Monday, August 28, 2006

What Conservatives Expect of George Osborne

I've already made my views on lower taxes very clear. I don't always agree with Shipley MP Philip Davies, but on this issue he sums things up perfectly in today's Telegraph...

"We can't tiptoe around the subject. We have to be confident in what we believe: that lower taxes increase economic activity and thus produce a higher tax take. We should not be fighting the battle on Gordon Brown's ground, arguing about how to slice the cake. We should be saying to the public: you have been overcharged for your public services and here is your refund."

In yesterday's Sunday Telegraph George Osborne gave an interview to Melissa Kite in the Sunday Telegraph in which he emphasised again his cautious approach to economic reform. Here are some quotes from the interview...

"What the Conservative Party needs to understand is that we have to be seen as people who can responsibly run the economy. When they come to vote for us, people need to know that their mortgages are safe. We are making a lot of progress on that...Economic stability must come first. Second, there are plenty of other taxes out there [he had earlier ruled out abolishing Inheritance Tax]. It's an amazing fact of Gordon Brown's tax system that the poorest people pay the highest proportion of their income in taxes. One of the things we need to look at is whether we can take low income people out of tax... The Thatcher Opposition promised tax refom, they said they would reduce some taxes but increase others. They did not promise to reduce taxes overall. And indeed, when that government actually came in, Geoffrey Howe's priority was getting a grip on inflation and the tyax burden actually rose. So those who say the Conservative Party is in government a tax cutting party or it is nothing should look at the early history of the Thatcher government."

There are some good points in that, but the last bit is a slight rewriting of history. Let me quote from the 1979 Conservative Manifesto...

"We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap; encourage saving and the wider ownership of property; simplify taxes - like VAT; and reduce tax bureaucracy. It is important to cut the absurdly high marginal tax rates both at the bottom and the top of the income scale."

Is there a single word of that quote which every Conservative could not sign up to today? However, George is right to say that there was also a commitment to raise some taxes. Again, quoting from the 1979 manifesto: "We must therefore be prepared to switch to some extent from taxes on earnings to taxes on spending."

I think all some of us are asking for - and will continue to ask for - is a commitment to reducing the level of the overall tax burden over the lifetime of a Parliament. No one expects huge tax cuts in the first budget of a Tory government. But we do expect a clear signal to be given that Conservatives believe taxes are too high and that under a Conservative Government they will not only be made fairer and simpler, but also lower.


Anonymous said...

Iain I have to disagree. New Labour are in denial about the mess the Government is in. They lie to us and themselves about it. I would want to wait to see how much it will cost simply to put right the mess they have made - before committing to any tax cuts.

Anonymous said...

I don't always agree with Shipley MP Philip Davies

Shame on you Iain....he is an excellent constituency MP

Anonymous said...

Too many still determined to indulge in the game of re-arranging deckchairs on the Titanic IMO.
Apposite quote re: political parties and the MSM:

"They have become so irrelevant to our concerns – especially the not-the-Conservative Party – that they have simply written themselves out of the script. As so often, The Business puts it admirably:

The collapse of trust in political parties is now all but complete. The information revolution – from 24-hour news to the internet – has allowed the electorate a clearer view than ever of politicians who purport to represent them; the reaction is one of informed, rational and heartfelt contempt."

The Remittance Man said...

What we want is less state interference in people's lives and value for money where such interference is absolutely necessary.

Personally if I were DC I'd be commissioning a root and branch re-assessment of every function of government.

Two simple questions:

Is this a valid function of the state to undertake?

If so, what is the most effective way of performing that function.

And any answer to question two that contains computer geek words like "IT" and "database" should automatically be sent back to the researcher with an almighty rocket attached.


Scipio said...

If I was writing the next manifesto, I'd just cut and paste the 1979 one straight in!

Rewarding hard work - excellent principle. Tax what you wish to discourage. Don't tax what you wish to encourage!

Cutting taxes is point of principle. The Government should take only what it needs - not what it wants - and it should ensure it needs as little as possible by ensuring that what it does is done well, and cost effectively.

