Tuesday, September 12, 2006

Redwood Report Calls for Low Taxes

John Redwood's Economic Competitiveness Group will call for lower taxes to boost the economy when it publishes its interim report this week. I suppose John Redwood calling for lower taxes is a bit like a LibDem calling for PR, but nevertheless it presents George Osborne with a tricky problem.

Redwood cites the 61 per cent growth in the Irish economy as a prime case of a successful low tax economy. By contrast Scotland's economuy has only grown by 13 per cent, with a comparable population. I think John Redwood must have been reading David Davis's speeches from last autumn!

Glad to know I'm not the only low tax Tory left in the Conservative Party. So far the only lower taxes mooted by the leadership are abolishing stamp duty on share transactions and a cut in Corporation Tax - both very welcome but unlikely to get the residents of Acacia Avenue, Basildon down to the polling station on a wet Thursday in February.

The Tory challenge is to come up with the tax equivalent of the 1979 manifesto commitment to sell Council Houses. It was the right thing to do and proved hugely popular with the very group of voters which we needed to vote for us if we were to take power. Now David Cameron must repeat the strategy.

19 comments:

Praguetory said...

Cutting taxes is intrinsic to being a Tory. The purge of Howard Flight was disgraceful. I hope those days are behind us.

We need to make the moral, economic and every other case for chopping and simplifying taxes. But let's not start with inheritance and stamp duty. It makes us look like w*****. Combine NI and PAYE and cut the lowest band rates. That's where we should start.

AnyonebutBlair said...

Totally agree, the issue is that the Tories cannot break the "what public service will you cut?" question whenever tax cuts are raised. The public doesn't believe politicians will deliver the cut, doesn't believe that public services can be maintained and doesn't understand that tax cuts=higher economic growth=more to spend on schools n' hospitals. Tax cuts force governments to be more efficient rather than the bloated & inefficient model we currently have in the showroom. The other key issue the tories face is that significant tracts of the north of England and all of Scotland & Wales have been captured by the state and are almost wholly dependant on soviet style state employment, hence will not vote for tax cuts. The state now under Browns vast spending employs a huge number of people who all fear losing their jobs and fat pensions if taxes are cut. Cameron needs to demonstrate the obvious truths and show some leadership

Rigger Mortice said...

comparing ourselves with ireland is dangerous.I saw someone on bloomberg the other day saying that 40% of their lending last year was for buy to letters.dublin is more expensive than London he said.there's a solid business idea,get twelve houses,leverage them up to 98%, sit on a 5% return (if fully let) and wait for the bailiffs.

bubbles always burst

as Brown will find out

Scary Biscuits said...

Iain, You and everybody else seems to forget that we are not re-fighting the 1983 or '87 election but the 1979 one. That is, people are fed up with Labour but still dubious about the Tories.

Selling council homes and public utilities might well have been hugely popular but neither featured in that campaign (the latter hadn't even been thought of in 1979).

If we want to replicate Mrs Thatcher's success in the 1979-83, then we need to be honest about our intentions, not spin them to be something they're not that will remove our mandate to act once in power (as has happened to Blair). We should also articulate our policies so that the working class (who deserted us in 1997) return. It is this group, not women, who are crucial to our success. Only once we've got their vote back on the basics can we claim a mandate for radicially improving their lives with radical ideas like shared equity or schools 'choice'.

James Maskell said...

Completely agree. Cameron is avoiding the hard fights because he doesnt want to be bullied by Labour. He knows what the sharp end of politics is like and he knows how to battle. So why is it that we avoid confrontation and being distinctive, especially on a core issue like taxation? Its pretty sad for a rejuvenated Tory party to be bullied into certain policy positions by a severely weakened Labour Party whose support is shrivelling.

neil craig said...

Dublin is more expensive than London because their economy is doing so well. In 1990 their per capita income was 2/3s of ours. This year it is passing that of the USA. The reforms they did to achieve this consisted of cutting corporation tax, & some regulations, primarily allowing more housebuilding (as Rigor shows not enough). This is not rocket science.

As regards the Irish bubble - people have been confidently waiting for it for 10 years.

Scary Biscuits said...

Rigger Mortice,

You may be right about the bubble bursting in Ireland (and here too). However, there's no doubting the Ireland is a hugely more self confident nation than 20 years ago. Finally, they've stopped blaming the Brits for all their woes and taken charge of their own lives.

Even if the bubble does burst, they will hopefully pick themselves up, modify their policies and try again.

Incidentally, it's this new self confidence that has more to do with peace in Northern Ireland than anything Blair has done. As with Brown on the UK economy, Blair's just surfed a wave that was already coming. (There's not small skill in doing that but it still doesn't make them responsible for the wave.)

The Hitch said...

Mr Mortice
It is about to happen here, this supposed stable economy we have been enjoying is based on debt rather than product,ditto the USA, the day will arrive when our credit is maxed and we can borrow no more then everything will implode all with millions of extra immigrant mouthes to feed.
Were you aware that 30% of our official exports are in fact bogus transactions and part of VAT carousel fruad?
As somebody who earns a living from the debts of others Im rubbing my hands with some of that lovely glee lotion.

