We take a look at tax thinkers' respective takes on General Election 2017.
The Institute for Fiscal Studies (IFS) has published an analysis of what has happened to corporation tax and receipts since 2010. Rate cuts announced since 2010 are forecast to cost at least £16.5 billion a year in the near term, with tax raising measures bringing the net cost to £12.4 billion a year, it said. Under current plans, corporation tax receipts are forecast to be 2.3 per cent of national income by 2021–22, substantially below the pre-recession high of 3.2 per cent. The IFS’ briefing paper can be viewed here. Raising the minimum wage to £10 an hour, another Labour pledge, would cost employers an extra £14.1 billion per year, undoubtedly causing them to lay off workers, pushing up the benefits bill, said the IFS. See link here.
The Institute for Economic Affairs and a group of economists have signed a letter to a newspaper calling for the Conservative Party to keep the tax burden below a third of national income. The letter questions PM Theresa May’s commitment to the Tories being the party of lower taxes. The letter says: "At least five new taxes have been imposed on politically expedient targets such as businesses, banks and soft drinks. This marks an unwelcome departure from [former Chancellor] Nigel Lawson’s aim of abolishing a tax at every budget." The letter is behind a paywall but a report of it can be read here.
The Centre for Policy Studies reports on HMRC statistics which show that onshore corporation tax receipts have increased by 44 per cent since 2011-12, rising from £34 billion to nearly £50 billion in 2016-17. This has rapidly exceeded the Office for Budget Responsibility’s expectations in 2013, which projected that total corporation tax receipts would be just £38.2 billion. See link here.
In a new paper ‘A Pensions and Savings Manifesto’ by the Centre for Policy Studies, one of its experts Michael Johnson outlines some pensions- and savings-related policy proposals for political parties to consider for their General Election manifestos. The policy proposals embrace the pursuit of simplification, transparency, and fairness, both intra- and inter-generational, the organisation claims. The paper puts forward proposals to restructure incentives to save, enhance the Lifetime ISA, and introduce a Workplace ISA to reinforce automatic enrolment. It also reiterates its calls for scrapping of pension tax relief and LTA.
IPPR has set out what it called a ‘series of practical and progressive recommendations for change, to help any and all political parties deliver the change Britain needs to deal with the mounting pressures we face’. Tax wise, it wants to see a hypothecated NHS tax by raising income tax and national insurance for the highest-paid to provide a further £3.9 billion a year to tackle the funding ‘crisis’ in the NHS, and reforming pensions tax relief to deliver a £3 billion a year cash boost to social care. It wants to guarantee a universal entitlement to free childcare for all those aged between two and four, and greater paternity rights for working dads and a new Skills Levy to boost employer investment in skills and lifelong learning, and a youth guarantee for 18–21-year-olds that offers education, training and intensive support to get into work. Click here for more details.
The New Economics Foundation (NEF) published research which it said shows that Britain’s real top earner is property. Over a quarter of the 100 richest people in the UK are gaining their wealth from property, according to analysis of the Sunday Times Rich List. Marc Stears, Chief Executive at NEF, said: “The election campaign has already seen pledge after pledge on income tax, VAT and national insurance. But none of these measures will come close to tackling the real issue, as highlighted by the weekend’s Rich List – huge amounts of concentrated wealth, tied up in land and property.”
In a blog on the General Election on the Fabian Society website, Chris Nicholas who we are told has ‘advised extensively on economic policy and taxation’ wrote: “Successive doses of neo-liberal policies have failed to deliver resurgent growth, investment and new businesses, while compounding the coring out or off-shoring of existing markets and businesses. Meantime the tax system overtly favours unproductive over productive activities while driving businesses to send as much as they can offshore and to bear down relentlessly on workers. All this has significantly increased inequalities; which are now as economically damaging as they are socially pernicious. Meeting these challenges cries out for a new economic strategy in place of failed neo-liberal policies. The cornerstones are bold, co-ordinated industrial, innovation and investment policies; a revolution in lifetime skills and training; housing-property-land reform; and major tax reform.”
Nigel Keohane, director of research at the Social Market Foundation, responded to a TUC report into international trends in insecure work, by setting out in bullet points how the self-employed are exposed to much greater risks and receive far fewer benefit, compared to employees. He said: “Our research has shown that almost half of the self-employed were paid less than the equivalent of the National Living Wage in 2016. They cannot access the genuine benefits of self-employment, yet access no upsides of employment, such as sick pay, access to training, or pensions.” See link here.
Blog by Hamant Verma, External Relations Officer, CIOT