With the UK budget scheduled to be unveiled on March 20th, Chancellor George Osbourne is receiving lots of advice on what to do. So I will throw in my 'two-pennorth worth'.
Essentially there are three problems. The UK is over-taxed, lacks economic growth and is over-stretched, debt and deficit wise.
I hold to the opinion that economic growth and tax reductions are self-supporting. Cuts in taxes (however these are labelled) will stimulate growth. There has been talk of further bouts of Quantitative Easing - where the Bank of England prints 'money' and pumps this into the economy. I still hold to the view that the only way such inflationary measures will work is if you actually put the money printed, directly into the hands of consumers. Please don't tell me that the BofE buying government debt is benefiting the economy (I will return to this later).
So to tax cuts and economic growth.
Firstly, let's do something simple about employer National Insurance Contributions (NIC). Though how something that is compulsory can be called a 'contribution' escapes me. So, how about this. Effective from the day that this is announced, any Small, Medium-sized Enterprise (SME) that engages a new employee, will be able to enjoy a 5 year NIC holiday for that employee. In my mind, an SME is one that employs less than say 500 people. That should help stimulate employment growth and reduce a cost burden on companies.
In fact, let's take it one stage further, and extend the holiday, until the new employee's 25th birthday. So either 5 years NIC holiday or until the person reaches 25 years of age, whichever is later.
Secondly, be bold! Reduce the basic rate of tax to 15% and accelerate the raising of the tax thresholds. Raise the threshold for 2013/14 to £12,000 and, here is the crafty bit, enshrine in the budget a commitment to raise it in the next 5 years by £2,000 each year. I appreciate that this may provide a dilemma for the Labour party - will they oppose or finally stand-up for low-paid taxpayers? This might flush out who it is that they actually represent - the workers or the shirkers!
Third, reduce the next rate from 40% to 38%, again, with a commitment to reduce this by 2% per year for the next 5 years. That might help the squeezed middle class that politicians bleat about so often but rarely actually do anything about!
Fourth, eliminate the 'green taxes' that are currently imposed, with immediate effect. These economically insane charges merely transfer money from masses of people to an ever-richer few. The taxes can never work in reducing so called greenhouse emissions, the science on so-called global warming is being daily discredited (and exposed for its untruths) and the UK acting unilaterally is plainly madness. Sorry Britannia but you no longer rules the waves and while you saddle your people and companies with ever higher energy prices, the rest of the world is getting on with making a living!
Fifth, and this is where the equation starts to balance out and where we address government debt. Commence a programme of real cuts in government expenditure. In all departments, take the 2010/11 out-turn as the basis and cut all expenditure by 10% in the coming year and enshrine 2% cuts in expenditure for the next five years. Again, challenge the tax and spend socialists to decide on whose side they are on - the tax payers or the public service unions?
Sixth, abolish the Department for the Environment and Climate Change - completely. Oh and this is over and above the savings from the preceding paragraph!
Please stay with me, not far to go now.
Seventh, Include a measure that with effect from after the 2015 election, MPs expenses will be subject to the same tax rules as those of the rest of the population. That is, the benefits in kind that they receive (free or subsidized transport, meals and housing support) are taxed just as they would be if these privileged few were treated the same as the general population. Some may say this is unfair but since those standing for election know the terms and conditions under which they will be employed, I suggest we ignore their complaints. Remember their basic salary is more than two and a half times the national average wage.
Eigth, Local Government - commencing with this fiscal year, set a limit of minus 5% on council taxes - so they must cut council taxes by at least 5%. Those that don't will see the central government grant being reduced by the amount that they would have had to reduce expenditure to afford this cut. Again, enshrine this in the budget and see the socialists and their fellow tax and spend travelers squirm.
We must get to a stage where tax increases - income, NIC and council taxes - are not considered natural, quite the reverse. We have come to a stage where a council pats itself on the back if it keeps a council tax increase down to inflation levels. That is plain wrong - what we need is cuts and continuously so - councils, like government, need to get out of the way and only do the things that the individual can't do.
Ninth, tell all government departments to re-negotiate all of their PFI deals, with a minimum target reduction of 20% in PFI fees required. If these can't be achieved because the financiers won't play ball, then cancel the contracts. Walk away and give them back their schools, hospitals and government office blocks and make a court date!
Tenth, ensure that the budget includes a measure that states that if the recently 'won' EU budget cuts are not approved by the European Parliament, then the UK will immediately cease all payments to the EU - all payments. Please don't even bother to talk about democracy and such, in the same breath as the EU, EU Commission or EU parliament and that such an act would be undemocratic. These people need to understand that we, the people, have had enough. There is no more money, as Liam Byrne said. There is no more gravy train. No more is going into the trough!
OK, so maybe this, when run through the various Treasury models, won't be cost neutral but since we are increasing the deficit anyway, isn't it better to do so, in order to put money into tax-payers pocket's? That is my kind of Quantitative Easing!
