy.

I would argue that government should be completely open with the taxpayer. For example, they must distinguish between how many full-time jobs are available and the number of part-time. This would provide everyone with a number that reflects the true situation rather than introducing false hope. Similarly, when the number of unemployed is published, the government needs to be more open, for example, identifying how many are unemployed, how many are on a disability payments etc., but now, they must include how many people are on a shorter working week and therefore entitled to some form of benefits payment.

This would not change the situation, but it would, at the very least, provide the people of this country with a more accurate picture of the effects of shorter working weeks and/or salary sacrifices. That is to say, if employees opted to go to a 3 day week, rather than have the lottery of losing their job through a comparable reduction in the workforce of 40%, then this loss would not be accurately reflected in existing statistics. For example, if an employer with a 1,000 strong workforce reduced the working week from 5 to 3 days, many employees would be entitled to state benefits or support, but the published statistics would not reflect this. Whereas if they reduced the workforce by 40%, the statistics would pick up the fact that there was a further 400 people unemployed. I would hate to think that this government would be able to massage the true state of our employment situation in the same way as they do everything else!

I live in hope that an enterprising journalist or an MP will, respectively, use the freedom of information act, or a parliamentary question to find out the true state of affairs. Otherwise, we will all be lulled into a false sense of security believing that it is not as bad as it seems, whilst struggling to secure an interview. I hope, at the very least, Alistair Darling has considered this aspect before he presents his budget, otherwise he could find himself missing yet another target. Par for the course when it comes to this government, but increasingly unacceptable.

Posted in General, Labour | Comments (1)

How to condition taxpayers into Billion pound mania

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How to condition taxpayers into Billion pound mania

Is it just me or are we are all becoming a little blasé about money, or to be more accurate, the number of noughts that follow the £ sign? Let me explain. Ever since Gordon Brown announced a massive £500bn plus bailout of the banking sector, commentators and politicians have been talking about £billions in the same way as they used to talk about £millions. In other words, everyone seems a little punch drunk. In the sales arena, the constant mentioning of large amounts of money was known as conditioning, if you keep talking about £65k BMW’s, then when the salesman mentions ‘just’ £15k for a new Vauxhall, it sounds like a bargain. However, in my little world, a £million is still a lot of money, especially when you consider how long it takes us to hand that amount of money to successive governments.

At a time when everyone is having to tighten their belt, this government has announced that they will increase spending from £620bn to £650bn, the conservatives tell us that they will “only” increase it by £25bn. Forgive me, but this sounds like an awful lot of money! In my personal life and indeed my business life, I have always understood and accepted that there are excesses, in other words, there have always been things that I want, rather than need. Therefore, when times are hard, I am obliged to deal with my excesses, to reduce my outgoings and I suspect, that this will be going on in the majority of homes and business up and down the land. This is a painful but necessary evil when times are hard. Not so for the government. No, instead, they tell us how they are going to spend more money, not how they are going to provide better value. The conservative are no better, because they say that they will just spend less (£5bn), but their proposals still amounts to an increase of £25bn!

By spending our money more wisely, buying what we need, rather than what we would like and curbing our wasteful habits, I suspect that most of us could, conservatively, reduce our outgoings by around 10%, possible considerably more. I didn’t say it would be easy, nor did I say all of us, so please accept that I am referring to most, not all of us. If this is a reasoned argument, why is it that the government cannot reduce their own waste, surely they are not going to argue that they are lean and mean or that all of our money is spent both wisely and without excess? Not a cat in hells chance. Surely, it would be better to reduce government waste and excess to channel the savings into more relevant or deserving causes, rather than just borrowing more money. The government is effectively condoning living on the never, never. Failing to practice what they preach. What angers me most, is that the conservative party, petrified of being accused of being the party of cuts, has failed to talk convincingly about value for money, getting the most of each taxpayer pound collected or borrowed.

With an election likely to be just around the corner, now is the time for the other parties to get tough. I am not talking about an austerity speech, nor a doom and gloom scenario, as has become the conservative party mantle. No, I am referring to a party, any party, that offers realistic hope, leadership and direction. One that refers to government money as taxpayers money, borrowings as future liabilities and above all, the use of taxpayers money in terms of value, not numbers to be bandied about. The people of this country do not need to see doom and gloom whenever they turn on the TV or read a newspaper, the majority of us know that times are tough and that they will be for the foreseeable future. What we need to witness, are politicians that appear to know what they are talking about (a very rare bread) and political parties that truly demonstrate that they know how to run a country and a good start would be how to spend taxpayers money wisely in order that we, the taxpayers, receive maximum bang for our buck.

