TaxPayers' Alliance

Getting the language right for the Health Service

2005-09-28T18:34:00.000+01:00

Critics of the way the National Health Service is organised often get sharply rebuked for questioning such a sacred cow. How gratifying then to hear Patricia Hewitt on the BBC this morning tip-toeing through this minefield using the New Labour language of "consumers, choice and independent provision".

The TPA has consistently called for the use of choice in public services to allow us as taxpayers to verify claims by tax-funded services that they are as good as alternatives might be. It's our money, and we want to be able to see that it is being spent wisely. Alternatives in provision are the starting point for this.

It's good that New Labour might allow us to choose, but it is only a first step, and this is why the public service unions are so set against even taking that step. If choice is a good thing for us acting as consumers of health, then logic dictates next that we be allowed to consume using our own money - choosing an "opt out". The best way to make that work is to ensure that our money follows us as patients, as is partly proposed now, but with the crucial leap to separation of payment from provision. We have to use health services as choosy buyers looking for results which we as individuals pay for.

That puts the incentives in the right place, for us to seek out the best services, for the providers to devise new top quality services knowing that it is our money we are spending.

Note that this does NOT mean that ways are not found to distribute available funds so that the less well off are helped to get the best care. But such fund transfers would be just that, money to help those in need. That would be a lot less taxing on our incomes. Subsidising producers and, much worse, turning them into planned monopolies lording it over both resources and funding has 50 years of observable evidence that it is a rotten deal for taxpayers.

The TPA will continue to press for choice through opt outs, putting our money into our hands, to consume services through direct contract wherever possible. We also believe in compassion for the unfortunate and damaged, but let's be transparent about that sort of goodness in giving - suppliers of caring services too can choose their prices - when we pay for services rather than being taxed for them.

Fixed pie versus bigger pie

2005-09-15T19:33:00.000+01:00

In the past week, the main contenders in the Conservative leadership contest have moved beyond sloganising about their commitment to low taxes to reveal the detail behind their economic philosophy.

The contenders can be split in to two camps: fixed pie men versus bigger pie men - a distinction first revealed on ConservativeHome.com. The fixed pie men believe that spending restraint must precede any tax cuts, whilst the bigger pie men believe that tax cuts are essential to incentivise the kind of growing economy which supports increased public spending.

The main fixed pie man is Ken Clarke. In a speech at the Cass Business School, Clarke said: "What I do say is that reducing the tax burden can only follow reducing the growth in public expenditure. Tax cuts that are made before public spending control is achieved can only be financed by borrowing and borrowing is merely tax deferred. Conservatives are not in favour of tax cuts because they benefit the better off. We know that low tax economies are the successful economies. All of us benefit from the economic growth that low taxation can stimulate. But we must be honest with people and tell them tax cuts can only come only when they are affordable. And probably the first area for tax relief when we have done the necessary work to make it affordable will need to be pensions and savings rather than cuts in direct personal taxation."

The bigger pie men are David Davis and Liam Fox. In an article in The Scotsman, David Davis wrote: "Britain is one of only three countries in the EU where the tax burden will increase both this year and next. In fact, that burden will soon be at its highest level for 25 years. Other countries have taken a different path and have outperformed the UK as a result. In Australia, for example, the government has increased spending more slowly, run budget surpluses and steadily reduced taxes, lowering the basic rate to 15 per cent and raising the top rate threshold. Since 1996, Australia's economy has expanded by a third, compared to only a quarter in Britain. And just across the water, Ireland's tax-cutting policies have helped them overtake Britain in terms of the amount of GDP generated per head. As a flat tax revolution sweeps around the world, fuelling growth and raising living standards, Mr Brown's only response is to bury the evidence of its benefits and to sweep the idea aside. Contrast this approach with yesterday's intelligent speech on this subject by his Conservative opposite number."

This analysis was echoed by Liam Fox yesterday in a speech to the Centre for Policy Studies: "In the General Election campaign, the debate was merely about how to distribute the cake ather than how to increase the overall size of the cake. That must now change. Conservatives need to take time to explain both the economic and moral cases for reducing taxes. Conservatives must recapture the wealth creation agenda. There has been a lot of discussion recently about the Laffer Curve. It is not complicated really. If you keep all your earnings, the government will get no revenue. If the government tries to take all your earnings, you won't bother to work. The maximal tax yield, therefore, lies somewhere between the two."

Where does David Cameron stand? Writing in today's Daily Telegraph, Cameron argues that the Conservatives "need to explain that reducing taxation over time is not just "nice to have"; it's essential for job creation. That's why George is absolutely right to set up a commission to examine flatter and simpler taxes." However, he has previously been more ambivalent. In a
Daily Telegraph interview in June he said tax cuts should be a long term aspiration rather than an immediate priority. "I would hope that any Conservative government at the end of its time in power will have reduced taxes but if the first thing the Conservative government has to say is tax cuts and the smaller state then we haven’t ‘got it’. If we’re all in it together then we have to have well-funded public services."

Why leftwingers should support a Flat Tax

2005-09-06T16:06:00.000+01:00

David Walker is wrong to argue in the Guardian today that the Flat Tax is a rightwing idea to help the better off. If this were the case, why is a Flat Tax being considered by the Socialist Workers' Party (PSOE) in Spain, why is it being implemented the Democratic Left Alliance (SLD) in Poland and why was it proposed by Jerry Brown in the 1992 Democratic primaries in the US? A Flat Tax would help the poorest members of our society by relieving them of their tax burden and generating the economic conditions for greater prosperity. For this reason, politicians on both the left and the right should support it.

Free low earners from the burden of income tax

2005-08-25T10:06:00.000+01:00

Geoffrey Clifton-Brown , Member of Parliament for Cotswold, reveals in today's Daily Telegraph that his Bill to free low earners from the burden of income tax is due for its second reading this October. This is very good news for taxpayers. Here is the letter:

Sir - I am very pleased to see that The Daily Telegraph has been encouraging debate over reform of the complicated and burgeoning British tax system.

The Conservative Party now has a responsibility to offer plans for a viable system of low taxes, designed to benefit everyone in our communities - especially the most disadvantaged. With this in mind, I have introduced a Bill, which is due for its second reading this October, to stop the immoral levy of income tax on the poorest wage-earners.

Through this Bill, I intend to help make work worthwhile for the thousands of low-income earners, from school-leavers to pensioners, who have clearly been disregarded by this Government.

I hope to exempt permanently those whose earnings are significantly below the national average from the income tax system entirely. This will encourage the creation of jobs, reduce the cost of welfare and provide opportunities for the poorest in our communities, who will be able to keep more of their hard-earned money. It will also help some of the poorest pensioners.

In the meantime, we should also continue to examine with great interest all proposals to introduce an internationally competitive flat tax system here in the United Kingdom.

Geoffrey Clifton-Brown MP, London SW1

Campaigning for a flat tax

2005-08-24T09:50:00.000+01:00

The TPA is campaigning for a flat tax because we believe that it is a fairer and more economically beneficial tax system. TPA Chairman Andrew Allum appeared on BBC Radio 2's Jeremy Vine show on Tuesday to talk about the flat tax following his article in The Business on the subject. The time is ripe for a flat tax.

Dynamic effects of a flat tax

2005-08-22T15:45:00.000+01:00

Amity Shlaes has written an excellent article today for the Financial Times on the dynamic effects of lower taxes and a flat tax. She is absolutely right to argue that large nations can expect increased growth and revenues following tax cuts, as well as small nations.

During this year's election campaign in Britain, none of the political parties referred to the dynamic effects of their fiscal policies. The Liberal Democrats assumed that work habits would be unaffected by their new 50p tax bracket for income over 100,000 pounds; the Conservatives fell into Labour's trap by not refuting Gordon Brown's assertion that tax cuts mean revenue cuts; and Labour ducked and weaved their way out of explaining that taxes will obviously have to rise very soon.

The media have suddenly opened up a very healthy debate about the beneficial effects that a flat tax would have for the UK economy and taxpayers. However, if any of the parties are to implement a flat tax or lower taxes they must start by making Amity Shlaes' arguments known to the public much more clearly.

Equally, economic commentators and institutes, such as the Institute for Fiscal Studies, who are the most trusted independent evaluators of fiscal policy in the media, have a duty to include dynamic effects in their models. If they do not, they are guilty of implicitly and unfairly discriminating against tax cutting proposals. This is a significant barrier to reform because, until they do so, tax cutting parties will always face the accusation that their sums don't add up.

New 50p coin

2005-08-18T10:35:00.000+01:00

The Royal Mint is inviting the public to submit designs for British coins. Perhaps the new 50p coin could carry an inscription: "My other 50p was spent by Gordon".

Flat Tax Update

2005-08-17T10:18:00.000+01:00

The Financial Times reports that Angela Merkel, the leader of Germany's Christian Democratic Union, is expected to appoint Paul Kirchhof, a Flat Tax proponent, to her campaign team today. Kirchhof, a former judge, unveiled a blueprint for a 25 per cent Flat Tax in 2003 - a plan that goes much further than the CDU's current reform proposals.

On the other side of the Atlantic, Steve Forbes has published a new book called The Flat Tax Revolution: Using a Postcard to Abolish the IRS. Forbes calls the complex U.S. tax code "the nine million-word monster" that wastes countless hours of American taxpayers' time and money. More information on the book, including a series of interviews with the author, can be found on the Forbes.com website.

Council Tax to dominate the autumn agenda

2005-08-16T20:24:00.000+01:00

Council Tax is in the news once again. Many newspapers reported today that council taxes have increased by up to 70 per cent since 1997. They also suggest that the Government has devised a "death tax" to relieve the huge pressures of Council Tax on older people. Those who own their own homes could avoid tax altogether, then the council would claim back all the tax owing when they die. Their children will then be left to pay the tax in full when they inherit the property. This plan is fundamentally wrong because it would leave the elderly, already struggling, to sign away their homes to the tax man.

Before the Sir Michael Lyons inquiry makes recommendations on the reform of Council Tax in December, the TaxPayers' Alliance will be assisting Isitfair on a major campaign to highlight the need for a fairer system of paying for local government services. Watch this space for more information shortly.

The march of the flat tax

2005-08-15T21:15:00.000+01:00

Politics is nearly always quiet in August as politicians go on holiday but the relentless spread of the flat tax continues.

- The Telegraph (p.32) reports today that Greece may become the next European nation to introduce a flat rate of income tax. The rate would be 25 per cent for personal and corporate income, with a tax-free personal allowance of 13,000 euros.

