Sunday, October 15, 2006

Tax Tax And More Tax

Taxpayers are starting to roost

The chickens are coming home: two more big articles today on the damage wrought by Gordo's taxes:

The Sunday Times carries a piece by the ever-excellent David Smith summarising the recent clucking:
  • The OECD says the share of national income taken in taxes is rising more sharply here than anywhere else in Europe. Taxes in Britain are now higher than the industrial countries’ average and are significantly above those in America, Japan and Germany.
  • According to calculations by the accountants Grant Thornton, many middle-class households can expect to see half their income disappear in taxes, either when they earn it or when they spend it
  • Richard Lambert, director-general of the CBI says “Current corporation tax levels are unsustainable. Either companies will relocate or corporate taxes will have to come down. Changes will be required.” HSBC, Britain’s biggest bank, has let it be known that it is considering moving its headquarters elsewhere
  • In May 1997 tax freedom day was May 24. This year it was June 3, the highest since the 1980s, with a particularly big increase over the past two to three years.
  • Professor Peter Spencer of York University says Britain’s tax burden was about to top that under Denis Healey in the 1970s, when he famously made the “pips squeak”, and under the Tories in the early 1980s when Sir Geoffrey Howe took steps to clear up the mess Healey had left. “Although many people are aware that the tax burden has gone up, I suspect there are large swathes of middle-class people who don’t realise the extent of it."
  • Under Brown, the number of people paying higher rate tax has risen from just over 2m to 3.5m
  • A recent estimate by the accountants Ernst & Young suggests that a rising tax bill, combined with higher energy costs and only modest increases in salary, mean the average family is 10% worse off than four years ago.

And yet... and yet, even though their own Forsyth Tax Commission is about to recommend those £20 bn of tax cuts, the Tory leadership is still frozen in the headlights. It's not just frustrating - it's downright inflamatory.

James Frayne of the TaxPayers' Alliance hits the nail on the head: “When even poll-obsessed people in the Labour party are worried and a centre-left party like the Liberal Democrats is proposing some tax cuts, it just shows how out of touch the Tories are. They’re stuck in the 1990s.”

Meanwhile, the Sunday Telegraph leads with news that the true cost of Gordo's infamous ACT raid on our pensions is at least £100bn. The calculation is set out in a paper for the Institute of Actuaries by Terry Arthur, a Fellow, and one of the profession's most respected voices (see here for more detail). He says:

"What happened in 1997 represented an enormous and ongoing raid on the assets of UK company pension schemes. My research shows it would be very hard to justify an impact of less than £100 billion — and even £150 billion may still be a conservative estimate."

No wonder it destroyed Britain's world leading final salary pension system.

And no wonder Gordo's appalling legacy of fiscal mismanagement will be remembered with such anger by taxpayers and pensioners for years to come.

PS The world of small staters is certainly starting to coalesce. As it happens, Tyler personally knows three of those mentioned above, having worked for one, had one as a client, and regularly shared pork scratchings with a third. And having fulminated against Big Government with all three.

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