Politicians and government must stop ‘conditioning’ the British people by constantly bombarding us with numbers most of us simply can’t envisage or picture. Instead, they must do what most normal people managing household budgets do when times get tough. Ensure that we are getting value for money. It is, after all, possible to spend more money on a holiday if someone gives up smoking, or to buy a better car if we shop at Aldi’s instead of Sainsbury’s, buy tea instead of coffee, drink tap water instead of bottled or even to survive the recession if we cut our cloth to suit our circumstances. It is a question of priorities. Government, whoever they are, have a responsibility, in fact a duty, to ensure that they spend or invest taxpayers money wisely. They must not be allowed to pour more money into a bucket which is already leaking taxpayers money.

Posted in Conservatives, General, Labour, Lib Dems | Comments (2)

Thanks Darling, another Brown tax con

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Thanks Darling, another Brown tax con

I have delayed writing about the Pre Budget Report because I was so angered by its content. Not so much for the state of the public finances, which most people expected, but the fact that we have yet another missed opportunity. The Gordon Brown touch was everywhere, because once again, it was about perception not reality and could never live up to its promise.

The principal part of this stimulus package was the reduction in VAT, which is estimated to cost £12.5bn over a period of one year. Which is what I shall concentrate on. Now, I would like to know how the government came up with a figure of £5bn, because we all know that sales are down, so is the estimate based on historical figures, or current sales? This is important, because the suggestion is that this £12.5bn is an injection of real cash into the economy, so a smoke and mirrors approach to presentation would just be a con and unforgiveable. Furthermore, if I had £12,5bn to spend I would have reduced direct taxation by 2.5% for a year not VAT.

VAT is a purchase tax, therefore in a sense, it is a voluntary tax and as a consequence no-one will feel any richer as a consequence of such small a reduction in retail prices. It is also essentially a luxury tax, in other words, it is added to non-essentials. Yes, I know that over the years this has been extended, but for the most part, it has to be remembered that there is no VAT on food, children’s clothes and so on. The VAT reduction would have had a direct benefit to people if it had been applied to fuel, but the government decided to raise duties to negate any benefit, they did likewise on alcohol, tobacco and spirits.

Many retailers have been offering massive sale offers, with cuts of up to 50% to tempt consumers to buy products in their stores, no doubt with differing levels of success. A reduction of 2.5% pales into insignificance set against this backdrop. Which is precisely my point, the VAT reduction had nothing to do with providing a fiscal stimulus and more to do with being able to brag about a big number, knowing full well that it would never cost as much as the forecasted figures. Moreover, it provided an excellent backdrop for the government to introduce new taxes on the basis that the ‘VAT holiday’ would have to be paid for.

Ask yourself this, if the government had £12.5bn to waste, why didn’t they put it straight into our pockets, by reducing income tax by 2.5%? A fiscal stimulus has as much to do with consumer confidence as it does ability to pay. If you want the public to feel wealthier, then the only way this can be done is by ensuring they have more  of their own money in their purse or wallet. That is tangible! But this had nothing to do with a desire to introduce a fiscal stimulus, it was only designed to con the British public into the believing the government were doing something. This will be an expensive failure because those that are in a position to buy products where VAT is applied will do so anyway and save 2.17%.  By contrast those that were not able to make the purchase will find that this 2.17% reduction will make no difference whatsoever.

Now lets take a look at another aspect of this ‘smoke and mirrors’ tax con. The government has made this years increase in the personal allowance permanent and sold it as part of the fiscal stimulus. But all is not as it seems, because they had no choice. The only reason they increased the personal allowances this year was because of the last 10p tax con. They knew if they did not act to make this ‘tax concession’ permanent that they would have had a backbench rebellion which would almost certainly have lead to Gordon Brown being ousted in disgrace. Now that is almost a price worth paying!

Now here is the best part for the government. In exchange for introducing a highly questionable fiscal stimulus, in the case of VAT for just one year, they have been able to substantially increase their tax take. For example, the adjustment in duties to offset the temporary VAT reduction on fuel, tobacco, alcohol and spirits will remain in place after VAT has been put back up. So this is a very real and permanent price rise, not only that, it is worth remembering that the consumer always pays VAT on duties, yes, a tax on a tax.

Plus, they have announced an increase in National Insurance contributions of 0.5% on employers and employees. This will raise billions and is permanent! So, in comes the smoke and mirrors again, by setting this tax increase against the change in personal allowances, the government can claim that certain taxpayers are better off. But hang on a minute, the change in personal allowances was introduced because, according to the government, they made a mistake when they removed the 10p tax band, so this was only introduced to compensate for that error. In other words, it was already our money! Don’t think for one minute that this tax raising government don’t know that and so do the media, but they are so far up the backsides of the government, the media refuses to reveal the truth.

