Is the Tory tax plan a gift to Gordon?
August 17th, 2007
Are we seeing the start of the general election campaign?
All the information coming out of the Brown camp before June 27th was that his first target would be to push the Tories from the centre ground by forcing them to the right. If that indeed was the plan then there will be delight within Labour this morning.
For the Tory John Redwood policy commission is publishing its findings today and the headline grabbing move is a plan to, as the BBC report puts it, to “abolish inheritance tax because it penalises too many middle-income families. It says rising property prices mean that estates of those who could not in any sense be described as rich” are now above the £285,000 payment threshold.”
It’s the Tories bad luck that the policy group is reporting in the same week as the stock market collapse is leading to suggestions that the upward trend in house prices might go into reverse.
Other key elements of the Redwood plan are aimed at reducing taxes on business with the aim of boosting economic competitiveness - which looks set to be the buzz phrase in the next campaign.
At the heart of Redwood, and presumably Tory thinking, is this from the report: “The evidence in favour of lower marginal rates of tax on income and profits is overwhelming. Countries with very low corporation tax rates have seen businesses grow especially quickly. Far from sacrificing revenue, a substantial marginal tax rate cut can, as a result of business and economic growth, lead to an increase in overall revenue after a year or so.”
The massive challenge for the Tories is that every-time they mention tax cuts that gets translated by the Labour propaganda machine into “Tory plan to slash public services”. Brown is the past master of this.
Will it be as easy for Labour as it has been in the past three general elections to demonise the Tories in this way? That looks set to be the deciding factor.
There’s little doubt, though, that inheritance tax has, with rising property prices, moved from something that only used to concern the rich into an issue that affects large sections of the population, particularly in southern England. It’s here that the Tories have to pick up many of the seats they lost in the Blair land-slide of 1997.
Mike Smithson
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Brilliant move. Am thrilled.
Snowflake 5 from the last thread, thanks but my investment has been in the US and UK and the US has done better.
It’s simple. Tories are talking about tax take INCREASES. They intend to take in more tax than Labour. These are planned tax revenue increases.
It’s a pricing decision. Labour have set the prices/rates at the wrong levels, and the whole country can benefit from the extra tax revenue that can be achieved.
IHT will be replaced by an existing tax CGT - with exemptions on the main home and other longterm assets held for ten years or more. By eliminating one whole tax, the costs of collection and administration will fall too enabling the government to redeploy tax collection efforts onto locating tax avoiders…a huge area of untapped resource. Tax collectors who are deployed into finding avoidance bring in 16 times their salary costs, and yet their numbers have been cut!!!!
Tapestry, do you have a link or some numbers or something to support your claim that scrapping inheritance tax would be a net gain to the treasury?
3. Try Taxpayers Alliance. IHT used to be revenue neutral - it cost as much to collect as it raised.
The British economy is a wine glass economy in which there are ‘millions’ of small businesses at the bottom, and a domination by large corporations at the top. Our middle sized company sector is tiny relatively - the stem of the glass. One reason is that companies sell up to the big boys and don’t bother carrying on growing beyond a certain size.
Countries that permit family wealth to exist like France, Italy and Germany have far bigger middle sized company sectors which are more dynamic than large companies, and create more jobs (they lack the huge small company sector that Britain has, and our dynamic consumers who borrow and spend so willingly). Countries like the USA, Canada, Ireland, Australia with similar consumer sectors to ours are growing at double our rate as people there keep building wealth and their economies benefit and grow faster as a result.
These other countries all have either nil IHT or it is at much lower rates. World average is around 20%. Britain has the highest rate of IHT in the world at 40%, and it seems to stop enough people/families from aspiring to build successful enterpises here. Wealth is not permitted in the UK unles you are a foreigner residing here.
Tory proposals are to replace IHT with CGT which on death is currently 0% but will now have to be paid with certain exemptions. Tbere will still be tax paid as inheritance passes, but not at the current extortionate rate.
You cannot measure economic sectors that don’t exist.