Essentially there are three problems. The UK is over-taxed, lacks economic growth and is over-stretched, debt and deficit wise.
I hold to the opinion that economic growth and tax reductions are self-supporting. Cuts in taxes (however these are labelled) will stimulate growth. There has been talk of further bouts of Quantitative Easing - where the Bank of England prints 'money' and pumps this into the economy. I still hold to the view that the only way such inflationary measures will work is if you actually put the money printed, directly into the hands of consumers. Please don't tell me that the BofE buying government debt is benefiting the economy (I will return to this later).
So to tax cuts and economic growth.
Firstly, let's do something simple about employer National Insurance Contributions (NIC). Though how something that is compulsory can be called a 'contribution' escapes me. So, how about this. Effective from the day that this is announced, any Small, Medium-sized Enterprise (SME) that engages a new employee, will be able to enjoy a 5 year NIC holiday for that employee. In my mind, an SME is one that employs less than say 500 people. That should help stimulate employment growth and reduce a cost burden on companies.
In fact, let's take it one stage further, and extend the holiday, until the new employee's 25th birthday. So either 5 years NIC holiday or until the person reaches 25 years of age, whichever is later.
Secondly, be bold! Reduce the basic rate of tax to 15% and accelerate the raising of the tax thresholds. Raise the threshold for 2013/14 to £12,000 and, here is the crafty bit, enshrine in the budget a commitment to raise it in the next 5 years by £2,000 each year. I appreciate that this may provide a dilemma for the Labour party - will they oppose or finally stand-up for low-paid taxpayers? This might flush out who it is that they actually represent - the workers or the shirkers!
Third, reduce the next rate from 40% to 38%, again, with a commitment to reduce this by 2% per year for the next 5 years. That might help the squeezed middle class that politicians bleat about so often but rarely actually do anything about!
Fourth, eliminate the 'green taxes' that are currently imposed, with immediate effect. These economically insane charges merely transfer money from masses of people to an ever-richer few. The taxes can never work in reducing so called greenhouse emissions, the science on so-called global warming is being daily discredited (and exposed for its untruths) and the UK acting unilaterally is plainly madness. Sorry Britannia but you no longer rules the waves and while you saddle your people and companies with ever higher energy prices, the rest of the world is getting on with making a living!
Fifth, and this is where the equation starts to balance out and where we address government debt. Commence a programme of real cuts in government expenditure. In all departments, take the 2010/11 out-turn as the basis and cut all expenditure by 10% in the coming year and enshrine 2% cuts in expenditure for the next five years. Again, challenge the tax and spend socialists to decide on whose side they are on - the tax payers or the public service unions?
Sixth, abolish the Department for the Environment and Climate Change - completely. Oh and this is over and above the savings from the preceding paragraph!
Please stay with me, not far to go now.
Seventh, Include a measure that with effect from after the 2015 election, MPs expenses will be subject to the same tax rules as those of the rest of the population. That is, the benefits in kind that they receive (free or subsidized transport, meals and housing support) are taxed just as they would be if these privileged few were treated the same as the general population. Some may say this is unfair but since those standing for election know the terms and conditions under which they will be employed, I suggest we ignore their complaints. Remember their basic salary is more than two and a half times the national average wage.
Eigth, Local Government - commencing with this fiscal year, set a limit of minus 5% on council taxes - so they must cut council taxes by at least 5%. Those that don't will see the central government grant being reduced by the amount that they would have had to reduce expenditure to afford this cut. Again, enshrine this in the budget and see the socialists and their fellow tax and spend travelers squirm.
We must get to a stage where tax increases - income, NIC and council taxes - are not considered natural, quite the reverse. We have come to a stage where a council pats itself on the back if it keeps a council tax increase down to inflation levels. That is plain wrong - what we need is cuts and continuously so - councils, like government, need to get out of the way and only do the things that the individual can't do.
Ninth, tell all government departments to re-negotiate all of their PFI deals, with a minimum target reduction of 20% in PFI fees required. If these can't be achieved because the financiers won't play ball, then cancel the contracts. Walk away and give them back their schools, hospitals and government office blocks and make a court date!
Tenth, ensure that the budget includes a measure that states that if the recently 'won' EU budget cuts are not approved by the European Parliament, then the UK will immediately cease all payments to the EU - all payments. Please don't even bother to talk about democracy and such, in the same breath as the EU, EU Commission or EU parliament and that such an act would be undemocratic. These people need to understand that we, the people, have had enough. There is no more money, as Liam Byrne said. There is no more gravy train. No more is going into the trough!
OK, so maybe this, when run through the various Treasury models, won't be cost neutral but since we are increasing the deficit anyway, isn't it better to do so, in order to put money into tax-payers pocket's? That is my kind of Quantitative Easing!
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