Sir Keir Starmer

[Chris in London]

Interesting you should say that, but we are not. Our headline rate is low, but the scope of what we tax is extensive and we are very mean with allowances compared to other countries. As I posted elsewhere, In France for example, although the headline rate is much higher (28% vs our 19%) they get a rebate of 7% of their payroll cost. And they get exceptions for R&D expenditure and more generous capital allowances. As as result, we are mid-table in the EU, in terms of corporation tax taken as a percentage of GDP.

Labour's proposals were to have the effect of lifting us to the top of the tax table.

Meaningless comparisons. Some countries tax individuals lower and companies more. Others tax goods and services more and income less. Some tax capital gains more and inheritance less. The only meaningful comparison is overall tax take against overall tax take.

I haven't looked at the statistics for some time but my recollection is that the UK's overall tax take is about a third of GDP as opposed to around 40% which is more widely reflected across the EU.

So we pay lower taxes and have shit public services. Who knew?

 

[Chippy_boy]

Meaningless comparisons. Some countries tax individuals lower and companies more. Others tax goods and services more and income less. Some tax capital gains more and inheritance less. The only meaningful comparison is overall tax take against overall tax take.

I haven't looked at the statistics for some time but my recollection is that the UK's overall tax take is about a third of GDP as opposed to around 40% which is more widely reflected across the EU.

So we pay lower taxes and have shit public services. Who knew?

All fair points, although it is not meaningless. The balance of where the tax revenues comes from is important. Otherwise you might as well say tax businesses at 100% and everyone else can have a tax cut.

What is true is that NOWHERE which has the sorts of spending on public services which Labour propose, fund it with a basic rate of income tax of only 20%. It is unrealistically low. As you clearly intimate, better services need more money and that money cannot realistically be found by only clobbered businesses and rich individuals. It would not work.

Moving the UK to the very top of the corporate tax table, whilst at the same time burdening companies with many other significant costs, AND considering our very poor productivity levels would be a recipe for disaster. One, fortunately, we have avoided.

 

[Chris in London]

All fair points.

What is also true is that NOWHERE which has the sorts of spending on public services which Labour propose, fund them with a basic rate of income tax of only 20%. It is unrealistically low.

True, but that policy was bollocks then and it's bollocks now and if they stick by that policy in the future it will still be bollocks.

The relevance of this to this thread is of course that Keir Starmer is IMO unlikely to adhere to an economically illiterate policy. The relevance to the wider political debate is that if we are ever to get rid of food banks - the mere existence of which in the 6th largest economy in the world ought to make every member of this forum ashamed - and tackle homelessness, and deal with the appalling underfunding of the NHS, and the shortages in manpower and equipment terms of our police and armed forces, and deal with the slashing of public services from local mental health services to libraries and museums, we need to get real about how it is to be funded. Pretending we will get a brexit dividend is just as economically illiterate as pretending we can wave a magic wand and get the billionaires to pay for it.

 

[aguerrrroooooooooooo]

Pretending we will get a brexit dividend is just as economically illiterate as pretending we can wave a magic wand and get the billionaires to pay for it.

What would you suggest?

 

[Chippy_boy]

True, but that policy was bollocks then and it's bollocks now and if they stick by that policy in the future it will still be bollocks.

The relevance of this to this thread is of course that Keir Starmer is IMO unlikely to adhere to an economically illiterate policy. The relevance to the wider political debate is that if we are ever to get rid of food banks - the mere existence of which in the 6th largest economy in the world ought to make every member of this forum ashamed - and tackle homelessness, and deal with the appalling underfunding of the NHS, and the shortages in manpower and equipment terms of our police and armed forces, and deal with the slashing of public services from local mental health services to libraries and museums, we need to get real about how it is to be funded. Pretending we will get a brexit dividend is just as economically illiterate as pretending we can wave a magic wand and get the billionaires to pay for it.

Agreed. ish.

The basic idea that we have to pay more is sound enough. But what is also true is that richer countries can afford better "stuff" than poorer ones. And therefore the question as to how we become richer (or at the very least do not become less rich) is very, very important.

 

[Chris in London]

What would you suggest?

We need to be honest about tax, and Brexit, and public services.

The impact of Brexit will be that our GDP will fall. The only question is by how much - whether it will be a pinch, something far worse, or somewhere in the middle. So the idea I have heard in some quarters that a Brexit related boost to the economy will enable us to improve public services is pie in the sky. We simply cannot rely on an economic upturn to improve our public services.