- The Wall Street Journal Europe (p.6) runs an article by Steve Forbes, Editor-in-Chief of Forbes Magazine and president and CEO of Forbes Inc, which advocates a US flat tax. "A flat tax would unleash a stupendous economic boom. ... How ironic that one-time Communist nations have been reaping the benefits of a flat tax before that bastion of free enterprise, the US."

- A leader in Saturday's Guardian (p.21) argued that a flat tax would not be suitable under Britain's mature tax and welfare system, but concluded: "Yet as with some once-controversial big ideas of the past - such as central bank independence - it would be a mistake to dismiss flat taxes too lightly."

- And The Business (p.2) reports that Howard Stott, a fellow of the Institute of Taxation, has authored a new proposal in which 10 per cent flat rate of tax would be applicable to all income and profits, allowing nearly all tax reliefs to be abolished.

The march of the flat tax continues, despite the summer break.

The Flat Tax spreads to Italy

2005-07-19T17:30:00.000+01:00

The Flat Tax revolution is spreading from Eastern Europe; the Spanish and German governments are considering the idea, and it is gaining ground in Italy. Recently a prominent Italian Minister endorsed it. Antonio Martino, Defence Minister, wrote:

"The expected benefits of the reform would be the simplification of the tax system, with enormous advantages for the taxpayer, a reduction of legal forms of tax avoidance (through evasion and tax relief), an increase in revenue, and the proper functioning of incentives to work, save and invest, with the consequent encouragement of economic growth. These advantages have already taken shape in those countries where the flat tax has been introduced, which explains why it is being adopted by so many other countries. Those who oppose what is happening throughout the world are not those who want tax reform and less taxation for everybody, but those who scorn and disdain this idea but are not able to offer an alternative proposal."

- Mario Chacon, TPA researcher

Public service software manufacturer

2005-07-16T13:40:00.000+01:00

Every year, each UK household with a television pays GBP126.50 to the BBC - the BBC tax - even if they don't watch BBC television, listen to BBC radio or visit BBC online. This revenue gives the BBC a tremendous competitive advantage over independent broadcasters and allows it to dominate the British media. In light of growing public dissatisfaction, the BBC continually portrays itself as a public service, embarking on projects too risky for the commercial sector but of benefit to the nation.

The latest example of this worthiness is the BBC's new Open Source website that outlines the broadcaster's contribution to the open source community and invites developers to contribute their own code to BBC-initiated and managed projects. These projects include the Dirac video codec, the Kamaelia testbed for network experimentation and modules for the Comprehensive Perl Archive Network, as well as a number of other projects related specifically to broadcasting technologies.

"For the BBC, open source software development is an extension of our Public Service remit," the broadcaster said. "Releasing open source software helps our audience get additional value from the work they've funded, and also get tools for free that they couldn't get any other way."

The website includes more warm words explaining that their Open Source policy is ultimately guided by "whatever gives the public the best value for their money". This sounds good for taxpayers, but it begs the question: should the BBC be expanding into Open Source programming and software development? The BBC dominates television and radio in the UK, it makes films and sells magazines - do we really want it to also be our main software developer?

The commercial sector has a much better track record of delivery what consumers want at a competitive price - this is why decrepit nationalised industries were privatised in the 1980s and why greater private provision of public services is being explored by politicians from all parties. Creating software is not an essential public service like defending our country is, so should the BBC - funded by taxpayers - be turning its hand to software?

How little of £100 you get to keep ...

2005-07-16T12:53:00.000+01:00

The following nugget comes from the Tax Beater website:

Of GBP100 earned, 10% is paid in National Insurance contributions (nothing but a euphemism for an additional tax on income) and 22% is paid in Income Tax (40% for higher rate taxpayers). Of the remaining GBP68 of take-home pay let's say that over a week you spend it thus:

- GBP15 for a meal out
- GBP8 on cinema tickets
- GBP16 in petrol
- GBP3 put by for electricity
- GBP7 on some cigarettes
- GBP9 on a few drinks down the pub
- GBP4 paid out in insurance premiums
- GBP3 put aside for Council Tax
- GBP2 put by for Road Tax

Sound reasonable? Obviously 100% of the last two items are wholly tax. Five per cent of your electric bill goes to the taxman and 4% of any money you pay to protect yourself with insurance. Of the GBP23 you spend at the flicks and eating out, 17.5% goes to the government in VAT. While you're enjoying yourself, so is the Treasury; they take GBP4.03 from you for the evening.

35% of a well-deserved drink goes direct to our masters, and a recent AA campaign followed by the picketing of oil refineries serves to remind us that a staggering 85% of the money spent on petrol is snatched by the taxman.

Eighty five per cent! But even that is not the worst. The state loves a smoker, of course, and from the money spent on cigarettes an astonishing 88.9% enters its coffers. It brings tears to the eyes. Altogether, a full GBP32.31 of that week's expenses goes straight to the taxman.

Of the GBP100 earned, GBP64.31 will have been paid to the government in tax. At the end of the day, all you will have to show for it is GBP35.69 in goods and services. A higher-rate taxpayer will retain a miserly GBP21.69.

Oh, and we haven't even taken into consideration the host of taxes on business, employers national insurance contributions, airport taxes, capital gains tax ... and then there's stamp duty, where you hand over thousands just because you decide to move house! Somebody is taking us for a ride.

The new Conservative economic vision

2005-07-13T09:38:00.000+01:00

George Osborne made a thoughtful and positive speech to the Centre for Policy Studies last night on the four objectives for a "modern economic policy". He rightly said that "a taxation policy does not equal an economic policy" and identified macroeconomic stability, increased productivity, reduced demand on the state and lower taxes as his four aims.

The shadow chancellor argued that lower taxes are essential to Britain's competitiveness in the global economy. "We need to make not just the moral case for lower taxation, powerful as that is, but also the economic case. The global economy will not tolerate high tax systems of the kind Gordon Brown is building."

In order to lower taxes, the Conservatives must produce "a number of significant, real and credible reductions in the long-term demands on the state." That should start with the chancellor's tax credits system and particularly the benefits paid to well-off families, he said. "We should ask ourselves whether taxpayers earning incomes of, say, GBP15,000 should really be providing means-tested benefits to people earning up to GBP66,000 a year."

Public sector pensions are a second area in which the Tories should look to make cuts, he suggested. "When millions of people in the private sector have seen their pensions reduced and their final salary schemes closed, how can we justify making them pay taxes to support generous, unfunded public sector pensions?"

Osborne also identified paying for new roads through tolling as another way of shrinking state responsibilities.

The most encouraging part of the speech was when the shadow chancellor acknowledged that they "need to make the case for lower and simpler taxes from the beginning of the Parliament, not in the last weeks before polling day." If Osborne continues to reiterate the case for lower taxes between now and the next general election, there is every chance that the Conservatives will feel confident enough to have a more taxpayer-friendly economic policy in four years time.

The Olympic spending race

2005-07-04T09:50:00.000+01:00

With the eyes of the world are focused on the UK for two successive weekends - first for the Live8 gig in Hyde Park and then for the G8 summit in Gleneagles - attention will briefly turn east to Singapore on Wednesday for the International Olympic Committee's decision regarding the 2012 Games.

One overriding question regarding the bids which has been under-reported is the crippling cost of hosting "the greatest show on earth". A very interesting 'Focus' in the Sunday Times yesterday provided all the facts and figures. Here's a precis of the key Olympic facts:

So far, taxpayers have provided GBP20m for London 2012, the company organising the British pitch, and GBP10m for supporting activities. If London wins the Games, the government estimates that it will cost taxpayers GBP5bn. Others say it could be double that.
Montreal, which hosted the Games in 1976, is still repaying its Olympic debts. It made a profit on the operation of the Games, but capital expenditure on infrastructure projects spiralled out of control, causing the government to slap a USD2bn (about GBP909m) tax on tobacco to recoup its losses. Nearly 30 years later, 17 cents from every packet of cigarettes goes to repay the debt.
The Sydney bid for the Games in 2000 estimated the cost would be less than GBP500m, with only GBP154m coming from public funds. The actual cost was more like GBP3bn, with taxpayers paying about GBP1bn. The cost of the most recent Games in Athens also spiralled from GBP750m to more than GBP3.5bn.
The last British Games in London in 1948 relied largely on existing facilities: Wembley stadium, built in 1923, was the centrepiece and many competitors were housed in barracks or schools. The cost was just GBP750,000 - about GBP18m at today's prices.

The key to understanding Olympic finances is the difference between operating costs and capital costs. The Games often make an operating profit, but this is usually outweighted by a much greater capital loss. The article breaks down the costs:

The bid budgets GBP1.5 billion for operating the Games. "It's made up of sponsorship, ticket sales, TV rights and merchandise," said Coe. "Not a penny of this will be drawn from the public purse." Stadiums and transport, however, do not come free. The facilities and links would be funded by GBP2.375 billion of public money, including GBP1.5 billion from the national lottery and GBP550m from London council tax. That, though, is far from the end of the money marathon. The bid relies on billions more being poured into the infrastructure not directly related to the Games. This includes road and rail schemes costing GBP7 billion paid out of general taxation; GBP800m largely from central government for redevelopment of the Lower Lea Valley in east London where the Olympic village would be sited; and GBP650m of private funding for a housing development."

This is why Michael Liebreich, a member of the British team in the 1992 Winter Olympics and now a Harvard-trained financier, is cautious. "We must be honest," he said. "If London did win, it would cost between GBP10 and GBP12 billion to stage the Games, not the GBP5 billion the bid suggests."

Hypothecated taxes - a double-edged sword

2005-07-01T12:06:00.000+01:00

Gordon Brown is drawing up plans to siphon off the millions of pounds raised each year from the GBP5 tax on airline tickets to fund a huge aid package for Africa, according to The Times today.

Ring-fencing (or "hypothecating") revenue from a particular tax for a particular project is rare because Chancellors rightly see it as a restriction on their ability to tax and spend. There have, however, been exceptions. Tobacco duty is earmarked for healthcare, and the 1p increase in national insurance for the NHS.

Although the last Conservative Chancellor Kenneth Clarke introduced air passenger duty, it has gone up considerably under Labour and become very unpopular with frequent flyers. Ring-fencing it for Third World aid will now make opposition to air passenger duties extremely difficult.

It's a pity MPs don't hypothecate revenue from a particular tax to cover their generous salaries and gold-plated pensions. That would be an easy tax to campaign against.

The Utopian Fix

2005-07-01T08:28:00.000+01:00

To achieve a low tax economy demands creating ways of organisation that help lower government over-spending. Privatisation has its critics, but sometimes we forget how it helps make over-spending transparent by revealing losses that shareholders dislike intensely and price rises that consumers hate.