On top of this, the government have decided to introduce a higher rate of income tax and remove personal allowances for those earning more than £140k. This means that they will be £2,246.70 worse off in 2010/11 and £2,849.93 down the following year. Now many will say that doesn’t matter, because they are rich etc, etc.

But lets put this into perspective. Firstly, they already pay more tax in real terms than the average person, in fact someone earning £150k per year pays as much tax as 4 people on average earnings. Also, many, I accept not all, of these people are the very people that create employment and provide jobs for the rest of us. Often, they will have risked everything they own to set up a business which creates wealth for the country and jobs for the people. Under this government they have seen capital allowances slashed, corporation taxes on the rise, massive increases in business rates (money which is a direct taxation by the government on business) and now a much higher tax take from them in their personal capacity.

I do not and never would begrudge anyone earning those sorts of salaries where they have contributed to the wealth of this country by creating jobs and a contribution to GDP. Two things that are vital, no, absolutely essential to the wealth of every country in the world. We have already seen a number of companies moving their businesses to other countries, such as Southern Ireland, because the tax regime is so much better. Can you really blame them if they are hounded for being successful and punished with punitive personal and business taxes for creating jobs and wealth. We all need to get real, envy is a very dangerous thing and in this case, if there was an exodus of the very people that help create jobs and wealth, we would be finished as a first world country. This pre-supposes that we are not already as a direct consequence of Gordon Brown’s reckless mismanagement of our economy.

The other changes made by the Chancellor are hardly worth mentioning, because they are so insignificant… so I won’t. I will say this however, they Pre Budget Report produced virtually nothing for small and medium sized businesses. Given these account for 50% of our GDP and employs 12.5m people, this was a massive mistake and one we shall all be paying for over the next few months.

Never was there a greater need for an honest fiscal stimulus, but Gordon Brown could not resist conning the British public again. The VAT reduction had nothing to do with providing a real fiscal stimulus, because the affects have been so severely limited. Instead, he contemptuously used it to introduce massive tax rises, which were designed to allow him to claim that the countries tax receipts, PBR and balance sheet would not be as bad as would have otherwise been in future years. Alistair Darling even included an assumption that we would see strong growth in a little over a year, everyone knows that is justwishful thinking. Whislt no-one believes this argument it makes the government books look a little better. They have no shame.  As my old boss used to say, it is all jam tomorrow.

The most worrying aspect of all this is how many people actually fell for the biggest and most dishonest tax con in history. Gordon Brown and his motley crew make Robin Hood look like a philanthropist.

Posted in General | Comments (8)

David Cameron divorces New Labour

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David Cameron divorces New Labour

News that David Cameron has divorced himself and the Conservative party from Labour spending plans is both welcome and long overdue. As too, is the announcement, that the Conservative party supports a return to responsible public spending. However, once again, David Cameron talks prudence, but fails to provide any tangible suggestions, yet another missed opportunity and evidence of political cowardice. News commentators must be getting as bored as the public are of another soundbite which lacks any detail.

Sorry David, but it doesn’t take a genius to work out that government must live within its means, nor a rocket scientist to determine that anything borrowed today, will inevitably have to be paid back tomorrow. Now I know that Gordon Brown is too inept to gauge this concept, but the public, for the most part are not. As a consequence, David Cameron sounds like a preacher rather than a politician and is getting very close to patronising the public and that could be political suicide. Opposition parties must provide alternatives, not state the obvious. We all know what is wrong, what we need is to know that those people in a position to make a difference if elected, are full of ideas and initiatives, not just truth and consequence. We are adults Mr Cameron, don’t talk at us as if we are children, because it will cost you the opportunity to get into power.

David Cameron is petrified of identifying which areas would be in his sights if the Conservative party was voted in. The problem is, even though we know that Gordon Brown is inept and self-obsessed, he also comes across as strong, self-assured and as a leader. By contrast, David Cameron comes over as weak, scared of his own shadow and patronising. To lead, people must have the courage of their convictions, in life it is important, in politics it is essential. If Cameron does not tell us what areas will be targeted, the people of this country will be suspicious of him and he will leave a void where the Labour party can claim that the reason he is saying nothing is because he has no idea what he would do and/or he intends to cut so called essential services, such as education and health.

If David Cameron wants to dip his toe in the water, he could easily start with agreeing to shelve, or better still cancel many of the unpopular information technology projects this government has announced or are already underway. These include, but is not limited to the Big Brother Britain database estimated to cost the taxpayer some £12bn, this should be cancelled altogether, the NHS database, estimated to cost in the region of £32bn, must be shelved in the short-term and re-considered in the medium term, based on a genuine cost versus return basis. Other database systems, that this government has so badly commissioned, budgeted for and managed should also be shelved until such time as the economy recovers, this would include everything related to ID cards. The public would rather have tax cuts than a Big Brother Britain database, you don’t need a poll to tell you that!

