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March 21, 2006

Ooooh, Polly!

Yes, wondrous, La Polla writes again on matters economic. What fun!

Ernst & Young is quoted all over the rightwing press with a spurious calculation that households now pay "the equivalent of" £9,000 extra tax under Labour. Weasel words, "the equivalent of". That would be the case only if every household earned the same and paid the same taxes, rolling in business and all other taxes. But that's nonsense in this wildly unequal society.

Err, all taxes are paid by households. Just as all income flows, in the end, to households.

Digby Jones, business's strident platoon leader, protests about "rising" corporation tax with equally bogus figures. But Labour cut it by 3% in 1999, and it remains the lowest in the G7 - lower even than in the US - and plumb in the middle of the EU 25.

Oooooh, dear. The amount of corporation tax paid does not depend solely upon the rate at which it is levied. You also have to take into account exemptions, allowances, depreciation rates and so on. Given that the amount raised in Corporation Tax has been rising, difficult to see that NuLab cut anything but the rate, isn’t it?

The most bizarre complaints warn that the chancellor's tax-avoidance clampdown is in danger of frightening off the mega-rich and their businesses. Siren voices warn that if he tightens the screw too hard, he will end up collecting less, not more, as the rich depart for tax-havens.

Well, lessee. Does that actually happen? Is Mrs. (Phillip) Green resident in the UK for tax purposes? No. So it does actually happen then.

It needs trust in government, which semi-anarchic Britain and its poisonous rightwing, anti-state press forever undermines. (Yes, scandals all governments have, in Sweden too.)

Trust in Government? With Lord Drayson around? Yeah, right.

This budget may be steady-state on tax and spend, celebrating a soft landing after minor turbulence, but how it would raise spirits if the chancellor would suggest Sweden as the chosen model for his coming time.

What is the big piece of legislation that Blair has just been defeated over? The Education Bill. Why? Because The Labour Party simply cannot stomach the idea of schools being free of the bureaucracy. What is the education system in Sweden? A pure voucher scheme.

So, the biggest barrier to the UK becoming more like Sweden? The Labour Party. What does Polly want? The UK to be more like Sweden. Which party does she support? The Labour Party.

Well done dear.

March 21, 2006 in Economics | Permalink

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Comments

I'd like to see a party dedicated to eradicating financial success punishments, and taxing property and consumption instead.

Posted by: Rob Read | Mar 21, 2006 12:10:12 PM

[Given that the amount raised in Corporation Tax has been rising, difficult to see that NuLab cut anything but the rate, isn’t it?]

difficult to see anything if you don't look ... no, the UK remains a low corporation tax country, New Labour have more or less left the tax base alone (apart from the windfall tax in 1997) and the amount raised in Corporation Tax has been rising because (drum roll) corporate profits have been growing!

The £9,000 figure is pretty bogus, to be honest; it is based on dividing the change in the total government revenues between 1997 and 2005 (which is not all down to tax as there is North Sea Oil in there too) by the number of households in the UK (which is also not right as a substantial proportion of the UK's corporation tax base is owned by foreigners who therefore pick up their share of UK corporation tax).

Posted by: dsquared | Mar 21, 2006 1:47:49 PM

(also note that a lot of that tax goes back to households through the benefit system, so even if the £9000 figure was right, the actual "burden" per mythical average household would be lower).

Posted by: dsquared | Mar 21, 2006 1:49:11 PM

So ...
They cut the tax rate, and the tax take went up.
Okay. Real world example. In the UK. In the last few years.

Oi! Cameron! Over here ...

Posted by: Andy Cooke | Mar 21, 2006 7:37:26 PM