An interview on Radio 4 this morning between John Humphries and a representative of the water industry illuminated the alternative. As usual, Humphries poked at his interviewee like a small boy sticking his finger into someone's ribs. The issue was the old chestnut about water losses through leakage. Humphries point was that it was madness to waste all this water and then claim there was a water shortage. He wanted a "fix" - NOW!

The poor engineer respondent struggled to explain how complex mending water mains can be. Design, scheduling, permissions, consultations, unexpected engineering problems and the sheer unknown of digging up a street and replacing a water main were clearly in his mind.

Humphries would have none of it - it was all excuses. The poor water engineer then blurted out the term "economic level of leakage" and kapow! - Humphries was on him like a savaging prairie dog, snorting at what he saw as an excuse equivalent to the infamous "wrong sort of snow".

Of course, journalists are not engineers. Optimising capital spends and capital plant maintenance is not done to create perfection, it's done to maximise revenue through time. An economic level of leakage is a perfectly sensible commercial approach to supplying water out of our taps.

What this illustrates is the short-termism of the media - demanding fixes to problems right now and damn the complexities. The problem for the taxpayer is that if these become public issues the politicians see it in their interest to be seen to be "doing something". They too have no real knowledge, but they have gigantic powers to tax us and create an unholy financial mess "working hard" to "get things done". The reality is that they do nothing of the sort, they create meetings, plans and consultations while engineers wait for decisions to do practical things like digging up a street to replace a leaking valve.

Privatisation at least has the huge advantage of clearing away such nonsense. Engineers are humble enough to realise that Utopia is impossible, and that a long term plod through the practical issues will gradually improve the world. For taxpayers, that is an optimal solution, the alternative, for which we have reams of evidence from the days of nationalised industries, is the hidden cost of political planning, long term losses hidden in Treasury accounts, appalling service to the consumer and worst of all, yet higher taxes to pay for the distopia.

Risky Government

2005-06-30T09:02:00.000+01:00

Two recent initiatives bring home how risky large government is for taxpayers.

First, the proposals for increasing the role of paramedics working for the ambulance service. Yes, the roles are laudable and the outcomes may or may not be more efficient, but think about how this change is being market tested. Because the innovation is being proposed by a monolithic nationalised industry it becomes a major political item; with all doctors, all health service workers, all the media, lots of patient groups and vast cohorts of administrators having their say. What a stupendously inefficient way of making change happen. About fifteen years ago I can remember a report about paramedics in Orange County California bringing in portable defibrillators on trial. There was no fuss, just a few dedicated doctors and paramedics working together to see if they could save more patients' lives and crucially, no extra cost to local taxpayers.

We're going to pay through the nose for the debate about paramedics - and this tax money will go nowhere near any paramedic or patient, it will go into endless meetings as each interest group tries to second guess what part of this change might affect them badly. Operational efficiency and patient benefits are more than likely going to be a very small part of this gabbling.

Second, the same process is at work in the identity card debate. This monolothic proposal brings in the mighty monster of the IT procurement process inside government. This is a never never land of special interests that has a track record of cost over-runs second to none. Once again, the taxpayer becomes the fall guy as arcane debates about the requirement, the technology and the useage processes see government stumble into the unknown at our expense.

That big government is risky is a notion we should all be remembering - the worst part being that they take risks with our money.

Eben Wilson, Editorial Director

Tory tax debate

2005-06-29T09:00:00.000+01:00

Tax has taken centre stage in the Conservative Party leadership election today as David Cameron makes the case for restoring the married couples allowance a key policy in the(unofficial) launch of his leadership bid.

Ahead of his Policy Exchange lecture, David Cameron told the Daily Telegraph that he would like to reintroduce a tax break for marriage. "You can't bribe people to get married but the Government ought to ask the question: Are we making it easier for people to stay together or more difficult?" This would be a welcome development in Conservative Party policy. More worrying, however, are his views on the level of taxation.

Tax cuts should, he believes, be a long term aspiration rather than an immediate priority. "I would hope that any Conservative government at the end of its time in power will have reduced taxes but if the first thing the Conservative government has to say is tax cuts and the smaller state then we haven't 'got it'. If we're all in it together then we have to have well-funded public services."

Alongside David Cameron's interview was a report on Shadow Chancellor George Osborne's research visit to Estonia which appears to put him at odds with his political soul mate. George Osborne called for the Conservatives to "make a bold case for lower and simpler taxes". Like David Cameron, Michael Howard said earlier this week that tax cuts were not "a silver bullet" and that public services should come first.

George Osborne said to the Daily Telegraph: "I am not disagreeing with Michael Howard; tax cuts are not a silver bullet. But we ought to make the case for lower and simpler taxes right at the beginning of the parliament, and it needs to be part of a broader economic strategy. I don't think we can just come up with a few tax cuts three weeks before the election."

The positive case for lower taxes

2005-06-27T12:21:00.000+01:00

Michael Howard's forthcoming speech to the Centre for Policy Studies receives widespread coverage in the media today for saying tax cuts are not the "silver bullet" that will solve the Conservative party's problems and restore it to power.

Though Gordon Brown's growing tax burden may make taxes a bigger election issue in 2009, Michael Howard will argue that voters are deeply sceptical of politicians' promises and a modern party needs a far broader appeal - ranging from patriotism to personal responsibility, enterprise, duty and "overwhelming optimism about man's ability to improve the human condition".

According to the media coverage, Michael Howard "triangulates" himself between those who see tax cuts as "the article of faith" and those who argue that it should be a badge of honour to offer no tax cuts at all. However, this is a false description of those - like the TPA - that believe in lower taxes.

The case for lower taxes - as Michael Howard himself acknowledged as Shadow Chancellor and Leader of the Conservative Party - is not tax cuts for the sake of tax cuts, but tax cuts to promote prosperity, future revenue for public services, and individual responsibility. The Conservative Party should not be afraid to voice the case for lower taxes but the only way to win the argument is to be positive rather than apologetic.

Buying IT for ID

2005-06-27T09:32:00.000+01:00

Thank goodness for the LSE and its report on what the cost for ID cards is likely to be. If I had a vote on the matter, I would say that even they will be wildly under. Leaving aside the issue of the cards themselves and whether they will work, this is the worst form of government program for taxpayers:

1) It's a grand vision.
2) It's not been thought through.
3) It's going to demand endless "consultation" between bureaucrat and bureaucrat.
4) It's monolithic without competition to control costs.
5) It's self-serving - once in, it will be all to easy to protect its raison d'etre and find new reasons for spending more money on it.

How much simpler to create a simple rule: should the agents of state believe that you are doing something which may be a threat to the safety of others you must show who you are and where you live. We can let the courts decide the limits to the state's suspicions under common law rules using juries to refine grey areas, and we can let individual agencies publish their requirements on i/d from existing methods, whether that be a passport, a driving licence or a gas bill.

The taxpayer needs protection from any legislation that purports to "fix" complex issues with a monolithic solution - they all cost a fortune, do not work, and grow in cost through time.

Eben Wilson: Editorial Director - The Taxpayers' Alliance

The HOT tax

2005-06-22T00:34:00.000+01:00

National Review Online contributing editor Deroy Murdock published an excellent article last week proposing a HOT tax for the United States - a Higher-rate Optional Tax.

Murdock is proposing adding a small box to the Internal Revenue Service 1040 form. In it, those who feel undertaxed, like Barbra Streisand, can indicate whatever higher rate at which they would like to be taxed.

The proposal is self-financing - the extra revenue collected would cover the administrative costs - and it would also satisfy people who claim that they would be willing to pay more tax.

Murdock is hoping to see someone on Capitol Hill run with the idea. I'll keep you posted on his success. In the mean time, I highly recommend his article.

Scrap the CAP

2005-06-20T14:22:00.000+01:00

The Observer's Business & Media supplement has an excellent feature launching a new 'Scrap the CAP' campaign.

- Did you know that the CAP costs the average family in the EU GBP16 a week in taxes and higher food prices?
- Did you know that each EU cow costs taxpayers USD2.20 a day, while half the world's population lives on less than USD2 a day?

The TPA has campaigned to scrap the CAP from the outset. In our most recent Bumper Book of Government Waste, we calculated that subsidising overseas farmers cost British taxpayers GBP1,935 million in 2004.

Britain's net contribution to the EU budget is currently GBP4,300m a year. About 45% of the EU budget is allocated to the Common Agricultural Policy (CAP), which means that GBP1,935m of our net contribution went to subsidising farmers in other European countries, including GBP88m for tobacco farmers.

This is not fair: why should British taxpayers bail out farmers in Belgium or Spain? In addition to this subsidy, British families also pay on average GBP16 a week more on their grocery bills because of the CAP. This is madness.

Small businesses burdened by taxes

2005-06-16T14:43:00.000+01:00

The Financial Times reports an interesting YouGov poll today which shows that small business owners feel the tax burden is a more pressing concern than the problems caused by regulations. The online poll of 1,137 of companies, commissioned by the Genesis Initiative, found high levels of dissatisfaction over the government's understanding of the needs of small and medium-sized companies. Asked to name the one thing the government should do in the next 12 months, 36 per cent called for a reduction in the overall tax burden on small businesses compared with a 25 per cent that wanted regulations streamlined. Tim Kind, of the Genesis Initiative, said: "There are too many taxes and the system is too complicated. Simplicity and transparency will reduce the burden."

Mysterious Monopolies

2005-06-07T08:40:00.000+01:00

The taxpayers' money wasted on chasing Microsoft through European courts is being used on the basis of some pretty strange ideas about monopoly. This was well illustrated on the BBC yesterday when John Humphries called Tesco's 30% share of the UK food market "a monopoly". This definition seems to mean "there's a big market leader around and we like small guys".

Monopolies exist where no-one can come into a market due to some kind of barrier, and the monopolist can thereby exercise undue pricing power. Even owning 100% of the market may not be a monopoly if there is a threat of entry and free pricing. Indeed, every new product under that sun starts as a 100% monopoly.

Microsoft certainly does not have a monopoly, what it does have is market leadership and it both pushes outwards into new innovative areas and drags other players along into new innovations all of which benefit us as consumers through lower prices and better products for all. As a market leader, it also demands that new competitors have to be very very good on prices and features to compete with it. That's good for us too, and keeps governments out of the IT business. As always, competition is a battle of knowledge.

