The Anonymous Widower

Cloud Cuckoo Politics

I listened to Chris Giles of the Financial Times last night on BBC Radio5’s Drive programme.  He said that the various parties promises on the deficit don’t add up.  They have promised saving in the order of ten billion or so, when documents from the Treasury show that we need to save around three times that much.

I’ve been in Newcastle over the weekend as you have seen and up there, they are worried about losing jobs when the new government cuts and cuts hard.  After all large numbers of jobs in the North East are either directly with the government or strongly supported.  Many too, are in-line for savage cuts because of new technology.

So would NuLabor tell the truth in the North East?  No!  But the Tories and the Lib Dems have nothing to lose there, so they would at least do the dirty deed after the election.

So what can be cut, what can be improved and how can we raise more revenue?

There are government programmes that can go like Trident, ID Cards, the two aircraft carriers, the Joint Strike Fighter and some other defence projects.  Most though will not show up until about 2017.

I have one bitch on what can be improved in the NHS.  Every time I go between my GP and Addenbrooke’s I have to tell the other doctor what the previous one, as the two doctors do not have access to the same database.  How much does that cost the NHS?  And how many other systems show a total lack of joined up thinking?

When we talk about efficiency savings, that is what we’re talking about and it will cost jobs in the NHS and agencies like the Police.  But these will mainly be in back-office clerical areas.  Well! They should be, but will government really bite the bullet.

Most taxes don’t raise more than about five billion.

So if you want to raise large amounts of taxes, then you increase the big ones like Income Tax, National Insurance, VAT, Corporation Tax and energy taxes.

Income Tax needs to be restructured with perhaps a 50% top rate and very much higher thresholds at the bottom.  But I would allow tax relief on any salary you pay to others.  So if you employed a nanny or a gardener, then this would be allowed.  This may seem something for the well off, but it would also enable anybody to investigate ideas without having to go to the expense of setting up companies and finding loopholes in the tax system.

In other words you restructure Income  Tax so that it is basically tax neutral for individuals but creates more jobs, which therefor will increase the tax take and also decrease the benefit take.

I’d also abolish National Insurance and combine it with Income Tax, as that is what it is, a secondary Income Tax.

At the same time, I’d also abolish Inheritance Tax and put three pence on the top rates of Income Tax.  This would mean that a lot of rich people would move here and they would create employment.  It would also have other employment benefits as people would do what was best at the time, rather than spend fortune avoiding Inheritance Tax.

I’m afraid VAT will probably have to go up.  There is no other way to raise significant revenue.  As VAT is generally only paid by consumers, as companies offset it, I would prefer that the tax rises were here, than before people got their money.

Corporation Tax is already high compared to other countries in Europe.  If it is raised we are in danger of losing companies abroad.  So raising it is a no-no, but lowering it may well raise more revenue as other companies would move here.

Now we come to energy taxes.  They should be raised substantially.  If coupled with increases in Income Tax thresholds they would publish the profligate.  I would abolish Vehicle Excise Duty and just have a Vehicle Registration Fee for every time a vehicle changes hands.

Now, I am a control engineer by training and a lot of this is standard control theory, where you do something and you get lots of secondary effects.  You just have to make sure that the secondary effects create jobs and thus raise Income Tax take and reduce benefits.

NuLabor has dug us into a big hole.  We will only get out by being radical.  Correct that; very radical.

April 27, 2010 - Posted by AnonW | Business, Health, News | NuLabor, Police, Politics, Tax