Why Labour can't increase taxes

After years of saying the tax burden was too high, Labour fought the election on the basis that taxes were too high & they wouldn't put up taxes on working people, wouldn't increase income tax, NI & VAT, & had no plans to put up other taxes

1/14 Who are 'working people'?

Keir Starmer, asked if he fell into his own description of “working man”, replied “yes, I’m a working person, I come within my own definition of a working person, which is earning my living, paying my taxes and knowing what it means to save money.”

Says Labour Shadow Minister Lisa Nandy: "At a minimum we should bring wealth taxes into line with income taxes - we go after the wealth... wealth is in assets & that's where we start"

Is Labour's bland & unrevealing manifesto a Trojan Horse, hiding all sorts of tax plans?

1/7 There's a lot of evidence of something odd going on

Earlier positions of Labour leaders point to a strong desire to hike taxes. Less than 3 years ago Starmer said "We're looking at income from property, income from dividends, shares etc. - all of those options are a wealth tax"

It's being floated that Labour may hike CGT but that would not be smart, not least because revenue will fall.

@Telegraph has now revealed the detailed HMRC figures analysing how much will likely be lost.

Last year @RachelReevesMP spoke out against hiking CGT, saying......

1/4 "There are people who have built up their own businesses who maybe at retirement want to sell that business.

They may not have had huge income through their life if they've reinvested in their business, but this is their retirement pot of money."

Fascinating article in @Guardian citing many Labour voters with kids at independent schools who will now not vote Labour because of its tax on education.

People put the interests of childen first.

It's worth taking the time to read the quotes in the thread below:

1/8 “To us, this is a tax on SEN,” said James, a 51-year-old IT manager from Hampshire, whose son is highly dyslexic but didn't qualify for additional state help.

“I have never voted for the Tories, but because of this I can’t vote for Labour," he said.

Labour says its new state company, Great British Energy, will result in lower bills but doesn't explain how

In fact it may result in both higher bills & higher taxes & levies

We can look at what happened in the 1990s when public sector electricity companies became private:

1/6 Electricity prices fell considerably in real terms in the 5 years after privatization - 10% for residential customers, 11.3% for small industrial customers, 17% for medium industrial customers, 16.5% and 6.7% for moderately large & extra large industrial customers.

15 questions for Labour on tax

Based on analysis of earlier statements by Labour politicians, advisers & think-tanks, we believe these are some of the key questions that Labour must answer.

1/5 Will you apply National Insurance (NI) to savings, investment & rental income?
Will you extend NI to people over the pensionable age?
Will you extend employer NI to employers’ contributions to pensions?
Will you increase the NI rates paid by the self-employed

Labour is trying to keep its tax policy secret but its outlines can be figured out from the policies developed by Labour think-tanks

Brian Monteith has reviewed those policies and summarised the key aspects of a future Labour tax policy for @MoneyTelegraph

Details below:

1/8 "Labour’s favourite think-tank, the Resolution Foundation, is pushing for a 300% increase in the National Insurance rate on self-employed taxpayers earning more than £50,270.

The hike to 8% would form part of a combined tax rate of 53% – & Labour hasn't repudiated the proposal."

Labour plans to reinstate a £1,073k pension lifetime allowance

55% of any amount above that will be confiscated by the state in a type of wealth tax

So if your pension investments grow too much a large chunk will be taken away in a direct penalty imposed on prudent savers

1/7 Before it weas scrapped by Jeremy Hunt the allowance was frozen at £1,073k since Spring 2021

The amount may seem high, but with inflation at an average level of 6% its real value in 2029 will be some £640k

Labour's tax will dissuade people from saving into pensions

Today Keir Starmer is promoting the extreme high tax agenda of Labour-aligned think-tanks.

He's the keynote speaker at an event to launch the Resolution Foundation's tax-hiking economic plan. Is it Labour's real tax policy?

Below we set out the tax hikes in their full horror Raise the capital gains tax (CGT) rate on shares to 37% & on other assets (mainly real estate) to as much as 53%

Charge CGT on death and on leaving the UK

Hike the basic rate of dividend tax from 8.75% to 20%

(Of course company profits have already suffered 25% corporate tax)

Keir Starmer is endorsing an extreme high tax agenda.

On Dec 4 Keir is the keynote speaker at an event to present the leftist Resolution Foundation's tax-hiking economic plan. Does this reveal Labour's real tax policy?

Below we set out the tax hikes in their full horror Raise the capital gains tax (CGT) rate on shares to 37% & on other assets (mainly real estate) to as much as 53%

Charge CGT on death and on leaving the UK

Hike the basic rate of dividend tax from 8.75% to 20%

(Of course company profits have already suffered 25% corporate tax)

How might Labour increase taxes?