The EU uses taxpayers money to pursue Microsoft in an area it knows nothing about. For consumers, this can only mean one thing, restrictions on the IT business that will mean higher prices, lower innovation and worse products. Time will show how well Microsoft adapts to a thousand agile, clever and aggressive small fry nibbling away at their advantages. They do not have a monopoly on talent.

- Eben Wilson, TPA Editorial Director

News from Devon

2005-06-06T16:56:00.000+01:00

A TPA supporter from Devon has just emailed me to say that his local Liberal Democrat county council's first action on coming to power in May was to vote themselves a 35 per cent increase in their allowances. "Funnily enough," the email continues, "this was not included in any of their election promises."

Fiddling whilst Rome burns

2005-06-06T13:17:00.000+01:00

The European Commission reacted positively today to Microsoft's efforts to increase the "interoperability" of its products with other non-Microsoft software. If this means we are nearing closure on this issue taxpayers across the EU will breathe a sigh of relief because the longer this saga drags on the more irrelevant it looks.

Most taxpayers who realise how much time the Commission has spent chasing Microsoft seriously question the bureaucrats' priorities. The EU's accounts haven't been passed by the European Auditor for over a decade because of systemic fraud. Heavy agricultural subsidies and high trade barriers continue to hurt the Third World. And MEPs continue their monthly commute between Brussels and Strasbourg, at the behest of the French government. All these are issues that directly affect taxpayers because they are all areas where we deserve better value for money, but the Commission continues to pursue Microsoft.

Following the strong rejection of the new European Constitution by the French and the Dutch and the latest installment of the Microsoft saga, it is difficult not to conclude that the Commission is fiddling whilst the Treaty of Rome burns.

TPA in the news

2005-06-06T12:54:00.000+01:00

Today's Daily Express covers a story (first picked up in yesterday's Sunday Telegraph) about how some local authorities are using money allocated to fight teenage pregnancy to give young mothers free makeovers, photoshoots, cameras and vouchers to "boost their self esteem."

We are quoted as saying: "At a time when some children are studying in classrooms where there are not enough books and people are in hospitals where there are not enough beds, it seems crazy that young mums are being offered free makeovers. It is a completely wrong set of priorities."

TPA Chief Executive Matthew Elliott repeated this point on BBC Radio Manchester this morning. He described the scheme as "a cosmetic exercise" and suggested that a better way to boost the self-esteem of teenage mums would be "to offer better vocational training and easy access to education to give them real hope for the future."

TPA on Daily Politics

2005-05-26T10:36:00.000+01:00

TPA Chief Executive Matthew Elliott has recorded a short interview for today's Daily Politics on the nine-week summer holiday that MPs get each year. Watch it at 12 noon on BBC2.

Government adviser advocates 51% income tax

2005-05-26T10:18:00.000+01:00

The Daily Express' front page story today reveals that the Prime Minister's Special Adviser wants the ceiling on National Insurance contributions to be abolished, heralding a 51p in the pound tax rate for those earning over GBP32,000 a year. In his book The New Egalitarianism, Patrick Diamond recommends abolishing NI for the low paid and floats the idea of soaking the better off. He asks: "Is it not time to remove the ceiling altogether?"

The newspaper quotes the TPA's description of the proposals as "a massive attack on the hardworking middle classes." TPA Chief Executive Matthew Elliott said: "Labour implied heavily during the election that it would not increase National Insurance again. But now we appear to be glimpsing their real plans."

Financing local services

2005-05-25T10:38:00.000+01:00

Peter Webb, Chairman of the Surrey Tax Action Group - an Alliance Member of the TPA - has written to the Daily Telegraph today responding to their leader which argues that "locally run services should as far as possible be locally financed." This is what Peter thinks:

SIR - Today in your leading article you say that locally run services should as far as possible be locally financed. They already are. But with centrally driven prescription we don't know who runs what local services, and 'local' and other taxes are recycled between areas by grant and between people in benefits before being put to work. Tax is not a price for local services and does not measure anything for accountability. 'Local' tax is as much a lie as is 'national insurance fund' (there isn't one).

To separate tax raising from tax distribution would allow great reform for simplicity, transparency and national well-being. The Lib Dem Party is to be congratulated for its vision, and action to investigate flat tax.

Any devolved operation should be able to tap into centrally banked tax. After all Local Authorities are now required by law to conduct the full panoply of corporate planning and associated disciplines. This unavoidably renders the budgets as better than centrally imposed grants as the measure of revenue required.

I have been able personally to give Sir Michael Lyons, leading the Lyons inquiry set up to prescribe for an improved council tax, a simple non-bureaucratic scheme for accessing revenue which does not conflict with national strategy and fiscal responsibility. And it is possible on one sheet of paper, or personal tax statement, to show the national accounts and the link to local spending, an objective which some experts have turned somersaults to try and achieve at great cost and complexity with local income tax design.

Peter Webb
Chairman, STAG
PeterWebb@stag.isitfair.co.uk

Carpet Baggers in Partnership

2005-05-23T15:39:00.000+01:00

All taxpayers should beware the carpet baggers of the bureaucracies that surround us. They can always justify what they do as necessary and important by declaiming broadbrush visions and worthy goals. How can "promoting regional economic growth" or "developing the arts" or "helping inclusiveness among the disadvantaged" ever be wrong?

Look inside these worthy aims and you find what actually goes on while they spend our money. King among the buzz phrases now are "partnerships". Worthy types in suits meet others to develop these arrangements. Endless meetings on plans and structure and programmes of consultation abound.

What this means in reality is one tax-funded salary meeting with other tax-funded salary in tax-funded rooms in tax-funded organisations. Arts Council staff regularly meet with County Councils to discuss art in the community in schools, public buildings and open spaces in its "creative partnerships". OK, so now we've got an art bureaucrat, a county planner or two, an educationalist, a community architect and a town manager - no doubt with a publically funded tame artist or two in attendance - all in one room that we pay for - talking about a programme we didn't ask for and never hear about.

"Economic partnerships" are another boondoggle. At the top level you get the big companies in a local area meeting with the local economic development team. They talk about something called "strategy". That means second guessing the labour force, housing market, transport needs, and business content of the local community. They are then usually split up into "partnership working groups" on transport, workforce, occupational health and so on. You then get meetings between economic planners, transport bureaucrats, and skills advisers with an occupational health observer working out whether forcing everyone out of their cars and onto the buses (central government policy) will damage regional business competitiveness (regional government policy) or promote healthier lifestyles (health service policy) or make skilled workers move elsewhere (nobody's policy).

The truth is that our world is far too complex to plan. We are doing ourselves a dis-service when we provide tax revenues to bureaucracies that then adopt the conceit of partnering. Clamping down on tax and hence government spending has its own added value; it prevents wasteful intra-governmental chit chat.

- Eben Wilson, TPA Editorial Director

Letter to the Daily Telegraph

2005-05-19T15:44:00.000+01:00

In response to two articles in today's Daily Telegraph, the TPA wrote the following Letter to the Editor:

SIR - Proof that governments across the world are all the same when it comes to cost-cutting. On page six of today's newspaper (May 19) you quote David James saying that Sir Peter Gershon had "his hands tied" when carrying out his review of government waste and on page nineteen you report that the Czech government has shut down a department assigned to "trimming the fat" in the bureaucracy. As Sir Humphrey said: "The public doesn't know anything about wasting government money. We are the experts."

Tax Misery Index

2005-05-18T18:01:00.000+01:00

Forbes have just published their excellent Tax Misery Index. This year, as in 2004, the French government inflicts the greatest tax misery on its citizens. The next worst place is the Beijing area of China, followed by Belgium, Sweden and Italy. Britain is half way down the index but, following last year's personal allowance freeze, has risen one place - indicating tax misery has increased - to 25.

CBI attack public sector 'non-jobs'

2005-05-18T11:12:00.000+01:00

John Sunderland, president of the CBI and executive chairman of Cadbury Schweppes, last night criticised the government for spending taxpayers' money on non-jobs such as "gender and diversity observers" rather than more doctors, nurses and police. Mr Sunderland's intervention in the government waste debate is extremely welcome because it will keep the pressure on all political parties to root-out wasteful spending.

The speech also highlights once again the need for political parties to be specific in the cuts they propose to the public sector. The Government is hiding behind the vagueness of the Gershon Review and the Conservative Party is hampered by their refusal to outline in detail which public sector workers would lose their jobs where the James Review to be implemented.

This has important electoral ramifications for the Conservative Party, an issue which was highlighted this week by David Smith in the Sunday Times. In regions outside London and the South East - areas where the Conservatives have to win seats to form a Government - public sector spending now accounts for more than half of regional GDP and well over fifty percent of households rely on the public sector for their main source of income.

Talk of "axing non-jobs" understandably makes everyone in the public sector afraid that they will lose their job. The Conservative Party's commitment to maintaining front-line services will only resonate if they are more specific about precisely which jobs will go under a new administration. Until the full details of the James Review are published, this confusion and electoral handicap will remain.

Charles Moore endorses lower taxes at Policy Exchange

2005-05-16T23:53:00.000+01:00

Charles Moore, the new Chairman of Policy Exchange, used his first lecture at the think-tank this evening to discuss the post-election political situation and to call for lower taxes.

"Like our centrally controlled public services, our tax system sucks power away from us. Not only is tax far too high, it is far too little related to the places from which it is collected."

Yet more government waste

2005-05-12T09:16:00.000+01:00

Many newspapers today have reported that Labour ministers who lost their seats at the election will be receiving GBP200,000 'golden goodbyes' from the Government.

Speaking to the Daily Star and the Daily Express, TPA Chief Executive Matthew Elliott said: "The big pay-offs to former Ministers are a disgraceful waste of taxpayers' money. When the voters said 'You're fired!' they certainly did not expect Ministers to have a golden goodbye and a gold-plated pension."

More government waste

2005-05-08T09:09:00.000+01:00

An article in The People today reported that the RAF has spent over GBP2,200 for former aircrafswoman Stephanie Hulme to retrain as a stripper.

Matthew Elliott, of watchdog TaxPayers' Alliance, said of Stephanie's case: "This is a disgraceful use of taxpayers' money. The MoD and the RAF should be spending their money on far more important things."

Tax Pledge 2005 in the Daily Telegraph

2005-05-02T20:44:00.000+01:00

There's a very good article in today's Daily Telegraph about the Tax Pledge 2005 campaign by Malcolm Moore.

The Conservatives have banned their candidates from promising not to raise taxes after the election, even though the party is campaigning for GBP4billion of tax cuts.

The Taxpayers' Alliance, a low-tax lobby group, e-mailed all prospective MPs asking them to sign a pledge that they would not vote for higher taxes. So far, the pledge has attracted only one Conservative signatory.

