Tax

Why are Boris’s tax rises so popular?

It is a curious thing to exclude a vast group of generally quite well-heeled voters from funding a policy innovation that they will benefit from more than any other group. One might almost call it blatant favouritism. But Boris Johnson’s plan to pay for a big increase in resources going into social care long-term and the NHS short-term amounts to just that. By opting for a National Insurance increase to fund his proposals, the PM is ensuring that nobody over the state pension age of 66 will have to put their hands in their pockets. Neither will the extra financial burden fall on so-called ‘unearned’ income such as dividends on

Three big problems with the government’s planned tax hike

We are in the middle of a once-in-a-generation shift: working from home. There are skill shortages across the economy, supply bottlenecks, and empty supermarket shelves. A couple of million people are still set to come off furlough, back into jobs that may no longer exist. The labour market is in utter chaos. But, hey, here’s a good idea. Let’s whack a tax on jobs. Really? The government’s widely leaked plan to increase National Insurance, a tax on jobs, could not come at a worse possible time.  The government’s widely leaked plan to increase National Insurance, a tax on jobs, could not come at a worse possible time We can all debate whether

Who first committed ‘cultural appropriation’?

Culture clashes The pop star Adele was accused of ‘cultural appropriation’ for adopting a Jamaican hairstyle for the online Notting Hill Carnival. Who first committed this alleged sin? The concept has been traced to a paper presented by Canadian art historian Kenneth Coutts-Smith at a symposium of the International Association of Art Critics in Lisbon in September 1976 — he used the terms ‘cultural colonialism’ and ‘historical appropriation’. His earliest example didn’t involve black cultures, however, but the Medici adopting an ‘idealised view of Roman Republican Virtue’ in the construction of Florence. Bags of rubbish The mandatory charge for plastic bags is to be doubled to 10p and extended to

The government’s social care reform plans don’t add up

As Covid-19 swept through care homes in the spring of last year, the public watched on with horror and helplessness. About a third of all Covid deaths in England took place among residents of these homes. It was worse overseas. In Spain, care home residents accounted for 40 per cent of Covid deaths last year. In the Netherlands and Sweden, it was around 50 per cent. In Canada, almost 60 per cent. But this doesn’t provide much comfort. Britain may belong to a large club of countries that got their pandemic policy wrong — but the results, regardless, were deadly. The huge holes in Britain’s social care system have been

How do the Tories stop the rise of an ever-bigger state?

When Gordon Brown raised National Insurance in 2002 to put more money into the health service, it was seen as a huge political gamble. The Tories — including one Boris Johnson — denounced the move in furious terms. In a sign of how far to the left the country has moved, the Tories are planning to do something very similar to cover the cost of a social care cap and dealing with the NHS backlog. If the Tories do this, it will put Labour in a tricky position. How do they respond when a Tory government raises taxes to put more money into the NHS? If the Tories do this,

Kate Andrews

What the NHS pay rise says about Boris Johnson’s priorities

Well, that didn’t take long. Two days ago, a leaked report revealed that the government was considering using a national insurance tax hike to pay for the NHS backlog and social care. Now it looks as though the money could be diverted elsewhere.  The anticipated increase of at least one per cent on national insurance would transfer an additional £6bn from taxpayers to the Treasury. But today, the Times reports that £1.5bn of that sum may not go to hip replacements or speeding up the timeline for cancer patients to access treatment. Instead it could help fund the three per cent NHS pay raise, which has been promised by health secretary Sajid Javid. This latest debacle also

James Forsyth

The tax-and-spend Tories

When you ask a government minister why something hasn’t happened, you get a one-word answer: ‘Covid’. It has become the catch-all excuse for manifesto promises not materialising. But in the case of social care, there is a particular truth to it. A meeting last week between the Prime Minister, the Chancellor and the Health Secretary nearly resulted in an agreed policy. A plan was expected this week. Then Sajid Javid tested positive for Covid, putting the three into isolation and the policy on hold. Johnson feels he needs a solution to social care, having promised to solve the issue when he became PM two years ago and again in the

A tax rise for care won’t solve the problem

The tax burden in the UK is nearing a 70-year high — but that’s not stopping ministers from mulling over plans to hike taxes further. According to reports this morning, Boris Johnson and Rishi Sunak are close to agreeing an increase to national insurance to help address the NHS backlog (five million patients in England, and counting). They also want to fill the long-standing black hole in the social care budget: something Johnson promised he’d address nearly two years ago to the day when he first entered Downing Street. The rumours have immediately led to criticism of the government’s willingness to break its manifesto pledge, not to raise income tax,

A minimum corporation tax is nothing to celebrate

So is this what the new era of global co-operation looks like? The EU has agreed to delay the introduction of its proposed digital levy until the autumn to allow negotiations for a global minimum corporation tax. Biden had demanded that the digital tax be dropped, seeing it as a direct attack on US tech giants. In other words, the EU appears keen to compromise in the face of US pressure — something that it would have been less likely to do under Donald Trump. The move makes it more likely that a global minimum corporation tax of 15 per cent will now become reality. Is that a cause to

Should flights be taxed more?