What that means is that we have a very simple choice. We can carry on more or less as we are, with the public services we can all see every day, and if you are happy with that, well that's your own funeral, and if you aren't happy with them but don't need to rely on them, you're one of the luckier ones.

On the other hand, if we want better public services, we need to be prepared as a nation to pay more tax. It's that simple. Nobody will deliver better public services for free. It's like anything else: if you want a ticket to City v Leicester on Saturday, you pay for it. If you want a pie at half time, you pay for it. If you want to catch the tram back after the game, you pay for it. If we want better public services, we pay for them.

There are different ways we can raise more taxes, but it is unrealistic to think 'X can pay', whether X is wealthy non-doms, tech companies, billionaires, southerners, anyone earning more than 50k a year or whoever. If we are going to pay more tax, everyone needs to pay more tax. As to how and where you raise that extra tax, there are two basic possibilities: an increase in general taxation, whether income tax, or VAT or similar, or focused tax rises. My own view is it needs something of both. I have thoughts on how and where focused taxes could be levied, but that's another debate for another day.

What I will say is this, however: one of the prime drivers of the Brexit movement has been the desire of some very very wealthy people, including people that own the media (eg those who own the Telegraph), to avoid forthcoming EU anti tax avoidance regulations. They will want to see their taxes rise so that ordinary people can get decent public services like they will want a hole in their heads.

So I suspect that for the rest of my lifetime we will end up with public services that are not noticeably better than those we have now.

 

[Chris in London]

Agreed. ish.

The basic idea that we have to pay more is sound enough. But what is also true is that richer countries can afford better "stuff" than poorer ones. And therefore the question as to how we become richer (or at the very least do not become less rich) is very, very important.

The question of how we avoid becoming less rich is the only question real ATM. The answers are that we either become a bit less rich or a lot less rich.

Whilst it's true that richer countries can afford more 'stuff' than poorer ones, many poorer ones have fewer calls on their public spending which the public at large wants them to maintain.

Did those tory voters in Blythe and Sunderland want us to cut our armed forces? Absolutely not. Do they want us to reduce social security spending? No, of course not, it's already at rock bottom. So what do we do?

All of the Scandinavian countries have economies that are dwarfed by our own. They all spend more in proportionate terms on public services and have better public services. What is true of Scandinavian countries is that they don't spend billions of pounds on new aircraft carriers and ballistic missile systems and don't have that call on their public finances. We could improve our public services at a stroke by massively reducing our defence budget, but that would put us in breach of our NATO commitment to apply 2% of our GDP to defence, and it would reduce our international standing. Or we could cut our social security spending yet further and spend the same on defence but end up with public service levels even worse than they are now.

I don't want to live in a country that does either. So if we are going to continue being the country many of us want to be, we need to be prepared to pay for it.

 

[Fame Monster]

We need to be honest about tax, and Brexit, and public services.

The impact of Brexit will be that our GDP will fall. The only question is by how much - whether it will be a pinch, something far worse, or somewhere in the middle. So the idea I have heard in some quarters that a Brexit related boost to the economy will enable us to improve public services is pie in the sky. W

e simply cannot rely on an economic upturn to improve our public services. ​

What that means is that we have a very simple choice. We can carry on more or less as we are, with the public services we can all see every day, and if you are happy with that, well that's your own funeral, and if you aren't happy with them but don't need to rely on them, you're one of the luckier ones.

On the other hand, if we want better public services, we need to be prepared as a nation to pay more tax. It's that simple. Nobody will deliver better public services for free. It's like anything else: if you want a ticket to City v Leicester on Saturday, you pay for it. If you want a pie at half time, you pay for it. If you want to catch the tram back after the game, you pay for it. If we want better public services, we pay for them.

There are different ways we can raise more taxes, but it is unrealistic to think 'X can pay', whether X is wealthy non-doms, tech companies, billionaires, southerners, anyone earning more than 50k a year or whoever. If we are going to pay more tax, everyone needs to pay more tax. As to how and where you raise that extra tax, there are two basic possibilities: an increase in general taxation, whether income tax, or VAT or similar, or focused tax rises. My own view is it needs something of both. I have thoughts on how and where focused taxes could be levied, but that's another debate for another day.