Thread no 2 in series: VAT

VAT is the third largest source of UK tax revenue after income tax & NI

It's thus a key target for tax raisers & indeed the high-tax lobby are campaigning for VAT to be extended

6 ways Labour may increase VAT.

1/X 1. Reducing the VAT registration threshold from £85k to catch many more small businesses.

The argument of the likes of @DanNeidle is that the £85k threshold is a cliff-edge stopping business from growing. But lower the threshold and it would have the same effect on many more.

How might Labour increase taxes?

A series. Firstly National Insurance (NI).

NI is just another income tax but people don’t understand that so politicians think it's an easy one to hike.

A thread on 4 ways Labour may increase NI:

https://twitter.com/CutMyTaxUK/status/1658534677962186752

1. Increase the rate. The last Labour Govt. said it wouldn't increase income tax but then went and hiked NI, (1% each on employees & employers) claiming the money would go to fund the NHS

That was rubbish as NI like income tax goes into the general pot.

10 FACTS ABOUT THE ULEZ TAX

It's all about raising tax revenue for city hall, not about reducing pollution.

Its wider negative impacts have not been accounted for.

We explain in this thread: 1. The inner London ULEZ generated more than £224m tax revenue last year for Sadiq Khan, the BBC found.

A third of the money came from penalty charge notices (PCNs) & the rest from daily charge payments

The expansion of the ULEZ is expected to bring in up to another £300m.

Labour's Shadow-Shadow Chancellor, Angela Rayner, has been growling again about increasing capital gains tax (CGT) and decrying the "gap" between CGT and income tax rates.

Angela needs to be educated on some basic facts about capital gains tax.

This thread tries to help her: It would be good to eliminate the supposed "gap" by bringing income tax rates down to CGT levels, but of course there is no intellectual basis for claiming that capital gains resemble income.

Gains result from taxed income put at risk, whereas income is payment for work.

Excessive taxes on branded medicines supplied to the NHS threaten not just pharmaceutical investment into the UK but also UK patient access to innovative new treatments.

Pharma companies are stepping up their warnings of the long-term effects of these tax rises.

A short thread: The increased tax is "a real risk to inward investment, the UK’s place as a life science destination, and, importantly, threatens our ability to get the latest medicines to UK patients,” said Véronique Walsh, general manager at Gilead Sciences UK

High tax zealots are currently trying to get Labour to commit to a wealth tax.

Recent headlines about massive capital flight caused by Norway's wealth tax have highlighted the foolishness of this approach

This thread details the negative wealth tax experience of many countries More than a dozen European countries used to have wealth taxes, but nearly all of these nations scrapped them, including Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden.

Why?

Former Bank of England Governor Lord King destroys the case for CBDCs - see his analysis in the thread below.

So why is the Bank of England still pressing ahead?

#CBDCs #CBDC #Britcoin "CBDCs are about ways of making payments; they are not a new currency."

"Whether a country needs a CBDC is really about the state of its current payments system," he pointed out in the House of Lords this month..

The House of Lords Economic Affairs Committee has attacked CBDCs, saying that they are a “solution in search of a problem.”

Here we list some of the threats and risks identified by the House of Lords.

A thread:

#CBDC #CBDCs #KeepCash PRIVACY:

“A CBDC system could not support anonymous transactions....

This lack of anonymity is to prevent CBDCs facilitating large-scale criminal activity, and to ensure a CBDC system complies with national disclosure laws that apply to payments"….

7 reasons why a UK CBDC should scare you👇 🧵

It's coming coming faster than you think - educate yourself below 1/ CBDCs mean Central Banks have "absolute control" over any regulations they want + the technology they need to enforce them (via @DowdEdward ⬇️ )

https://twitter.com/DowdEdward/status/1624258852379320320

Fun facts on the UK tax code, the longest in the world.

Its complexity is yet anther way in which tax is holding Britain back. A thread: The UK tax code is over 21,000 pages long and contains over 10 million words.

That's about 12 times the length of the Complete Works of Shakespeare and 12.5 times the number of words in the Bible (800,000 words).

Corporate tax should be zero, points out Stuart Kirk in an excellent article in the FT

Scrapping corporation tax would remove myriad distortions and inefficiencies 1/6 "Companies are generally seen as fair game when it comes to taxes. It looks much better on television to target the global headquarters of a faceless mega-firm than a hard-up family with bills to pay. And therein lies the problem," says @stuartkirk__.....2/6