There are also the costs associated with a bloated European Union and an overseas budget of some £5bn. None of these affect education or health, so no real political fallout. The LibDems have also suggested limiting the pension tax allowance for higher wage earners from 40% to 20%, maybe this has some merit. Tough, but perhaps for the greater good. In fact there are a whole raft of areas where this government has wasted and continues to waste taxpayers money and have nothing to do with health or tax.

There are other areas that a tough, conviction politician might also consider and that is the massive costs of the highly lucrative public sector, final salary pension schemes which are paid out of tax revenues rather than a pension fund. The bloated public sector, now home to 1 in 5 employed people, or the thousands of quangos that have been set up a government, drunk on massive tax revenues brought about by a boom and stealth taxes.

If the people of this country are to survive relatively intact from the consequences of this recession, then a fiscal stimulus is necessary, It is no good tinkering around the edges and there is no point in stating that “the cupboard is bare”. People must be able to eat, no-one will ever vote in a party that states that they must starve to death for their own good. A proper stimulus package, that includes a substantial reduction in direct taxation, even if it is short-term (2-3 years), is essential, it is okay to fund this through cuts, but whatever the medium term costs, the people of this country need this stimulus now, as do small business. There is no point in looking back at previous recessions, this one is different. More people are employed by small business than ever before, people have higher levels of debt than ever before, more people own their own homes, there are more people on pensions than ever before and the individual is taxed at a higher rate that ever before.

Small and Medium sized businesses need a stimulus package, thus far, the Conservative policies demonstrate a real ignorance of the needs of this sector, which employs some 12.5m people and accounts for nearly 50% of our GDP. Delays in paying VAT and small NI holidays are too little and will help no-one, it is tinkering, not encouraging. David Cameron needs to get down and dirty with small business if he is to understand their needs, not conduct a whistle stop tour for a TV programme. He needs to accept that he and most of his shadow cabinet know nothing about small businesses and their needs, but he cannot ignore such an essential part of UK Plc.

From an outsiders perspective, David Cameron appears to be hiding in Gordon Browns shadow, because he is so scared of his own. Cameron is intent on substituting rhetoric for policies, but what the public want to hear is, if elected, what will the Conservative party do for our country and the people of this country. Cameron is concerned that the Conservative party failed to win the past two elections because of their tax cutting policy, but that wasn’t the reason. It was because the public could see through the veneer, we could see that it was still a party that was not ready for government. I would not have said this 3 months ago, but today, I believe that in spite of the way Gordon Brown has destroyed this economy, he could still win another election simply because the Conservative party is too scared to tell us how they will get this country back on track and make a commitment to reduce taxes through a reduction is waste.

Gordon Brown has waged a vendetta against traditional Tory voters, so called middle income earners, they have been savagely and disproportionately squeezed for higher taxes. The highest earners have been left alone and the low income earners have benefited enormously. The balance has been lost, middle England has been shafted and Cameron needs to commit to redressing this imbalance. It is middle income earners that have paid for Gordon Brown’s social engineering experiments and it is middle income earners that will revolt against New Labour if there is a viable alternative.

A Conservative Party victory with a healthy majority is assured if David Cameron can commit to, and tell us how or when he will; return power to the people, by repealing the draconian, civil liberty busting, intrusive legislation that has been brought in by this present government., cancel the information technology projects that have been ill-thoughout, are way too costly and with questionable returns, address the thorny issue of public sector, final salary pension plans which this country cannot afford., reduce bureaucracy and the obsession with state control and voyeurism., address the issue of 2.5m people on long term sick benefits, deal with the situation where people are better off living on benefits than they are working and making a contribution, illegal immigration. There are a whole raft of policies that would, for the most part, receive majority support.

The Labour party has created a nanny state, where too many people are now reliant on state aid and support. Many believe it is a fundamental right, even if they haven’t contributed anything. Much is said about “free education” or “free health services”, it is not free, at least not to those that pay for it. Social responsibility is about encouraging people to stand on their own two feet, providing a safety net, not an easy opt out. There must be less state intervention, less nanny state and this will lead to a natural reduction in the level of taxes required to fund it. Cameron, you need to grasp the nettle, have the courage of your convictions and put a package of measures in place that reduces waste, reduces taxes, reduces state aid and above all reduces state control over its citizens.

If David Cameron cannot win an election in this current climate, then he never will, nor does he deserve to. If he is not willing to spell out his policies in detail, stand by them and sell them, then he should not be leading the Conservative party, he must stand aside and allow a real politician to take over. Cameron would not last 5 minutes in a real business, because no CEO would accept rhetoric over substance, ideas but no plan, smooth talk but a lack of backbone. David Cameron needs to learn to become a man, a leader of men and a politician who is willing to announce, stand by and sell his policies.