"On the day it launched, Conservative Central Office sent out an e-mail to all candidates telling them not to sign the pledge," says Matthew Elliott, the Alliance's chief executive.

"I have had phone calls from 20 to 25 Conservative MPs and candidates saying they morally support the campaign, but they cannot back it publicly because Conservative Central Office told them they cannot," he adds.

You can read more here.

P.G. Wodehouse on tax

2005-04-25T09:27:00.000+01:00

TPA supporter John McNulty has spotted an excellent link to an article on Income Tax written by P.G. Wodehouse in Vanity Fair in 1919. Here's a taster:

"As I sit in my poverty-stricken home, looking at the place where the piano used to be before I had to sell it to pay my income-tax, I find myself in thoughtful mood. The first agony of the separation from my hard-earned, so to speak income, is over, and I can see that I was unjust in my original opinion of the United States Government. At first, I felt toward the U.S.G. as I would feel toward any perfect stranger who insinuated himself into my home and stood me on my head and went through my pockets. The only difference I could see between the U.S.G. and the ordinary practitioner in a black mask was that the latter occasionally left his victim carfare. Gosh! I was bitter."

To read more, visit Dianne Durante's website.

59 Percent Believe They Pay More Tax than Donald Trump

2005-04-14T08:07:00.000+01:00

The Tax Foundation in the US has released an interesting poll on the eve of the April 15 tax deadline. The survey shows that a majority of U.S. adults believe taxes are too high, they find the federal tax code complex, and they believe it should be reformed toward simplicity - even if it requires giving up some deductions and exemptions to do so. The survey also found some 59 percent of U.S. adults today believe they pay more federal income tax as a percentage of income than billionaire Donald Trump. Other key results include:

68 percent said they favored a complete repeal of the federal estate tax.
77 percent said the federal tax code needs a "complete overhaul" or major changes, compared to 18 percent who said it's fine as it is.
81 percent believe the federal income tax is somewhat or very complex.
66 percent rated the value received from the federal government as "poor" or "only fair."

The maximum percentage of anyone's income that should ever go to taxes is just 16 percent - far below the nation's estimated total tax burden of 29.1 in 2005. 59 percent of respondents said it was unfair that an estimated 44 million Americans file tax returns but pay no income tax after deductions and credits, and that everyone should be required to pay some minimum amount of tax to help fund government.

Attack Tax - Make More Money

2005-04-12T16:52:00.000+01:00

TPA supporter John McNulty has contributed this article to the blog:

Imagine a dreadful disease crept up on your world. Blending cancer with deadly fungus, it infects everyone. Now grown so globally pervasive, it consumes half your energy, squanders half your savings - wastes half your life. Inescapable, its contamination lurks everywhere. This crippling plague answers three real names - Bureaucracy, State or Government. It clips every coin you make, spend, save or inherit. It controls everything - your nearest and dearest - even what you eat and how you learn. It impedes progress.

Properly constituted Government - one "of laws, not of men" - undertakes to protect the individual, without choking us. The individuals it supposedly defends must control government, not vice versa. Currently Government protects and perpetuates itself mainly. Would you hire someone who 'gets paid anyway' and cannot be dismissed? Does 'someone-else's committee' know best in spending your own hard-earned money? How many leave lights blazing, furnaces roaring, engines running, thumbs twiddling at your expense? Look around you at the wasted time, effort and money - your money, your life, burned by bureaucrats. Allegedly, these people work for you; does it feel that way?

Some say, 'You can't beat City Hall' - betting on paying less whilst claiming more expenses. It doesn't work like that. The house rigged this game. Government owns no money - it takes it by stealthy force. It prints, then controls, paper money but makes no value. Government's dead overhead throttles everyone - even its own legions. Government servants pay taxes - one Government employee paid to extract money from another. This pitiful ploy attempts to make bureaucrats 'seem equal' to productive earners. It highlights the self-absorbed, wasteful attitude inside the machinery of state.

Government cannot legitimise stealing from the rich by pretending to outlaw poverty - an irrational, unworkable contradiction. The only pockets ever filled by pilfering? Pickpockets. Tax-cut opponents always fear that someone else will benefit more than they. Who? People who produce more and better? 'Robbing the rich' supporters wrongly assume that they aren't the next moving targets. Wealth exists not as a fixed resource but as something created via productive effort, grown from ideas by individual initiative. Other than itself, Government cannot enrich anyone - it can impoverish everyone. It cannot educate - it will not learn. Its moral job: ensuring that individuals keep what they rightfully earn. Time it realised that you are its paymaster.

Excise this cancerous bureaucracy. Reclaim freedom; vote to axe your taxers.

Copyright John McNulty. Paris. March 2005.

Media summary - Tuesday 12 April

2005-04-12T14:35:00.000+01:00

Extracts from today's Reform Media Summary:

The Conservatives published their election manifesto yesterday. Its front page reiterated the central themes of the Conservative campaign: "More police, cleaner hospitals, lower taxes, school discipline, controlled immigration and accountability." Key policies include: GBP4 billion of tax cuts, 5,000 more police officers a year, bringing back matrons to deliver clean hospital wards, giving head teachers the power to expel disruptive pupils, limits on immigration and a border police force, and setting a date for a referendum on the European constitution. Reaction:

Times (leader): A leader assesses the merits of the manifesto: "The Tories' themes are tax, immigration, crime, health and education. On the first, they are right to highlight an emerging demand for tax relief (especially for those with middle incomes) which will increase further if inflation starts to creep back into the international economic system."
FT (leader): A leader argues that the Conservative manifesto is "less than a programme for government" and it has continued the Party's "focus on the issues that market research shows to be worrying groups of voters - health-service squalor, unruly youth, crime and immigration". It states: "The overarching theme of the manifesto is that Britain is heading in the wrong direction. There is certainly a strong case to be made for this, with sharply rising government spending producing disappointing improvements in public services and taxes climbing without any sign of levelling off... . Unfortunately, there is little to make such a case in the manifesto. Instead it promises to continue with Labour election bribes, such as this year's one-off GBP200 council tax payment for pensioners. No detail is given of the GBP4 billion of tax cuts the Conservatives offer. When it comes to red tape, promises of a crackdown are offset by pledges of further regulation - on school meals, for example, and hospital performance. Rather than making a coherent case for a smaller state with less nannying, the Conservatives substitute their policy prejudices for Labour's."
The Telegraph leader said that the Conservatives need to spell out their tax proposals and declared that "the central battleground of this general election is tax and spend".
Simon Carr asks in the Independent: "The savings Mr Howard claims from the James report will take time to come through, why won't the Tories face the same black hole they say Labour will face?"

Spending plans: The Today programme interviewed members of each of the three main parties about their spending plans.

Labour (Ed Balls): The former Chief Economic Adviser to Gordon Brown argued that the Conservatives were planning to cut spending every year: "But they've also come along and made promises yesterday in their manifesto... . They're saying that in the first year of a Conservative government, they could also reduce borrowing by GBP8 billion and cut taxes by GBP4 billion and, on top of that, spend more money in certain areas... . The problem they've got is that it doesn't add up. It's not possible to cut taxes and spend more and borrow less all at the same time without a black hole... . Their long-term cuts plan... just doesn't get anywhere near being enough to pay for the extra commitments they've got."
Conservatives (Oliver Letwin): The Shadow Chancellor noted that the IFS said that the Conservatives would be able to reduce borrowing and cut taxes under their current plans. He said: "This election is about a massive question of choice for the British public. It's about whether you have a set of spending plans which Labour have set out which mean, and the Institute for Fiscal Studies says this, that there will be an increase in tax after the election, they estimate GBP11 billion, or whether you choose to have a government which tries to get better value for taxpayers' money, to spend more each year but at a slower rate than Labour would plan and which therefore can reduce borrowing, avoid tax rises, and cut taxes by a modest GBP4 billion in our first budget."
Liberal Democrats (Vince Cable): The Liberal Democrat Treasury Spokesman said that the Child Trust Fund "is not a terribly good use of government money" and that the Liberal Democrats would abolish it. He stated that those who had already received the "baby bond" would not have to pay the money back. He said that the money saved would be used to reduce class sizes. He argued that the Party was not proposing a general increase in taxation but was only raising tax in one area - a 50 per cent rate for income over GBP100,000. He also argued that the average family would be about GBP450 better off under the local income tax.

New NOP poll: An NOP poll has found that amongst people who are intending to vote, more than two to one favoured increased spending on services over tax cuts. John Curtice said that it "suggests that Britain's main opposition party may have seriously misread the nation's mood on tax" (Independent, p.4, p.24, p.25 [Curtice]).

Gordon Brown explicitly refuses to rule out tax rises. Gordon Brown said yesterday: "Nobody is going to make the error - and I hope not even the Conservative Party will make the error that politicians like John Major made in 1992 - of trying to anticipate every possible circumstance" (Times, p.26).

Conservatives dismiss GBP15 billion hidden spending claim. The Conservatives yesterday issued a detailed rebuttal to Labour's claims that the Conservatives had pledged an extra GBP15 billion of uncosted spending commitments. Shadow Chancellor Oliver Letwin said that the extra spending was fully costed within the Party's published spending plans. Mr Letwin also said that some of the policies identified by Labour cost less than Labour claimed, such as the extension of the right to buy. Labour claimed that extending the right to buy to housing association homes would cost GBP443 million although the Conservatives say that the policy would be revenue neutral. Carl Emerson of the Institute for Fiscal Studies said on the Today programme that if the Conservatives can find all the savings that the James Review says they can, then the Party's tax plans are affordable. He said, however, that the IFS had not looked at the James Review savings in detail.

The Times publishes a letter from Phillip Oppenheim, Exchequer Secretary to the Treasury in 1996-97. He writes: "Too much taxation reduces growth and the economy's ability to finance greater public spending. From 1979 to 1997, tax fell substantially as a proportion of GDP, helping the economy and productivity to grow faster than our main competitors (even manufacturing grew significantly), financing substantial rises in public spending. Since 1997, the tax take has gone up, productivity increases have fallen below those of comparable countries, our much-vaunted economic growth has been disproportionately dependent on the public sector and private consumption rather than productive investment." He concludes: "The choice is not lower tax or higher spending; it's tax too much and you will end up with less to spend. It's a shame the Conservatives are entering the election seeming not to understand this message themselves, let alone getting it over to voters" (Times, p.16).

New tax on new housing. The Guardian reports that a "roof tax" will be unveiled after the election in Milton Keynes. The scheme will require developers to pay the planning authority a tax of about GBP20,000 for each house to get permission for new development. The paper reports that a senior planner who has advised the Government said that a "roof tax" could soon be rolled out across the country (Guardian, p.10).