Praguetory said...

When inefficent loss-making Czech banks were taken over by foreigners in the late 90s/early 2000s the new owners initially ran a cost minus budget (where all departments were given a fixed cut in their budgets to work to). Next they worked on what is termed a "zero-based budget" where everything in the budget had to be justified (i.e. not enough to say it was there last year). Czech banks are now very profitable enterprises thanks to these painful measures. We need a similar overhaul for UK plc. Sorry to monopolise Iain - but you keep writing interesting posts.

Scipio said...

Iain, yo are NOT the only low tax tory!! I agree with cutting taxes too. So does almost every Tory I know. I suspect that the freont bench do to - but they are just a bit too timid to say so because they think that they will get a hammering from the lefty press!

Anonymous said...

I've never understood economics and I suspect that I'm not alone so I have a question.
If government keep cutting taxes at what point do they not have enough income to provide services for those who cannot afford them?

James Maskell said...

Cut down on the waste (and there are tens of billions of pounds worth of waste that can be eliminated) and you can make some pretty substantial cuts without hurting frontline public services. There have been a couple of big reports on this identifying savings that can be made.

Theres no real reason why the Conservatives cant be more aggressively in favour of taxes.

Anonymous said...

There is cutting taxes, and there are cuting the right taxes, both for maximum effect on voters and because it is the right thing to do.

We can start with the iniquitous tax called the Licence Fee; get rid of the licence fee and all of a sudden a whole swathe of Labour chav voters, who couldn't care less for the BBC, rightly so, come over to the Tories. It's a no lose situation.

Then there is road tax: raise the tax on fuel by 2p and scrap road tax..with all the savings on admin etc. and those who use more pay more ...yadda...yadda, you know what I mean. Again a no lose situation.

This is just the basic vore grabbing stuff before we got on to the nitty gritty of real macro-economic policies.

Anonymous said...

Had to make a quick comment on various other comments:

(((Finally, they've stopped blaming the Brits for all their woes and taken charge of their own lives. )))

Why are you all, seemingly, goong on about the Irish success? Of course they have a booming economy and are confident, and so would we if we had been sucking EU dick for thirty years for the massive subsidies and internal investment they have been getting from the EU.

I agree with the comments that say we need to be radical. The whole tax system needs to be drastically rethought and simplified, and frankly we need to BUY the respect and trust of the voters..just like parties have always done.

Cameron needs to be radical...just like Thatcher was FROM 1979, and if some get hurt in the process then so be it, because that is the real world.

Why is Cameron not making more capital out of the fact that Bliar and New Labour, with Brown as the no2, is privatising the NHS, education and transport? I know we would have done it, but WE DIDN'T! They did, and the electorate needs to realise that. The electorate needs reminding of what happened in the mid to late seventies.

Cameron needs to get back to basics with the tax system and explain in simple terms to the electorate just how bad Bliar and Brown have done, and the same with the NHS. The Tory party shys away from telling it like it is, and they shouldn't.

neil craig said...

"If government keep cutting taxes at what point do they not have enough income to provide services for those who cannot afford them?"

They will always not have enough money to provide everything people want somebody to buy them. However there is very little real poverty* which is why government can now afford servies like subsidising windmills & farmers. In economic terms such subsidies cost far more in taxes than they can ever pay & distort the market in a way which means they can have no role in generating long term wealth whereas taxes certainly destroy long term growth.

It is difficult to be sure but since Ireland's EU subsidies largely went into agriculture it is unlikely they were the major cause. Remember also that the UK has been subsidised by nature in the form of oil.

*I am defining poverty as being poor in absolute not relative terms as the "caring" industry now has to)

Praguetory said...

Anyone who thinks that the main or even a major factor behind Eire moving from 2/3 of UK GDP to 4/3 is a simpleton.

Anonymous said...

Neil Craig, the subsidies haven't been largely to agriculture. The main bulk has been to infrastructure and major development of the whole country, whether that be farming, transport or industry.

Anyone who knows Ireland, and knows business regimes over there, would have to be a simpleton to think their economy would do anything but wither without EU subsidy.

Praguetory said...

As Ireland is shortly expected to be a net contributor to the EU, you will be able to see for yourself, Shotgun. From my perspective their success has been driven by light regulation, business friendly low tax policies plus a strategic focus on high-tech industries such as software. We can learn a lot. Similarly with the beautiful Isle Of Man (which is not a member of the European Union). In the 1980s UK GDP/capita was twice that in the Isle of Man. IOM GDP/capita is now 104% of that in the UK.

neil craig said...

Shotgun you are wrong. The overwhelming bulk of ALL EU subsidies are to agriculture.

One of road building projects get more publicity but they are one of projects.

Those interested should check out
http://www.tcsdaily.com/article.aspx?id=032805E