Unless David Cameron starts to put flesh on the bones, he will reach a point where no-one will be listening, Gordon Brown is shrewd enough to know that, he knows that Cameron will become his own worst enemy. Gordon Brown also knows, that fear drives politics, if the public fear that Cameron doesn’t know what to do, then they won’t elect him. If the public fear that Cameron’s policies are so unpalatable that he cannot outline them, then they won’t elect him and Gordon Brown will fuel that fear, by filling the void and telling us how the Tory party will cut services, such as health and education. David Cameron is being outmaneuvered by Gordon Brown and he can’t even see it, that is shameful, because the public want change, but we have to be able to see what that change is, before we can support it. If the public stops listening to Cameron and an election is called, then he will surely lose it and he would only have himself to blame, whilst the rest of us will have to pay the price.

Posted in Big Brother, Civil Liberties, Conservatives, General, Labour, Lib Dems | Comments (0)

Gordon Brown, tax cuts for Labour Party supporters

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Gordon Brown, tax cuts for Labour Party supporters

Gordon Brown has been thrusting himself about the world stage as he tries, unsuccessfully in my opinion, to appear like a sort of financial guru. I honestly believe that many world leaders are laughing at him behind his back. Only someone as naive and self-obsessed as Gordon could run around having virtually single-handedly destroyed the UK economy and think he is King Economy. The man is a fool, but then most objective British citizens already know that. Anyway, let me get to my point.

As we all know, the Labour government spin machine always leaks its own announcements early so that they can guage ‘public opinion’, normally expressed by what the newspapers say (rather than the public), before making any final tweaks to their policy announcements. However, if the leaks are to be believed it looks, once again, that Gordon Brown is going to continue with his social engineering project, otherwise known as Robin Hood from Kirkcaldy and Cowdenbeath.

It would appear that Gordon Brown does not believe that everyone is suffering as a consequence of his handling of the economy for the past 11 years and the subsequent recession. Oh, no, Gordon Brown from his taxpayer funded home in Downing Street, believes that it is only those on “low incomes” that are in need of tax breaks. What world is he living in? He has spent 11 years long years targeting so called middle income earners with his tax increases, using this section of the community to fund his extravagant, cost-loaded experiment to re-distribute wealth. Now having squeezed the middle income earners until they are bordering on relative poverty, he has now abandoned them, by saying that any tax breaks will be targeted at “low income earners”.

During New Labour’s reign, top earners have remained relatively neutral in terms of total tax take, low income earners have benefited dramatically through allowances, tax breaks and various forms of income support and middle income earners have been seriously and relentlessly shafted. Now, he has got away with it so far, because the golden goose did not really feel all the affects of his shafting, as a consequence of a booming economy and the relative wealth created by higher house prices. That of course is no longer the case. As the economy starts to contract, the golden goose is starting to feel the pinch and because they were the primary target for revenue raising, they are feeling it more than any other section of the community. In spite of this, Gordon brown in his cosseted environment, turns his back on the very people that have funded his social engineering experiements.

Now I know that Gordon Brown needs to guarantee his core vote, many of whom will come from the lower earners and rightly so, because lets face it, they have been the only winners over the past 11 years. But he needs to understand that it was the votes of the middle income earners that actually brought New Labour to power and that irony cannot be lost on this section of the community. Nonetheless, it is all a bit academic, because there is no way that Labour will win the next election, even if Gordon Brown went around at Christmas and gave every Labour voter a £1000, oh sorry, that is the plan isn’t it, hope I haven’t spoiled anyone’s surprise!

Now enough of my sarcasm. Gordon Brown does need to provide a fiscal stimulus and I believe that everyone is agreed on that, even David Cameron, it won’t prevent the recession, but it may create enough of an impetus to save a few jobs and keep some businesses going if correctly targeted. However, it would appear that Gordon Brown intends to offer tax breaks in the form of increased allowances for low earners only. No widespread stimulus, just a further, last ditch attempt at social engineering, except this time, he can’t take anymore money from middle income earners, instead, he has to borrow it. Worst still, one of the reasons that Gordon Brown prefers to offer increased ‘benefits’ is he can always exaggerate the numbers, but this is not the time for one of his infamous smoke and mirror exercises. The economy will only get a boost if the money is real and tangible.

Gordon Brown has repeated many times that this is a unique set of events that requires a unique set of solutions and I couldn’t agree more. But he is just promising more of the same, take from one section of the community and pass to another, except this time, he wants to store the cost, so that middle income earners can pay it later. The man is a fanatic, he quite clearly has an ingrained almost psychopathic hatred of middle income earners.