Waste: Ministerial special advisers cost the taxpayer a record GBP360,000 for foreign trips last year (Times, p.29).

This tax media summary was extracted from Reform's daily media summary, which can be subsribed to at www.reform.co.uk or by e-mailing katy.turner@reform.co.uk.

Letter to the Telegraph

2005-04-12T12:43:00.000+01:00

The Daily Telegraph has an excellent leader today arguing that tax "must be central to every voter's decision on May 5". It goes on to advocate raising the income tax threshold to reduce tax "for all Britons, and for the hardest-pressed families most of all."

The TPA has sent in a letter responding to the leader:

SIR - Raising the income tax threshold is indeed a good starting point for reducing tax bills (Comment, Apr 12) because freezing thresholds has been the biggest postwar 'stealth tax' of them all. Had the 1954 threshold increased in line with inflation for the past fifty-one years, people would not pay income tax until they earned more than GBP25,000, in contrast to the current personal allowance of GBP4,895. Both Labour and the Conservatives are committed to saving the GBP22billion of wasted spending identified by Sir Peter Gershon. This would be sufficient to increase the personal allowance by GBP3,437 to just under until GBP8,500 - a vote winning policy, if ever there was one.

Media summary - Monday 11 April

2005-04-11T16:42:00.000+01:00

Every working day, Reform, the independent public policy think-tank, publishes an excellent media summary which can be viewed on their website or subscribed to by email. Here are the tax stories from today's summary:

Business believes Labour will raise taxes. A MORI poll of 200 finance directors in today's FT finds that nine out of ten believe that Labour will raise taxes after the election. 49 per cent believe that the Conservatives have "the best policies for business" compared to 23 per cent for Labour and 4 per cent for the Liberal Democrats. 58 per cent of the finance directors said they would vote Conservative, 26 per cent Labour and 14 per cent Liberal Democrat (FT, p.1).
Hamish McRae on tax competition. In the Independent on Sunday, Hamish McRae argued that international tax competition can be regarded "as a crucial discipline on governments that waste taxpayers' money. Given the pressure on politicians to spend more, the only real discipline is to deny them the funds to do so. You force efficiency on the public sector, the argument runs, by denying it the money to spend" (Independent on Sunday, Business, p.13).
Roger Bootle on flat taxes. In the Sunday Telegraph, Roger Bootle noted that a combined income tax and NI flat tax would be 33 per cent. He argued that to reduce that rate would require the abolition of allowances and exemptions: "But delivering such a radical reform would require an unusual combination of political vision and self-discipline. It is easy for politicians to 'be generous' by introducing some allowance that supposedly helps some deserving group or other. With each 'good deed', though, the tax system becomes more complicated... . Still, we should not underestimate the scale of what could be achieved. After all, the Labour Party will go into this election with a pledge not to increase the basic or higher rates of tax from 22 per cent and 40 per cent. Before Mrs Thatcher, a Conservative government imposed a top rate of tax of 75 per cent" (Sunday Telegraph, Business, p.4).
Labour to say that Conservative spending plans leave a GBP15 billion black hole. The Government will today release a Treasury-costed estimate that the Conservative manifesto contains commitments to an extra GBP15.7 billion of spending by 2007-08. The estimate is drawn from 23 different spending commitments made by Shadow Cabinet Ministers (Guardian, p.1).
Conservatives expected to announce tax plans this week. The Telegraph reported on Saturday that the Conservatives are expected to announce their final pledges on cutting tax during the week. These are expected to include reducing income tax for lower and middle income workers and a lifting of the inheritance tax threshold from GBP263,000 to well over GBP300,000 (Telegraph, Saturday, p.8)
Allegations that Labour plans to increase National Insurance. On Saturday, the Mail reported that the Government has changed the rules that "ring fence" National Insurance contributions. It recalls the rise in National Insurance after the 2001 election and suggests that Labour will do the same again if re-elected (Mail, Saturday, p.6).
Volunteers to receive council tax discount under Labour plans. The Guardian reports that the discount will be for people who take time out to care for older people or to work in their local community (Guardian, p.4).
Fred Harrison argues in favour of taxing land rather than income. In the Guardian, Fred Harrison argues: "We should untax people's wages and savings: conventional taxes inflict deadweight losses on incomes. Instead, public services could be funded out of rents that people were willing to pay for the benefits they enjoy at a particular location. That is efficient. Productivity would rise and speculation in gains from land would fall. It is also fair. It is the voluntary, self-assessment approach in which payments are direct and proportionate to the public services people want to use ... . Politicians of all parties should champion a simple ad valorem charge on the location value of all land - excluding improvements such as buildings. A high enough rate would end boom and bust cycles and establish a new relationship between citizen and the state. The interface between the public and private sectors would be redefined, and many of the disputes that divide our communities would be resolved" (Guardian, p.25).
Business prepares to face new swathe of red tape. An article in the Telegraph looks at the extra burden placed on businesses by laws enacted last week before Parliament was dissolved. These include 10 significant pieces of legislation establishing over 100 new rules in the fields of labour relations, pay and gender. The biggest single costs from recent legislation are associated with the introduction of a maximum 48 hour working week for the haulage industry which will cost operators, according to the Government's own estimates, about GBP1 billion a year and create a need for 21,000 new drivers. The law firm Sweet & Maxwell has also calculated that over the past two weeks alone, more than 200 statutes and statutory instruments in the field of commercial law have been implemented. The British Chambers of Commerce highlights a 46 per cent rise in the number of new regulations over a 12-month period, bringing to a total of GBP40 billion the cost of regulations on business since Labour came to power. This figure is hotly disputed by the Treasury (Telegraph, p.31).
Sunday Mirror poll. The paper noted that the Observer poll showed that 56 per cent agreed with the statement: "Government services such as health, education and welfare should be extended, even if it means some increase in taxes." Only 15 per cent thought that "taxes should be cut, even if it means some reduction in government services, such as health, education and welfare".
David Cameron says that the Conservatives will do most to help the poor. The Observer reported that David Cameron said that tax levels were now "absolutely holding back" the least well-off. He said that good state education, clean hospitals and more police" matter most to the people in the country who have the least. If you are very rich you can buy your way out of bad education and put a security guard at the end of your street" (Observer, p.5).

Child Trust Funds

2005-04-07T08:54:00.000+01:00

There's a TPA article in the Yorkshire Post today about the Child Trust Fund scheme, which went live yesterday. Unfortunately it's not available on the Internet, but I can email it to anyone who's interested in reading more.

In recent months the Government has been at the mercy of events, buffeted from pillar to post by Iraq, the Conservatives and internal feuding. But in one policy area it has displayed impeccable timing and control. From yesterday, to coincide with the start of the official election campaign, families up and down the country with children under the age of two-and-a-half will gain access to their new Child Trust Fund.

Under the 'Baby Bond' scheme, as it has been dubbed in the press, every child born after 1 September 2002 has received a GBP250 lump sum to invest or deposit in a bank account, with those born to parents on low incomes receiving an additional GBP250. Parents, relatives and friends can then put an extra GBP1,200 a year into the fund tax-free, which becomes available to the child on their eighteenth birthday. The Government plans to add another payment on the child's seventh birthday and is considering a third payment when the child enters secondary school.

Through the scheme, the Government is effectively handing out GBP1billion to almost 2 million families the day after calling the general election. Coming in the same week as the conviction of six Labour councillors in Birmingham for postal ballot fraud, 'electoral bribery' does not seem too strong a phrase to describe the timing, particularly as both the Conservatives and the Liberal Democrats have expressed serious misgivings about the scheme. Such blatant political opportunism should not, however, surprise us because it has characterised the Government's whole approach to welfare and the public sector.

TPA in the Express today

2005-04-06T08:54:00.000+01:00

The front page story of the Express today is about a lady who walked free from court after fraudulently claiming GBP30,000 of income support, council tax relief and housing benefit even though she had savings of more than GBP70,000.

Matthew Elliott, chief executive of the TaxPayers' Alliance, described Patel's treatment by the court as "astonishing". He said: "Taxpayers will be astonished that such a flagrant benefit fraud should go unpunished. Benefit fraud costs taxpayers GBP2billion a year. Letting cheats off scot-free casts a bad light on genuine benefit recipients. Courts need to take a tough line to make other fraudsters think twice before ripping off taxpayers."

Tax Pledge article in the Sunday Times

2005-04-03T13:44:00.000+01:00

The Sunday Times published an article launching the Tax Pledge 2005 campaign today. The campaign is supported by IsItFair, eight council tax groups and The TaxPayers' Alliance and is asking candidates to pledge vote against tax increases if they are elected to the next Parliament. More news will be posted as the campaign progresses.

TPA coverage in the Express

2005-03-31T10:57:00.000+01:00

In today's Express (p11), a report on how travellers living in illegal sites are being given free advice to launch discrimination cases quotes TPA Chief Executive Matthew Elliott saying: "The police should spend more money ensuring travellers behave responsibly and less on PR excercises informing them of their rights. Unless the Government starts treating ordinary taxpayers and travellers equally, the recent disputes will only get worse"

ASI blog shortlisted for Guardian award

2005-03-29T15:59:00.000+01:00

The Adam Smith Institute's blog has been shortlisted for the Guardian's political weblog award. Make sure you cast your vote in the blog Oscars today!

TPA letter in the FT

2005-03-29T15:34:00.000+01:00

The TaxPayers' Alliance letter in response to Martin Wolf's article on why 'Big spending does not mean less growth', was published in the Financial Times today.

How to sell a Flat Tax to Tony Blair

2005-03-29T12:18:00.000+01:00

Flat Taxes are suddenly back in fashion. When I spoke to a well-known centre-right economist about Flat Taxes shortly before the Pre-Budget Report, they said to me: "I support them in principle, but I think it's about 120th on the list of things Britain needs to do." Fast forward six months and the media is full of Flat Tax stories.

This debate has been initiated by the spate of East European countries adopting a Flat Tax - the latest being Poland - and the question of how (high) progressive tax West European countries can compete with their new (low) Flat Tax neighbours.

Leading the way for a UK Flat Tax is the Adam Smith Institute: first with Andrei Grecu's Flat Tax: The British Case (November 2004) and now with Richard Teather's A Flat Tax for the UK: A practical reality (March 2005).