Governments should approach the issue of tax from the position of fully believeing that it is first and foremost other people's money they are spending, and that in all likelihood, the people whose money it is generally speaking believe that they can spend it better than the Government can.

So, it is not about the Tory party making the case for cutting taxes, it is about the Tory party making the case for not cutting taxes. If we approached the agrument from that perspective, you would be surprised just how many people would go 'they have a point'.

Therefore, I believe that we as a party need to be bolder in making the case for no longer sustaining the unsustainable, and for giving back people some of the power over their own money, and trusting them to spend it more wisely that a profligate government! either we 'trust' the people, or we don't!

The appetite for fat, hungry, costly government has gone. People now understand their role as tax payers and are increasingly happy to question the wisdom of ever increasing amounts paid for little return.

As they say in Germany 'die fette tage sind forbei'!

Anonymous said...

Don't close the book on scrapping Inheritance Tax - even if George has, Gordon may not have.

Although the commentariat has been baffled by Byers kite-flying last week, there is a perfectly good explanation. The Blair camp was flushing Gordo out, guessing it may be one of the blockbuster crowd-pleasing tricks everyone assumes he has up his sleeve for 'when he becomes PM' (yeah, right), along the lines of his Bank of England job in '97.

It ticks all the boxes: deeply popular with the English middle classes (and Iain); cheap (Gordo drops £3 billion in VAT fraud without batting an eyelid); quick & easy to do; annoys the Left (see top-up fees, Trident, nucs, 90-day detention etc etc). Oh - and it would have been a big suprise.

Pre-empted like that, perhaps it gets crossed off Gordo's little list. But it's certainly on the agenda now. What about it, George?

Benedict White said...

Sorry Iain, I thought we had a clear promise that over the term of a parliament that by sharing the proceeds of growth, we would indeed have a lower tax take (relative to GDP) than at the begining.

I personaly favour making the tax system simpler, flatter, and less tax on the poor.

Anonymous said...

I think (though don't know if it would actually work) that we should do away with the 10% tax band all together. That would greatly decrease the tax burden on the poor. We should keep the 22% tax band as it is and also the 40% tax band. However, anyone earning over 150-200k should pay 40% tax on all their income because they are the people who can afford to pay.

Scipio said...

no-one can afford to pay 40%. All that happens is thier salaries het inflated more to compensate.

I think that the obviously poor should be taken out of income tax all together (no point giving in benefits then taking in tax), and then there should be a flat tax of around 25% up to say £100k, and maybe up to another 10% on everything over that.

Scrap inheritence tax and offset the savings needed by scraping John Pisspot!

towcestarian said...

Ardian Yelland et al.

Can we please start to question the meme about the poor not paying taxes. In the same way that it is important that rich people get tax allowances, it is important that poor people pay taxes. If you don't pay taxes, you stop being part of the taxation system and your benefit payments come at no personal expense. If people obviously see they are paying taxes they may well have some appreciation for tax reduction policies. The alternative is having a large swathe of the population fat, dumb and happy and living on benefits

Anonymous said...

Sorry Iain, but in the leadership election I knew David Cameron had won when he spoke about "sharing the proceeds of growth .
I knew David Davis had lost when he advocated tax cuts on Question time.
Have we learnt nothing in the last 25 years! The tories gave us tax cuts and starved public services. Labour is burying us in taxes and red tape to feed the public sector.
Neither the electorate or the tory party were buying that argument as the basis of running the UKplc last year.
The public don't mind paying for their public services,they just want their money spent wisely. Do that and you won't have to make your case for giving them some of their money back.

Scipio said...

OK, some thoughts.

Taking the working poor out of the income tax bracket will enable many of them to get off benefits completly - which is not just about issues of dignity - but is also about getting them out of the welfare trap, where the more they work, the more their benefits are clipped back, and their extra work results in no visable benefit to them, so work ceases to be an incentive. Getting people off benefits (by increasing their income through reducing tax) means they actually have a real incentive to work where they can.

Also, since so much of the tax take comes from comes from indirect taxation, even those who no longer pay income tax will still be part of the tax system and will still be contributing.

This is about fairness to the working poor and fairness to the highly taxed.