What I will say is this, however: one of the prime drivers of the Brexit movement has been the desire of some very very wealthy people, including people that own the media (eg those who own the Telegraph), to avoid forthcoming EU anti tax avoidance regulations. They will want to see their taxes rise so that ordinary people can get decent public services like they will want a hole in their heads.

So I suspect that for the rest of my lifetime we will end up with public services that are not noticeably better than those we have now.

Good post.

The only bit I'd take issue with - and this is being slightly pedantic because I agree with the general point - is that the rich can't pay more. They can but the truth is that increasing corporation tax and the top rate of income tax wouldn't raise that much - and far lower than the fantasy figures put out by Labour so you would need to go elsewhere on top of that if you wanted to see a big increase on day-to-day spending.

 

[bluethrunthru]

The names Nandy, Lisa Nandy.

Thats a no from me. Met her at a conference about 4 years ago - talked to her on and off most of the day - she addressed the hall etc etc. Her vapid delivery doubtless left an indelible blank on many a delegates memory - I bet loads who saw and spoke to her forgot it had even happened by the time they got back home.

 

[Chris in London]

Good post.

The only bit I'd take issue with - and this is being slightly pedantic because I agree with the general point - is that the rich can't pay more. They can but the truth is that increasing corporation tax and the top rate of income tax wouldn't raise that much - and far lower than the fantasy figures put out by Labour so you would need to go elsewhere on top of that if you wanted to see a big increase on day-to-day spending.

Modelling suggests increases to the top rates of ICT and CT would produce fairly modest increases in tax revenues, and can have a depressing effect economically. To give an example, if a business owner is facing higher CT bills, he will look to keep his other overheads down so that his own personal remuneration doesn't fall. So when he needs new staff, they go on zero hours contracts so he only pays them when he needs to. So ICT receipts fall even as CT receipts are increasing.

To say nothing of the effect of zero hours contracts in social policy terms.

You need to be really careful in increasing one aspect of tax because they all interact. It needs careful thought, and ultimately you need a co-ordinated approach to raise taxes across the board otherwise what comes into one pocket just goes out of another.

 

[aguerrrroooooooooooo]

We need to be honest about tax, and Brexit, and public services.

The impact of Brexit will be that our GDP will fall. The only question is by how much - whether it will be a pinch, something far worse, or somewhere in the middle. So the idea I have heard in some quarters that a Brexit related boost to the economy will enable us to improve public services is pie in the sky. We simply cannot rely on an economic upturn to improve our public services.

What that means is that we have a very simple choice. We can carry on more or less as we are, with the public services we can all see every day, and if you are happy with that, well that's your own funeral, and if you aren't happy with them but don't need to rely on them, you're one of the luckier ones.

On the other hand, if we want better public services, we need to be prepared as a nation to pay more tax. It's that simple. Nobody will deliver better public services for free. It's like anything else: if you want a ticket to City v Leicester on Saturday, you pay for it. If you want a pie at half time, you pay for it. If you want to catch the tram back after the game, you pay for it. If we want better public services, we pay for them.

There are different ways we can raise more taxes, but it is unrealistic to think 'X can pay', whether X is wealthy non-doms, tech companies, billionaires, southerners, anyone earning more than 50k a year or whoever. If we are going to pay more tax, everyone needs to pay more tax. As to how and where you raise that extra tax, there are two basic possibilities: an increase in general taxation, whether income tax, or VAT or similar, or focused tax rises. My own view is it needs something of both. I have thoughts on how and where focused taxes could be levied, but that's another debate for another day.

What I will say is this, however: one of the prime drivers of the Brexit movement has been the desire of some very very wealthy people, including people that own the media (eg those who own the Telegraph), to avoid forthcoming EU anti tax avoidance regulations. They will want to see their taxes rise so that ordinary people can get decent public services like they will want a hole in their heads.

So I suspect that for the rest of my lifetime we will end up with public services that are not noticeably better than those we have now.

Great post mate. Pretty much sumps up why I have been against brexit from the start

 

[Chris in London]

Great post mate. Pretty much sumps up why I have been against brexit from the start

In simple economic terms, why, after nine years of austerity, people have voted - again - for an act of economic national self harm when we are weaker economically than we have been for a generation is beyond me.

But they did. Now we make the best of it. But that won't I suspect, involve improving public services to any noticeable degree.

 

[aguerrrroooooooooooo]

In simple economic terms, why, after nine years of austerity, people have voted - again - for an act of economic national self harm when we are weaker economically than we have been for a generation is beyond me.