What is needed is a simple and properly funded fiscal stimulus, which benefits everyone, not one section of the community. Everyone is suffering from the downturn in terms of the increases in fuel and utility bills, council tax, caps on wages, reduced pension benefits, insurance costs, travel, shopping bills, job losses, the list is endless. They all need to be able to see the benefit of a fiscal stimulus and the best way to do this is a reduction in the basic rate of tax. Everyone knows that Gordon Brown always exaggerates the affects of any government ‘giveaways’ whilst moving swiftly over the small print that invariably takes back any benfits, with interest, so the reality is, most people have learned not to trust a word he says. Therefore, he more than anyone, needs to ensure that any stimulus is kept simple and results in people being able to keep more of their own money. This is no time for treasury tricks.

He also need to offer targeted assistance to small business, they employ 12.5m people and many, as a consequence, will not have huge cash reserves, nor can they go to the bank or shareholders. He ignores this area of business at his peril, small and medium businesses generate nearly 50% of UK Plc’s GDP, not an area to be ignored.  David Cameron’s suggestions are weak and will offer very little assistance to small business, I have already outlined what I think needs to be done for small business in a previous post.

The bottom line is many of the problems we are facing today are because Gordon Brown allowed, (inspite of warnings about the risks), this country to continue a relentless boom on the back of easy credit and rising house prices. He could and should have done something about it, but he chose not to. Our economy was booming and the relative tax take was increasing anyway, still he opted to introduce many, many stealth taxes. Often, but not necessarily, disguised as green taxes, but invariably targeted at middle income earners. This was not enough for the man Brown, on top of all that, he increased public borrowing during this period, spending like a man possessed, not saving anything for a rainy day. He was reckless in his handling of the economy and he allowed the public to become reckless, by not introducing measures to cool,things down, because it would have been unpopular and inevitably, would have required him to reign in his social engineering project.

As a consequence of this mans actions, not only has his reckless behaviour virtually bankrupted this country, it also means that Gordon Brown owes a massive personal debt to the people of this country. He can start to pay that debt by stop trying to be clever and spinning the numbers. He can help redeem himself in part by offering an apology to the people he has shafted in is quest to be the hero of the low income earners, by introducing a universal 5% reduction in direct income tax. This must be funded through capital project cuts and a good start would be all of these unpopular information technology projects that are invariably doomed to failure, always have substantial cost overruns and in most cases are not wanted by anyone and in particular the public. He must also tighten his belt on other forms of government spending, just like everyone else has to do in difficult times. Government has become a very lucrative place to do business, because many of those charged with negotiating terms are no match for the very professional, highly paid, highly skilled sales people on the other side of the desk. This has to stop!

New Labour’s social engineering project was a failure in terms of value, although I do accept that low income earners are substantially better off than they were when New Labour came to power. However, were it not for a booming economy, it could have been safely argued that Gordon Brown actually reduced the gap between low and middle income earners so much that they the differences are no longer discernable. Because as he boosted income for low earners, he took this money of middle income earners, pushing one section up and the other down. This will become self-evident as the New Labour Boom turns to Bust. Thanks Gordon!

Posted in Conservatives, General, Labour | Comments (0)

Conservatives tax cuts, is that it?

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Conservatives tax cuts, is that it?

Blink and you will miss it! After all the hyperbole, David Cameron has announced what the Conservative party would do to stimulate the economy and quite frankly it is pathetic. What a missed opportunity, he is so beset with trying to prove that he is ‘prudent’ that he fails to grasp the extent of the economic downturn on business and ordinary people. Quite frankly he is a fool. I did not think it was possible for the Conservative party to lose the next election given Labour’s pathetic 11 years of tax and spend, then spend even more and borrow. But I have to hand it to David Cameron, he is doing an excellent job of trying.

Now I know that Cameron relies heavily on his advisors, after all, what would he know about being unable to pay the bills? You could be forgiven for believing that I am a die-hard Labour supporter, but regular readers will know I am nothing of the sort. I have only ever voted Conservative, but I am now politically homeless, because I could never bring myself to support a party that lacks backbone, initiative and orginality, nor one that actively supports a leader that is clearly weak, patronising and lacking any conviction. Tony Blair didn’t win because he was young, it was because he was believable, love or hate his policies and beliefs, he divided public opinion in the same way that Thatcher did, but he was a conviction politician. For what it is worth, I also found him superficial, but that is my personal view because I didn’t like him either, I always felt he was quite prepared to heap icing on a biscuit and sell it as a wedding cake.

David Cameron proposes that business and the unemployed could be supported by a stimulus package which would provide national insurance tax breaks for those employers that are prepared to take on anyone that has been unemployed for more than 3 months. Now, this idea is not original, here is what I said on the 28th November 2008

Small business should be encouraged to take on the long term unemployed and those that are in receipt of disability benefits (some 2.5m), but can work. Small business employers could be offered a full rebate on all employer NIC’s for employees that are classed in either of these categories. This will assist small businesses, increase the opportunities available for the long term unemployed and result in a massive reduction in the burden on the state from those who are in receipt of benefits, rather than contributing. This initiative could be self-funding or even offer a surplus.

