As David Cameron pledges to ease the burden on UK taxpayers, what should he tackle first?

FISCAL DRAG
After a decade of tax rises, David Cameron is finally talking about tax cuts. But as you might expect of a politician who made “sharing the proceeds of growth” his slogan, his language is all wrong. He talks about putting money back into people’s pockets; it was in people’s pockets before the government removed it! While the list of desirable cuts is long, a good start would be to deal with under-indexed tax thresholds, which have left more people vulnerable to punitive taxes. Higher rates of stamp duty are likely now paid on most London property transactions; the inheritance tax threshold has not kept up with inflation; and middle earners are being dragged into the higher rate tax band. Addressing this fiscal drag would probably use any fiscal adjustment that Cameron has in mind. Thereafter, it would be nice to see the abolition of stamp duty, inheritance tax and capital gains tax. Perhaps next year. Philip Booth is a professor at Cass Business School, and editorial and programme director at the Institute of Economic Affairs.
STAMP DUTY
All taxes are damaging, but some are worse than others. The damage wreaked differs across taxes and rates. So when the government looks at how it can relieve the burden on taxpayers, it should pay attention to which taxes cripple the economy most relative to the revenue they raise for the Treasury. Stamp duty is one such tax where the surprisingly small revenues do not justify the comparatively heavy economic hit. A recent study suggested that the housing market is much more sensitive to stamp duty rates than previously thought, choking transaction numbers by 20 per cent for every percentage point of the tax on home purchases. Walbrook Economics estimates that ending the “cliff edges,” by making the higher rates only apply to amounts over the thresholds, would be fiscally neutral. With the housing market heating up, pushing the average British home into the punitive 3 per cent band this year, action on stamp duty is overdue. Rory Meakin is head of tax policy at the TaxPayers’ Alliance.

Philip Booth

Philip Booth is professor of insurance and risk management at Cass Business School, and editorial and programme director at the Institute of Economic Affairs.

Monday 08 December 2014
BRITAIN has just celebrated “Small Business Saturday”. Perhaps yesterday should have been declared “Multinational Monday”.
Thursday 27 November 2014
Philip Booth, professor of insurance and risk management at Cass, and editorial and programme director at the Institute of Economic Affairs, says Yes.
Monday 24 November 2014
FALL-OUT from the Autumn Statement next week is likely to focus heavily on the slowdown in deficit reduction.
Wednesday 08 October 2014
THE LIBERAL Democrats have proposed raising capital gains tax (CGT) rates in order to reduce taxes on the least well off. Go to the back of the class! CGT is a bad tax implemented badly. There is no more revenue to be raised.
Wednesday 17 September 2014
In denying the Scots the option of devo-max on the ballot paper today, David Cameron made arguably the most monumental mistake of any recent premiership. And whatever the result of the referendum, that mistake cannot be undone.
Tuesday 19 August 2014
Colin Stanbridge, chief executive of the London Chamber of Commerce, says Yes.
Monday 18 August 2014
PROPONENTS of Bitcoin like to suggest that it will be the money of the future. Critics point to its price volatility, evidence of a Bitcoin bubble and other problems.
Thursday 24 July 2014
There is no shortage of concern about the UK’s large balance of payments deficit. Many in the government are trying to solve it by cajoling British companies to export more with lots of new fancy schemes and initiatives.
Tuesday 03 June 2014
IN THE Queen’s Speech today, the government is likely to give the go-ahead for large pension schemes along Dutch lines. Such collective defined contribution schemes have many advantages.
Monday 12 May 2014
NO MAJOR UK political party is interested in a radical decentralisation of power. The Conservatives, in particular, are scarred by their experiences of “loony-left” councils in the 1980s, and we certainly don’t want to go back to those days.
Wednesday 30 April 2014
TWO fallacies are common in the EU debate. One is the “nirvana fallacy”, the idea that, if we leave the EU, we will have optimal policy at home.
Thursday 27 March 2014
IT IS not entirely unwelcome that the energy industry has been referred to the Competition and Markets Authority (CMA) by Ofgem. It may lance a festering boil; it may do some good.
Tuesday 07 January 2014
WE HAVE little detail of pensions minister Steve Webb’s proposals to allow pensioners to switch between annuity providers in the same way that they can switch between mortgages.
Wednesday 18 December 2013
MUTUALS and co-operatives have been promoted as the acceptable side of business by both arms of the coalition. Nick Clegg has lauded the Waitrose and John Lewis model.
Thursday 31 October 2013
BARELY a day goes by without a government attack on the private sector. Yesterday saw the publication of a report proposing charge capping for pension funds.
Monday 16 September 2013
ECONOMISTS should be humbled by Friedrich Hayek’s famous plea: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” If only government and central banks – and those who lobby
Friday 23 August 2013
ONCE again, a major mis-selling scandal has broken out, with 13 high street banks and credit card issuers facing a £1.3bn redress bill for mis-sold card protection policies. No amount of financial regulation seems to stop the flow.
Tuesday 16 July 2013
WITHIN two years of entering the European Economic Community (EEC) in 1973, there was strong public support for Britain’s membership.

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Rory Meakin

Rory Meakin is research fellow at the TaxPayers’ Alliance.

Wednesday 03 December 2014
Rory Meakin, research fellow at the TaxPayers’ Alliance, says Yes. Finally! Yesterday, the chancellor at last ditched the awful “slab” rate structure for stamp duty on homes.
Monday 03 November 2014
Ben Gummer, Conservative MP for Ipswich, says Yes. This is an important day for taxpayers and for democracy – and that’s a big claim for a single sheet of A4.
Wednesday 09 July 2014
Take That’s Gary Barlow has again been reported to have participated in complicated tax avoidance schemes. And as ever, discussion on the subject has been clouded by inaccurate reporting.
Tuesday 01 July 2014
JUST days after the House of Commons Public Accounts Committee published a damning report, describing tax authorities as “unable to cope” with the number and complexity of UK tax reliefs, it has emerged that the chancellor is considering abolishin
Wednesday 14 May 2014
THE LONGER Pfizer’s attempt to take over Astrazeneca remains in the political spotlight, the more intense and worrying the pressure on the government is becoming to extract guarantees about what the combined company would and wouldn’t do in Britai
Tuesday 17 December 2013
ED MILIBAND was right to identify the housing affordability crisis as one of Britain’s most important policy challenges in his speech yesterday.
Tuesday 08 October 2013
TAX simplification is back on the agenda, thanks to Simon Walker, director general of the Institute of Directors.
Tuesday 03 September 2013
MOST agree that the UK housing market has long been stuck in an affordability crisis.
Friday 23 August 2013
STAMP duty has to be a good candidate for the most stupid, destructive and illogical of the UK’s many taxes. Residential stamp duty raised £4.2bn in 2011-12, just 0.8 per cent of the government’s total tax revenues.
Tuesday 25 June 2013
IT HAS been six years since the financial crisis began, and the government’s books are still in a mess. As the chancellor prepares his latest Spending Review, public sector borrowing will yet again exceed £100bn this year.
Friday 17 May 2013
THE Public Accounts Committee offered about as much to the debate on tax avoidance yesterday as a hot air balloon offers transport. No clear direction, not a lot of movement, but a lot of hot air.
Monday 19 November 2012
AS GEORGE Osborne approaches his Autumn Statement, there’s reason to hope he may finally do something about a tax albatross that hangs around the necks of employers and workers alike: national insurance.

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