Thursday, October 30, 2014

DC on lower taxes and the difference between the Tory and Labour approaches

The PM had an article in The Times today about the need to increase Tax thresholds, of which more anon.

He also had this to say about the difference between that approach and that of the main opposition party ..

Today the contrast between the Conservatives and Labour could not be more clear.

We're reforming welfare; Labour want to turn the taps back on. We celebrate the businesses who create jobs; Labour demonise them. And while Labour want to put up taxes on people's homes, pensions - even their deaths - the Conservatives are committed to cutting your taxes.

Over the past four and a half years, as we have reduced the deficit, we have also cut income tax for 26 million people.

In the next Parliament, we will go further. We have made two clear commitments that will benefit 30 million taxpayers:
  1. We will raise the tax threshold again, so that nobody earning less than £12,500 will pay income tax
  2. No-one earning less than £50,000 will pay the 40p rate of tax
Financing these tax cuts while continuing to cut the deficit will be hard, but doable.

Labour could not deliver any of this - and for me, this goes to the heart of the choice at the next election.

A Labour Party offering more spending, more borrowing, more debt and more taxes. Or the Conservatives offering a long-term plan that is working; tax cuts that are credible; a future that is more secure for you and your family.

The choice could not be more stark. So please donate to our campaign today and let's secure a better future for Britain:

Donate 20 pounds today

Thank you,

David Cameron


Jim said...

That is one that has been on the cards for a while (the 40% tax thing)

As its stood its not been moved in a long time, so more and more people are being pushed into it.

A few years ago someone earning over £31,865 was considered to be seriously rich, these days though its not an obscenely hi salary.

Im not a fan of "progressive taxation" at the best of times, to me a higher earner pays more anyway, simply because the tax rate is a percentage not a flat figure. so 20% of £100,000 is more than 20% of £20,000.

Also its the highest earners those earning over £150,000 (45% payers) who can afford the clever accountants, Thus a managing director earning £2million ends up paying less in tax than the office cleaner.

Im not anti tax avoidance, in fact I am all for it, its down to governments to reduce the tax levels to the point where the temptation to avoid tax is lost.

Jim said...

its one of those things that at first glace does not seem to add up. It somehow does not seem to make sense, kind of in the way some people can't get their head around "the universe needs no creator".

Well its true with taxation, the exchequer can take more overall by simply demanding less. Odd, but true.

Chris Whiteside said...

You've anticipated several of the points which I'm planning to work into a post over this weekend - if you don't uprate tax thresholds in line with inflation then "fiscal drag" produces what amounts to a gigantic stealth tax.

I strongly support the increase in Thresholds which DC announced, but by the time you allow for inflation over a parliament the impact will be much less

- at least, relative to where the tax take stands today, if not relative to where it would be if the thresholds were left where they are in money terms -

than a lot of commentators seem to be assuming.

Jim said...

its like 5% of 1000 is 5 times more than 100% of 10.

Chris Whiteside said...


Do you remember the story of the Labour MP who, a few years after Mrs T and Sir Geoffrey Howe had cut the top rate of income tax from 98p in the pound or 87p in the pound to 40p, asked how much less the richest 5% were paying as a proportion of tax revenue as a result?

The relevant minister replied with a certain amount of glee that both the amount and the proportion of tax paid by the richest people had massively gone up

Jim said...

I don't remember it personally, but I have heard the story a few times.

I quite like John F Kennedy's quote on this:

"the soundest way to raise the revenues in the long run is to cut the rates now … The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."