So clearly I would be supportive of this measure, but it just doesn’t go far enough, because it demonstrates a complete lack of understanding of the needs of small business. If a patient is bleeding to death, a bandage may make the first-aider feel as if he is making a contribution, but it will take a tourniquet to save the patient’s life. This tax initiative is okay, but it must be part of a package of measures, as I suggested in my original post on helping small business. Let me remind you Mr Cameron, in case your advisors haven’t told you, 12.5m people are employed by the SME sector, over 50% of all those employed. Something else many of your advisors will not have told you is that businesses will fight a lot harder to save a job, than they will to take on new people. In other words, you should be targeting help to keep people employed as well as supporting firms to take on new employees.

Of course no-one can criticise David Cameron for insisting that any tax cut measures need to be paid for, I couldn’t agree more. However, sometimes circumstances will dictate a variation in policy and outlook, even if it is short-term, of course natural leaders already know that. The current economic downturn in one such instance and a visionary, competent and an open-minded leader would recognise that. There are many government projects that could and should be shelved and this would save money, but equally, as Cameron rightly pointed out, it costs £8,000 per annum to support someone on benefits and there is the loss of tax revenues and national insurance to add on top of that. In other words, damned if you do, damned if you don’t. In this type of situation, I would sooner be seen as someone that was prepared to take risks, both financially and politically if I felt the results could save jobs and reduce the length and depth of the recession.

David Cameron’s tax tinkering would do more harm than good, he really needs to get out more. Relying on meetings with 3 business people for a TV show or advisors that have never run a business is not going to provide him with the depth of knowledge that is necessary to understand business, particularly small business. If he is relying on the same people to advise him of what to do on personal taxation, then I suspect there is no point in turning up to the press conference. David, get a grip, be a man for once in your life. Leaders lead, they don’t tip their toe in the water to see how cold it is, they must have the courage of their convictions but they should also be able to listen, digest and expand on new or radical ideas. This country does not need an also ran, to follow the Labour loser.

Posted in Conservatives, General, Labour | Comments (6)

Labour race to introduce tax cuts

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Labour race to introduce tax cuts

Well I have argued that there needs to be a combination of monetary and fiscal cuts in order that the economy can receive a well needed stimulus, although I am not naive enough to believe that it will stave off a recession. This country is already in a recession, even if the official measures used to determine a “real” recession have not yet been met, all we can do is try to lessen the impact on people, jobs and business.

Gordon Brown has indicated over the weekend that he believes fiscal policy should include tax cuts and rumours abound as to the extent of such cuts, with estimates of £480 per person through to an annual estimate of £15bn in tax cuts. Whatever the case, there are two things which I am wary of. The first, that Gordon Brown has a habit of double counting and this is no time for a sales pitch. The economy needs a real injection of cash and the people of this country need to know that they have a little more money in their pockets, no sales pitch is going to change that, so Gordon Brown, beware of New Labour spin. The second is the form that tax cuts will take.

Some “experts”  have suggested a temporary cut in VAT. What are they smoking? Lets take a look at that proposal shall we? There is no VAT on food, council rates, children’s clothes etc., what many will call essential items. Where VAT is charged, how can we be certain that retailers, keen to impress their shareholders and hold onto their bonuses, will not take the opportunity to increase their margins? Thereby minimising the affect of any price reduction which ought to be brought about by a fall in VAT to the proposed 12.5%. Also, there is the cost to business, especially small business, they are the organisations and people that will have to deal with the major changes to their business that would be brought about as a consequence of a short-term change in VAT. Are these people really advising the government? I hope Gordon Brown is not listening, fortunately, not one of his strong points.

What we need is a simple, clear cut, obvious reduction is direct taxation. It must be one that is both tangible and visible, no messing around withallowances, tax credits and bandings. Instead, there should be a significant reduction in direct taxation and I have suggested this should be a reduction in the bottom rate of tax from 20% to 15 %, with all other banding’s remaining static, so the full effect benefits everyone, in a way that cannot be fiddled. Fiddling, with one or 2% will make little or no difference to the man on the street. There is no point in targeting cuts to the poorest sections of the community, because,put simply, everyone is affected, especially so called “middle England”, that has funded virtually every one of New Labour’s ‘feel good’ initiatives over the past 11 years, through proportionately higher taxes.