Commenting on Teather's pamphlet in the Daily Telegraph today, Christopher Fildes calls it "The Tythe Plan", after the tythe - 10% of income - that used to go to the local church. Seeing as all the Abrahamic religions - Christianity, Judaism and Islam - embrace the concept of tything, perhaps this is the way to sell a UK Flat Tax to our notoriously religious Prime Minister.

Press summary: Tuesday 29 March

2005-03-29T10:17:00.000+01:00

The blanket coverage of the Howard Flight affair continues in Tuesday's newspapers (Financial Times, The Times, Daily Telegraph, Guardian, Independent, Daily Mail, Express, The Sun, Mirror). All of them agree that the on-going situation is damaging Michael Howard. Only the Daily Mail attempts to put a positive spin on the affair by headlining their article "How New Labour's new lies backfired."

Writing in the Daily Telegraph, Charles Moore supports Michael Howard's decision to take the whip away from Howard Flight, arguing that "no employee in a business could expect to stay in the company if he said that the business's product was wrong or that its advertisements were untrue."

In the Independent, Stephen Richards looks ahead to after the general election when "the Tories can have their much-needed row about tax and spending." He rightly says that there "is still an eager audience for Howard Flight's views among Tories who seek a much smaller state." The same is true of the general electorate.

Philip Stephens, writing in the Financial Times, suggests that the story indicates that "Whatever else one says about the Tories, two defeats and 15 years on they still walk in the Lady's shadow."

Giving an economic perspective to the debate for The Times, Gary Duncan argues that the situation is "a symptom" of the lack of debate between the major parties on taxation and public spending. "Bizarrely, the Tories, whose Shadow Chancellor is Oliver Letwin, have declared what amounts to a virtual non-aggression pact with the Government on the tax-and-spend issue. Their strategy is to fight Labour on its own territory, confining the fiscal fight between the parties to a silly scrap over their proposal for a derisory GBP4 billion tax cut - less than 1 per cent of total taxation. The consequence of this is that both sides spend most of their time exaggerating the almost non-existent differences between their economic platforms in an insult to the electorate's intelligence."

Christopher Fildes discusses the Adam Smith Institute's new Flat Tax pamphlet in his column for the Daily Telegraph.

Irwin Stelzer argues in The Times that Gordon Brown "does not yet understand how to equip his nation to play in the unforgiving game of international competititon."

"So, work late, earn a bit more, and turn 40+ per cent of it over to the Government when you earn it, and another 17.5 per cent when you spend it. No one can blame anyone who decides that the net benefit of that extra effort just isn't worth the trouble. Which may explain why Britain continues to trail in the productivity league tables."

Press summary: Thursday 24 March

2005-03-24T11:53:00.000Z

In a wide-ranging article for The Times (p21) on the general election, Anatole Kaletsky argues: "Both polling and common sense suggest that tax cuts would not in themselves be much use in wooing voters today. What the Tories need is not tax cuts but an alternative vision on how to meet the great social challenges of the future - health, education and pensions."

Comment: Whilst Kaletsky is right to argue that low taxes should be part of a wider agenda of reforming public services, he is wrong to underestimate the desire for lower taxes. A TPA/YouGov poll published ahead of the Budget clearly shows that a tax cutting agenda would be popular, with 44% of voters wanting to see taxes and spending reduced after the next election and only 12% wanting to see them increase.

The second item of yesterday's Newsnight focused on the rise of the Flat Tax and the general competitiveness of East European countries. The report included a 'lively debate' between Tim Evans of the Centre for the New Europe and John Monks of the European Trade Union Confederation.

Comment: Over the past few months, the British media has woken up to the rise of Flat Tax across the world and even the BBC carried a positive report on it last night. Poland has recently adopted a Flat Tax and the socialist government in Spain is said to be considering the introduction of a Flat Tax. After the general election, there is a real possibility that the introduction of a British Flat Tax will become a big talking point.

Figures released by the ODPM yesterday show that council tax bills will rise by more than twice the rate of inflation this year and even bigger increases are predicted next year when homes are revalued (The Times, report p1, commentary by Tony Travers p29)

The Government yesterday tried to present Conservative councils as high spenders by moving to cap the budgets of nine authorities which have posted inflation-busting council tax rises. The increases range from 9% in Aylesbury, Buckinghamshire, to 100% in South Cambridgeshire and have prompted ministers to claim that the councils had posted high increases in the hope of being bailed out by a Conservative government. Sir Sandy Bruce-Lockhart, Chairman of the Local Government Association, said that the councils capped were "low-tax and low-spend" and that the LGA "totally opposed" the decision" (Guardian, report; Daily Telegraph, p8)

Writing in The Times (p21), Michael Howard defends the Conservatives against Labour's accusation that they want to "cut" government spending by GBP35billion. "If those are cuts then I'm a banana."

The Daily Mail (p8) reports that spending on advertising and PR by the Government is likely to exceed GBP300m for the second successive year, making Whitehall Britain's biggest advertiser.

The Daily Telegraph has a very good special supplement today on inheritance tax.

Response to Martin Wolf

2005-03-23T17:49:00.000Z

At first sight, Martin Wolf's case in today's Financial Times that 'More public spending does not lead to slower growth' appears very conclusive. The graph is clear and the use of OECD figures makes it seem impeccable. However, I will not be giving up the battle for lower taxes.

First of all, it seems unusual to plot a single year's government spending/GDP figures against an average of a decade's growth and output figures, as Martin Wolf did. I would be interested to see figures which compared like with like, a year to a year or a decade to a decade.

Secondly, a recent study from the OECD found that every percentage point increase in taxes as a share of GDP reduces per capita output levels by between 0.3% and 0.6%. And a recent UK Economic Outlook report (February 2003) by PricewaterhouseCoopers, found that every 1 percentage point of GDP increase in distortionary taxation reduces economic growth by between 0.2 and 0.4 points a year. Perhaps Martin Wolf will give us his views on these papers in a future article.

Press summary: Wednesday 23 March

2005-03-23T10:15:00.000Z

All the newspapers report figures, released under the Freedom of Information Act, that reveal the Common Agricultural Policy subsidies paid to some of the country's richest people. The biggest landowners - including members of the Royal Family, dukes and agrifood companies - receive millions of pounds a year from the European Union. Tate & Lyle tops the corporate league with more than £127m a year and the Queen received £545,897 last year.

The Times leader describes the CAP as "an obscene arrangement" which inflates the annual food bill for a family of four by £600 and urges the Prime Minister to "highlight the monstrosities of the CAP on every occasion." The Guardian leader says: "Europe needs a long-term programme to phase out subsidies completely and to use part of the money saved to manage the countryside in the interests not only of the farmers." (The Times, article p4, graphic, leader p17; Guardian, article, leader)

Comment: In the Bumper Book of Government Waste 2005 (p15), the TPA calculated that Britain gives over £1.9bn a year to overseas farmers. Britain's net contribution to the EU budget is currently £4,300m a year. About 45% of the EU budget is allocated to the Common Agricultural Policy (CAP), which means that £1,935m of our net contribution went to subsidising farmers in other European countries, including £88m for tobacco farmers.

A top Treasury official revealed to a private meeting last week that it is transferring as much as £138m every fortnight to the EU. Chris Austin, the official who oversees the Treasury's European union finances, revealed the figure at a private meeting of the Federal Trust held in the offices of the European Parliament in London. He also said that since 1984 Britain has contributed £58bn - more than France (£29bn) and Italy £17bn) (Telegraph, p22)

In her Business Editor's Commentary for The Times (p41), Patience Wheatcroft leads on the Chancellor's public sector pension liabilities "time bomb". She reports that, when questioned by MPs yesterday, the Chancellor stuck to his December forecast of the cost rising from 1.5% of GDP in 2003-04 to 2.2% in 2053-54. Since the government suspended its plans earlier this week to raise the retirement age from 60 to 65, having been threatened by 1.5million public sector workers going out on strike today, these figures are now out of date. They were based on calculations that reflected the mid-point between retaining the present rules and raising the pension age to 65. Now the reforms have been suspended, Wheatcroft says the figures are more grim.

Speaking to MPs yesterday, the Chancellor dismissed accusations that the Treasury coerced the Office for National Statistics to adjust official data to give a £3bn boost to public finances (The Times, p44; Guardian, report)

The launch of the Economic chapter of the Conservative manifesto is covered in many of the newspapers. Michael Howard pledged match the Budget "sweeteners" announced by Gordon Brown last week and make additional tax cuts of £4bn in its first year (Daily Telegraph, report)

Labour's private polling figures suggest that 66% of voters do not believe that the Tories would be able to find £35bn in savings from waste in public services if they form the next Government (Independent, report)

Comment: A YouGov poll for the TPA last week found that over half of voters - 52 percent - believe that the Government wastes more than £20 of every £100 it spends overall. With public spending forecast to top £520billion in 2005/06, this suggests that the majority of voters believe that the Government wastes over £100billion each year. It is worth noting that a European Central Bank report estimates Government waste in Britain to be as high as £83billion each year.

Martin Wolf argues in the FT that higher government spending does not lead to lower economic growth (Financial Times, opinion)

TPA op-ed in Yorkshire Post

2005-03-22T17:28:00.000Z

The TPA has an op-ed in today's Yorkshire Post (p11) on how 'MPs must lead the way on pension reform'. Unfortunately it's not on the website, but an extract is reproduced below and I will happily email a copy of the full op-ed to interested readers.

"It wouldn't have looked good, 1.5million local government workers going on strike just weeks before the election. The public sector trade union UNISON has played its cards like an old-pro. By calling a one-day strike, they forced the Government to suspend talk of public sector pension reform, but the issue will not go away. John Prescott may have given a written promise to withdraw plans to raise the retirement age for public sector workers from 60 to 65, but pre-election promises can be forgotten. The government after the next government will have a choice: to address the public sector pension liability or to lose their credibility for economic competence."

TPA response to Tory tax plans: "Stop Erring"

2005-03-22T11:37:00.000Z

This morning the Conservatives published the Economic chapter of their manifesto. Much of it is good. They criticise Labour's 66 tax rises (without mentioning Tim Yeo's pledge to introduce the proposed EU aircraft fuel duty); they lambaste the 60% increase in spending on running government since 1997; and they include a useful chart showing how low tax English-speaking countries enjoy higher growth rates than high tax Euro zone countries. "The lesson is clear," they write, "low tax economies grow faster than high tax ones."

The problem is, they do not propose any policies that would move Britain towards becoming a low tax economy. Even the wording of the manifesto betrays this. The five point summary of their economic policy commits them to "create a lower tax economy" (p2 of the pdf) and Michael Howard's introduction talks about "value for money and lower taxes" (p3). There is a big difference between 'lower taxes' and 'low taxes'. The Tories should cut out the erring and propose more substantial tax cuts to create a low tax economy.