The European Commission is set to propose EU-wide minimum taxes on kerosene, the fuel for planes, as part of their EU energy taxation plans to meet the new eco 2030 targets. However, it remains to be seen if this tax will be agreed by all member states, as taxation issues require unanimity.  A leaked draft from the Commission proposes a minimum tax on flights inside the EU. Freight flights are to be exempted, so as not to give a competitive advantage to non-EU competitors, which could be seen as a muddled approach to satisfy too many objectives at once. And there are alternatives, such as including aviation companies in the

Suddenly used cars are hot property

Companies should willingly pay tax wherever they generate profits — this column has long argued — because it’s fair they should contribute to the cost of the public services on which all business ultimately relies, and because the reputation of capitalism as a whole is tainted when corporate tax bills are reduced to absurdly low levels by the use of offshore domiciles and spurious royalty payments that most governments lack the willpower to challenge. So I welcome at least one half of the G7 finance ministers’ agreement last weekend on a new global corporate tax regime. The half I’m ready to praise is the proposal that all countries should have

How many Lilibets are there in the world?

Rare Lili Other than the new royal baby, is there anyone in the world formally called Lilibet? — There are 141 Lilibets in the US. None have been born since 1999 — when 8 were born, according to the US Social Security Administration. — Lilibet Foster, born in the US Virgin Islands in 1965, is a documentary-maker whose film Speaking in Strings, about the violinist Nadja Salerno-Sonnenberg, was nominated in the 72nd Academy Awards. — In answer to a freedom of information request in 2017, the Office for National Statistics refused to provide a full breakdown of the first names of people living in Britain. But it does publish a

Will the G7 tax deal survive?

What are the chances of the G7’s agreement on a minimum rate of corporation tax actually coming into effect? While it was presented as a done deal last weekend, things are not going too well. Firstly, the G20 will have to agree — which is far from guaranteed given that smaller countries have less to gain from the proposal than the US. It is a tax designed to help countries with a large number of multinational companies who currently operate through subsidiaries in countries with lower corporation tax rates. While no G20 country currently has a rate below the agreed 15 per cent, (and the biggest loser, Ireland, with its 12.5 per cent

Which countries still haven’t had a single case of Covid?

French lessons France’s former president Nicolas Sarkozy was sentenced to three years in jail, with two of them suspended, for corruption and ‘influence peddling’ after seeking to bribe a judge. Some other French leaders who have been convicted in criminal courts:— Jacques Chirac got a two-year suspended sentence in 2011 for setting up fake jobs to claim public funds for political purposes.— Christine Lagarde was convicted in 2016 of making payouts to a businessman while she was finance minister in 2008. She was not punished and went on to be appointed head of the European Central Bank.— In 2020 former PM François Fillon was given a five-year sentence, three suspended,

Martin Vander Weyer

The case for keeping business taxes low

Why should business pay tax at all? That’s a provocative but forlorn question to ask in Budget week. Business pays corporation tax on profits because that’s what voters expect, partly because many are conditioned to believe profit is a sin and partly because all would prefer to pay less tax themselves. Investors pay tax on capital gains because — as the American bank robber Willie Sutton said of his crimes — that’s where the money is. And companies pay more tax as business rates on premises because that’s the easiest way to collect contributions towards public services from which they benefit — but it’s also an easy levy to relieve

20 taxes Rishi should bin

When Rishi Sunak takes to the Despatch Box on Wednesday it will be against a backdrop of colossal national debt, the recent rise in government bond yields and the ongoing Coronavirus crisis. The British state owes £2.1 trillion, ten times the size of the entire economy of an independent Scotland. Yet some concerns over the health of the public finances are misguided – or at least exaggerated. The increase in borrowing to pay for Covid does not itself have to be repaid (at least in the short term). Why? Because provided the government can continue to make the interest payments, debt can simply be rolled over. What’s more, the UK

A proportional property tax would be a disaster

Two of the most unpopular taxes in Britain are stamp duty and council tax, property taxes both, seen as economically damaging and unfair. So it is not surprising there is a noisy campaign, gaining widespread coverage, to abolish them both and replace them with a simple ‘proportional property tax’. The more your home is worth, the more you pay — what could be fairer and simpler? Although well intentioned, this new property tax is a genuinely bad idea. To be revenue neutral for the Treasury, campaigners estimate it needs to be set at 0.48 per cent of the value of the property per year — so that someone with a £1

If taxes must rise, Sunak should pick on private equity instead

It’s not axiomatic that taxes must rise to pay for the pandemic, if you seriously believe the surge in growth, jobs and prosperity that will follow the rollout of a hyper-efficient national vaccination programme will generate sufficient revenues for Rishi Sunak to stabilise the public finances, albeit at the highest level of debt ever seen in modern times. On the other hand, the Chancellor is surely pondering this question: in the current mood of public gratitude for the NHS and government support for the economy, there must be taxes I can tweak that won’t lose sackloads of Tory votes and might chip the peak off the debt mountain — so

Can Scotland afford independence?

How would an independent Scotland have fared during the pandemic? We found out this week on the annual release of Gers, which adds up all Scottish spending and taxes and states the size of the gap. This year it’s estimated at about 27 per cent of GDP, according to the Institute for Fiscal Studies, which would make it the worst-hit country in the developed world. It’s unlikely that a small country could sustain a deficit of this size even in a pandemic: the UK has been hit bad, but we have the pound and the Bank of England’s QE to lower the cost of issuing debt. For a country of five million to run

Italy owes Wales reparations for the wrongs of the Roman Empire

There’s talk of reparations in the air. Lobbyists from around the world are demanding sin-payments from former colonial powers. Let me add my voice to the clamour on behalf of this island’s indigenous Celtic people. My family are from Llanelli in Carmarthenshire and I believe that my compatriots have an excellent case to make against the Roman empire. This is not an extinct claim – the money is still in play. Britain was invaded by Julius Caesar in 55 BC and his visit was followed up a century later by the Emperor Claudius and his mob. The Roman occupation, which involved the military subjection of the Celtic peoples, lasted for