Because people were decieved into believing brexit was somehow good for us, I suspect many people that voted for brexit realise this is the case but will never admit it.
It is exactly why the 'let's get brexit done' message was so effective. Don't think about the detail, let's just get it out of the way even if it will be painful with no real world benefits

 

[Chippy_boy]

I don't want to live in a country that does either. So if we are going to continue being the country many of us want to be, we need to be prepared to pay for it.

As a general principle, yes. But you have to be very careful because IMO the economy is a finely balanced machine. You cannot whack it with a dirty great big tax and borrowing hammer and expect it to still purr along as before.

 

[Chippy_boy]

Modelling suggests increases to the top rates of ICT and CT would produce fairly modest increases in tax revenues, and can have a depressing effect economically. To give an example, if a business owner is facing higher CT bills, he will look to keep his other overheads down so that his own personal remuneration doesn't fall. So when he needs new staff, they go on zero hours contracts so he only pays them when he needs to. So ICT receipts fall even as CT receipts are increasing.

To say nothing of the effect of zero hours contracts in social policy terms.

You need to be really careful in increasing one aspect of tax because they all interact. It needs careful thought, and ultimately you need a co-ordinated approach to raise taxes across the board otherwise what comes into one pocket just goes out of another.

Great post. You could have taken the words out of my mouth.

 

[Chris in London]

As a general principle, yes. But you have to be very careful because IMO the economy is a finely balanced machine. You cannot whack it with a dirty great big tax and borrowing hammer and expect it to still purr along as before.

What?

Somebody had better tell the Chancellor!

 

[Chippy_boy]

Because people were decieved into believing brexit was somehow good for us, I suspect many people that voted for brexit realise this is the case but will never admit it.
It is exactly why the 'let's get brexit done' message was so effective. Don't think about the detail, let's just get it out of the way even if it will be painful with no real world benefits

And genuinely I am now of the opinion that forecasts of doom have been greatly overplayed. A no deal Brexit would be damaging I am sure, but let's not panic about that unless we get one, and even then we will have to deal with it. e.g. wIth interest rate cuts, government incentives and tax breaks for businesses etc.

But if we get an FTA with low or zero tariffs, then there will be no reason for any inward investment to leave the UK, no reason for any export business to be lost. And every reason to believe we can be more agile and more dynamic an economy than the rest of the EU, with appropriate reward to result.

 

[Chippy_boy]

What?

Somebody had better tell the Chancellor!

Or the shadow chancellor more like ;-)

 

[aguerrrroooooooooooo]

And genuinely I am now of the opinion that forecasts of doom have been greatly overplayed. A no deal Brexit would be damaging I am sure, but let's not panic about that unless we get one, and even then we will have to deal with it. e.g. wIth interest rate cuts, government incentives and tax breaks for businesses etc.

But if we get an FTA with low or zero tariffs, then there will be no reason for any inward investment to leave the UK, no reason for any export business to be lost. And every reason to believe we can be more agile and more dynamic an economy than the rest of the EU, with appropriate reward to result.

We could've honoured the referendum and got this whole sorry mess out of the way if we'd have ensured we stayed in the single market and customs union quickly with an EFTA style deal instead of cocking around for 5 years.

But no, we had to commit to losing freedom of movement, leaving the single market for no discernible reason and shoot ourselves in the foot.

The idea that the forecasts were bunk doesn't make any sense when you consider we've slipped in GDP rankings by a few places, brexit hasn't happened yet and it's already had a negative impact on us economically.

 

[Fame Monster]

Modelling suggests increases to the top rates of ICT and CT would produce fairly modest increases in tax revenues, and can have a depressing effect economically. To give an example, if a business owner is facing higher CT bills, he will look to keep his other overheads down so that his own personal remuneration doesn't fall. So when he needs new staff, they go on zero hours contracts so he only pays them when he needs to. So ICT receipts fall even as CT receipts are increasing.

To say nothing of the effect of zero hours contracts in social policy terms.

You need to be really careful in increasing one aspect of tax because they all interact. It needs careful thought, and ultimately you need a co-ordinated approach to raise taxes across the board otherwise what comes into one pocket just goes out of another.

I agree but as far as I'm aware, the IFS or other mainstream economists don't believe we're at the point of revenue maximisation for either corporation tax or the top rate of income tax just yet so I think you could target those groups if you wanted to see a marginal improvement in public services but coming back to your original post, I agree it wouldn't get you a lot.