Press summary: Tuesday 22 March

2005-03-22T09:43:00.000Z

An ICM poll for the Guardian (p1) suggests that taxation and public services (11%) is the fourth most important issue for voters after health (27%), education (18%) and law and order (14%). The poll found that Labour enjoys a 10 point lead over the Tories on tax and public services, with 35% thinking the government is putting forward the best policies, to 25% for the Conservatives and 13% for the LibDems. Gordon Brown's budget has made 20% of voters more likely to vote Labour in the election, 14% are less likely to vote for the Government and for 61% it will make no difference. According to the Guardian, the poll confirms that economic competence "remains the Tories' achilles heel, and when the detailed results are correlated against voting intention, appears to be the most important factor in shaping people's voting patterns."

Stephen Pollard (The Times, p18) rightly lampoons the Conservative's support for an EU fuel duty that would increase the cost of flights by GBP3.50-7. Shadow Transport Secretary Tim Yeo said yesterday: "If I was in office on May 6 I would want to straight away talk to my colleagues in Europe about how we could make progress towards a fuel tax." Pollard concludes: "If Mr Yeo's neo-Heathite approach to business success is what lies in store under the Conservatives, roll on that third defeat."

Prof Peter Spencer, of York University, told the Commons Treasury committee yesterday that Gordon Brown is unlikely to meet his "golden rule" in the current economic cycle and, looking forward to the next cycle, due in 2006-07, the margin for error is simply too tight. Martin Weale, of the National Institute of Economic and Social Research, said that it was generally agreed that tax rises were on the cards. Predictions of GBP10-15bn were "probably" correct (Daily Telegraph, p2) .

The Daily Mail (p2) reports figures in the Budget Red Book that suggest Britain will overtake Germany as the biggest contributor to the EU budget following a GBP1.7bn jump in contributions, taking the total to GBP4.3bn. Germany, in comparison paid GBP4.1bn to Brussels last year and the figure is expected to be the same this year. The Leader (p12) concludes: "How can this Government continue to pretend that close European integration is in our national interest?"

A major study published by the Royal Economic Society suggests that children do "sizably and statistically significantly worse in both maths and English" when they use computers several times a week in school. The Government has earmarked GBP2.5bn for school computers and pledged a further GBP1.5bn in the future (Daily Mail, p37).

A new report suggests that the identity card scheme may cost more than double the current GBP3.1bn estimate (The Times, p2).

The Daily Telegraph (p23) has an obituary for John DeLorean a "Dody car manufacturer who relieved successive British governments of GBP78million of taxpayers' money".

TPA quoted in The Sun

2005-03-21T18:01:00.000Z

The Sun splashes this morning on "Gipsies' GBP30m handout". The TPA is quoted in the article. An abbrieviated version of the piece is here. "Matthew Elliott, chief executive of the TaxPayers' Alliance said: "Decent hard-working taxpayers who have seen their tax bill soar in recent years will be horrified. Travellers seem to be getting special treatment. If paying less tax, getting more benefits and being exempt from planning laws isn't enough, they are now having additional cash showered them. The Government should treat people equally and put the interests of taxpayers first."

Reaction to the Budget

2005-03-20T23:20:00.000Z

Unsurprisingly, the Sunday newspapers contain a more thoughtful and considered analysis of the Budget than the instant reaction in Thursday's newspapers.

David Smith argues in the Sunday Times (Business, p4) that the budget "was definitely not a bang, and only just qualified as a whimper." He points out that there were few individual tax measures of any significance and suggests that "After eight years, either Brown has run out of ideas or he has decided that he has tinkered enough." Commenting on the council tax refund for pensioners financed by timing changes in oil companies North Sea tax payments, he writes: "Pensioners, the main budget beneficiaries, have votes. Oil companies don't."

Andrew Rawnsley argues that "politicians of all parties have already indicated an intention not so much to win votes as to buy them" (Observer, p29). Whilst conceding that Gordon Brown "did not indulge in an extravagant giveaway", he says that "his performance was still striking for the unashamed manner in which he lunged at particular segments of the market." Rawnsley also criticises the Liberal Democrats for targeting first time buyers by raising the threshold of stamp duty and the Conservatives for offering a discount on council tax bills for the elderly. He says that the Conservatives message in contradictory. "From one mouth of the Tory Party, Michael Howard scorned Labour's sweeteners as unaffordable. From the other, the shadow chancellor said he would match their chips and shovel more on to the table."

Matthew d'Ancona's column for the Sunday Telegraph (p21) argues that "the true political significance of this Budget did not lie in its pre-election gimmicks" but in "communicating that only one party can now deliver economic stability." Ministers see the public's general sense of economic prosperity as Labour's best hope of a third substantial election victory. D'Ancona also questions the Conservative's 'Vote now, pay later' slogan. "Today's electorate, already immersed in personal debt and habituated to living on the tick, may not find the warning 'Vote now, pay later' as frightening as their parents might have. Indeed, the may find it positively appealing."

Other interesting Budget reactions

2005-03-20T14:16:00.000Z

Is It Fair founder Christine Melsom has branded the Budget's one-off GBP200 council tax refund a pre-election bribe. "The refund for pensioners is an obvious attempt to buy pensioners votes", she said, speaking to the Sunday Telegraph (Money, p4) on behalf of the council tax protest group. "While we are fully aware of the difficulties faced by many pensioners, and welcome any help for them, there was no help for the many hard working families who have struggled for years to keep up with the relentless inflation-busting hikes in council tax."

Gordon Davidson, the joint managing director of Jupiter, welcomed the Budget announcement that the existing Isa limits will be extended until 2010 - a year longer than had been expected. However, speaking to the Sunday Telegraph (Money, p4), Davidson said that it was not all good news for savers. "On the one hand, the Government has said it wants to encourage greater saving but at the same time it has made it less attractive to do so by abolishing the dividend tax credit."

The Council for Mortgage Lenders has calculated that the doubling of the threshold at which stamp duty is payable from GBP60,000 to GBP120,000 will do little to help people get on the housing ladder (Sunday Times, Money, p7). Last year 83% of first-time buyers paid stamp duty. The figure is expected to fall to about 48% as a result of the chancellor’s decision - still much higher than the 22% who paid when Labour came to power.

Inheritance tax threat

2005-03-20T14:06:00.000Z

Writing in the Sunday Times (Money, p2), Kathryn Cooper criticises the imminent changes to inheritance tax rules which mean that over 30,000 families who have set up complex trusts will face the stark choice of paying an annual penalty of GBP20,000 or leaving their heirs to pay the IHT they have tried to avoid. "The government likes to portray people who try to shelter their family homes from death duties as greedy tax evaders. But many are just ordinary people capitulated into the inheritance-tax net by the relentless rise in house prices. It is only natural that they want to pass some of this wealth on to their heirs free of IHT through trusts."

The 35 billion pound row

2005-03-20T11:57:00.000Z

The political analysis in Sunday's newspapers is dominated by the on-going row over the Conservative's proposals for GBP35billion "cuts" in government spending in 2011-12. In contrast to the prevailing opinion in Friday's newspapers that Labour's attack has backfired, many newspapers today turn their fire on the Tories.

The Business' leader (p15) argues that "The Tories ... have only themselves to blame for the Labour smear: it is absurd that a party which believes in the market economy is even talking about what it would spend in 2012, the unfortunate consequence of having a jejeune Shadow Chancellor in Oliver Letwin, who belongs in a think-tank rather than the Tory front benches."

Peter Hitchens, writing in the Mail on Sunday (p31), argues that the "Useless Tories" have been "reduced to marginal squabbling about how much, rather than how or why" taxpayers' money should be spent on public services. "Once, the British people would have had a chance to decide whether they preferred to spend their own money or let the State spend it for them. Not any more."

Roger Bootle, in his weekly Economic Agenda column for the Sunday Telegraph (Business, p4), rightly points out that "The Conservatives' planned slowdown in the growth of government spending is quite mild and would leave spending in the UK relatively high compared to other English speaking countries." The column includes a useful bar chart of government spending as a percentage of GDP in English-speaking countries. The UK sits at 41%, ahead of Canada and New Zealand at 39%, the US and Australia at just under 36% and Ireland at 34%. "This, rather than free bus passes for pensioners, is what the Budget should be about. It will surely form the battleground for the coming election."

William Keegan's column in the Observer (Business, p12) says: "I sniff the whiff of revenge in the way Labour has seized a figure of GDP35bn for putative 'Tory spending cuts' in years to come. The GBP35bn rankles with Labour; the Tories, in two previous elections, made much of the threat of GBP35bn of tax increases under Labour, to devastating effect." He also has some advice for the Conservatives. "I feel it is difficult for the Conservatives to have it both ways - warning of tax increases under Labour because of the alleged state of the finances, while promising tax cuts, should they win the election, from the very same budgetary finances."

Peter Kellner, Chairman of YouGov, challenges the assumption that Labour's attack had backfired. Quoted in the Sunday Express (p12-13), he argues that "What Labour is doing is a mirror image of what Chris Patten did with Labour's 'double tax whammy' in the 1992 election, when he was chair of the Conservatives. The issue then was not what the different parties were actually proposing, it was the general sense that maybe Labour would take money out of your pockets and not give anything back to you. What Labour is trying to do is to sow the seeds of doubt about what the Tories would do with public services if they got back in. You don't have to believe that the Tories will cut that particular sum, just that they might spend a bit less on health and education. On the whole, Labour will be happy that the issue got quite a lot of coverage and airtime in the media."

No doubt this row will continue as the election campaign progresses.

New Poll reveals public scepticism about Budget tax cuts

2005-03-16T17:01:00.000Z

A YouGov poll published by the TaxPayers' Alliance to coincide with the Budget reveals that most voters see Gordon Brown's tax cuts as a short term electoral gimmick rather than a long term strategy for sound public finances.

50% of voters think that Gordon Brown was more concerned by "short term priorities such as the forthcoming general election" when planning his Budget, with only 15% crediting him with taking a "long term perspective of maintaining sound public finances."

54% think that Gordon "cannot prudently cut taxes" and only 27% think that his tax cuts today are prudent.

91% believe that taxes will go up if Labour wins the election - 35 percent think they will 'go up a lot' and 44 percent think they will 'go up a little'.

These findings suggest that voters see today's Budget as an 'Election Budget' rather than a 'Prudent Budget.' Voters want fiscally responsible tax cuts, not a pre-election giveaway followed by tax rises after the election.

Full details of the poll can be found here.