I doubt that it will be possible to fully-fund such tax cuts, which I think, at least for the time being, should be limited for a period of 3 years, to provide the personal reassurance that most people seek in their lives. However, in these uncertain times, I go against my instincts in terms of government borrowing if required to as a result of a ‘funding gap.  I would insist, however, that some funding is gained through cuts in non-essential government and believe me there is a great deal of that. For example, the Big Brother Britain database estimated at a cost of £12bn, should be cancelled altogether, the NHS database, estimated to cost in the region of £32bn, should be shelved in the short-term and re-considered in the medium term, based on a genuine cost versus return basis. Other database systems, that this government has so badly commissioned, budgeted for and managed should also be shelved until such time as the economy recovers, this would include everything related to ID cards. The cost of being part of the European Union is rising year on year, our ministers need to ensure that the European Parliament also looks at their costs in these difficult times, so that member countries can see a reduction in their ‘dues’. A good start would be to stop the European Parliament introducing draconian, liberty busting, politically correct rules and legislation, which costs money as well as stripping everyone of their national identities.

At this difficult economic time, we must also consider revising the $5bn overseas aid budget, this amounts to 1.5% of all tax receipts and cannot, therefore be ignored. Similarly, the public sector now employs some 1 in 5 of all those employed in this country, it has bloated and is arguably out of control. Equally, the cost of public sector, final salary pension schemes is paid for out of tax revenues, not a pension fund, therefore, the costs are enormous. This needs to be curtailed, the economy cannot afford such generous pension schemes, particularly when the private sector, who were hammered 11 years ago by Gordon Brown, have ‘pensions’ on average, worth just 1/15th of the public sector schemes.

Mere mortals like me, do not get provided witha detailed set of fiancial accounts for UK Plc, therefore I am unable to go through each and every expenditure line, but one thing is certain, you can guarantee that there is waste and excess in a public sector the size of ours and it needs to be dealt with. The way any businesses would do at a time of crisis. The adult population are better positioned than the government to determine where any additional money is spent, which is why any tax cuts must be via direct taxation, not indirect taxes, lets face it, it is our money in the first place. But whatever happens, it will never cost as much as the headline figure the government use to sell the cuts. Because, if people buy, companies prosper, business tax revenues are preserved or rise, VAT is paid, more people are employed, therefore less benefits are paid out, even if people save, many of them will be taxed on the interest. The government never loses.

For the record, I do not believe that bringing forward public sector infrastructure projects is the right way to go. The impact would be very limited, and the benefits disproportionate to the costs. Most of these projects would be PFI initiatives and, mark my word, history will look back at these PFI contracts and wonder why it was, that a government was awash with tax receipts, would enter into contracts which are akin to a consumer buying their houses at credit card rates, rather than on a traditional mortgage.

David “the cupboard is bare” Cameron, with his austerity speech, which I am sure he thought would make him look clever and responsible is in a tight corner. Traditionally the Conservative party has been the party of tax cuts and enterprise, he has fallen into a trap and it was one of his own making. David Cameron thought we needed to be told how bad things were, we didn’t, because we can feel it! A good leader must never, never back himself into a corner, now he must either eat a bit of humble pie, or, more likely for a British politician, he will come out with a fudge. Either way, he made a mistake and he will pay dearly for it. He will not be forgiven for allowing Gordon Brown, one of the most despised men in this country, get away with using former tory policies, at a time when people want them most.

Let me provide David Cameron with one piece of advice, something that he will not appreciate from his privileged upbringing. There is no point in having a balanced budget if you die of starvation in the process. Government takes our money at will, then they spend it on their favourite pet project or group, without consultation, in the process, they keep as much as 35% of our money on ‘administration costs’. If government were an investment fund, it would need a bailout every year, in fact that is what they get, it is just government take our money when they get a bit short, forever dipping into our pockets when we are not looking, a kind of distraction theft. I have always voted conservative in the past, but this lightweight, ill-considered leadership provided by David Cameron frustrates the hell out of me, he just doesn’t seem to have a clue.

Now come on guys, whatever your party colours, pull your finger out. Do what is necessary to help the people of this country, interest rate cuts were the first part, the second is a reduction in direct taxation and the third to reduce wasteful public expenditure. To have a short term impact, the second was contingent of the first, but the second should not be contingent on the third, because the third must always be part of responsible government. Stop whining about losing your seats or creaming yourselves over the thought of winning the next election by default, not one of you has earned your pay yet, so you are all, still very much on trial. If you don’t grow up, we could see quite a few members of the Monster Raging Loony Party, as people register their protest. Still, from what I can see from the current crop of MP’s, it couldn’t be much worse.

Rant over, but have left in typo’s, poor grammar and other errors so you can see just how much I have smashed into this keyboard, off to PC World now to see if they have any cheap keyboards.

Posted in Conservatives, General, Labour, Lib Dems | Comments (0)

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