You can see what other countries do, Edmund and that in Britain our government finances are in a mess as we are not growing as fast as we used to do, or as we could. We need people and families to become more entrepreneurial and our economy to be less reliant on large corporations which dominate sectors and put up prices - e.g supermarkets is an obvious example. We all pay a high price for the lack of competition in our economy. We could be so much more dynamic. The rest of the word is passing us by. The elimination of IHT is an important component in enabling more tax to be raised from a more efficient economy.
3. Try Taxpayers Alliance. IHT used to be revenue neutral - it cost as much to collect as it raised.
The British economy is a wine glass economy in which there are ‘millions’ of small businesses at the bottom, and a domination by large corporations at the top. Our middle sized company sector is tiny relatively - the stem of the glass. One reason is that companies sell up to the big boys and don’t bother carrying on growing beyond a certain size.
Countries that permit family wealth to exist like France, Italy and Germany have far bigger middle sized company sectors which are more dynamic than large companies, and create more jobs (they lack the huge small company sector that Britain has, and our dynamic consumers who borrow and spend so willingly). Countries like the USA, Canada, Ireland, Australia with similar consumer sectors to ours are growing at double our rate as people there keep building wealth and their economies benefit and grow faster as a result.
These other countries all have either nil IHT or it is at much lower rates. World average is around 20%. Britain has the highest rate of IHT in the world at 40%, and it seems to stop enough people/families from aspiring to build successful enterpises here. Wealth is not permitted in the UK unles you are a foreigner residing here.
Tory proposals are to replace IHT with CGT which on death is currently 0% but will now have to be paid with certain exemptions. Tbere will still be tax paid as inheritance passes, but not at the current extortionate rate.
You cannot measure economic sectors that don’t exist.
You can see what other countries do, Edmund and that in Britain our government finances are in a mess as we are not growing as fast as we used to do, or as we could. We need people and families to become more entrepreneurial and our economy to be less reliant on large corporations which dominate sectors and put up prices - e.g supermarkets is an obvious example. We all pay a high price for the lack of competition in our economy. We could be so much more dynamic. The rest of the word is passing us by. The elimination of IHT is an important component in enabling more tax to be raised from a more efficient economy.
On the Tories’ strategic problem about tax and spending, I think they’re going to have a hard time persuading people that they can get something for nothing - even if it’s true. (In this case I’ve got no idea if it is or not, although instinctively I’d be sceptical.)
I can’t imagine many people buying either the laffer-curvish stuff about tax revenue increasing as tax rates fall or about there being lots of wastage about which can be painlessly cut without reducing service levels.
Their best bet is probably to ape the Labour 1997 plan but in reverse: Start by basically accepting current the Labour settlement on tax and spending, but carve out a few symbolic, specific, properly-costed, easily-understood exceptions: a couple of spending programmes they are prepared to argue should actually be cut, and a corresponding (fairly small) tax cut for somebody. “A penny off income tax, paid for by closing all the school swimming pools and selling the land to property developers” or something.
Not sure exactly what they should cut, but the point is that they get to choose it and explain it to the public - as opposed to all this “reduce waste and red-tape” and “lower taxes bring more growth” stuff, which even if was properly costed is impossible for the public to evaluate - and therefore, in this case, impossible for the public to believe.
Test, you are easily thrilled!!!!
Will it help the poor?
cut in IHT will help many people who have worked hard all their lives and want to pass it on to their kids. ordinary working people are now caught in the net due to house prices. this is a big vote winner
compare this to browns tax grab from the very poorest when he abolished the 10% rate. this si good news for DC
I’m not sure this is a ‘gift’ to Gordon. Those people who hate this tax most, are probably going to vote Tory anyway, it may pull in a few marginal voters, but thats all.
There will only be one real issue in the forth coming election, Gordon or David, errrr thats it really.
The fact that its Redwood, could be the start of the rights fight back, Redwood has leadership ambitions, we all know that. Could be that we will see a Blair/Brown type rivalry in the Tory Party: ‘At last the David & John show’ ‘Redwood versus Deadwood’ who knows!
As Redwood identifes, a threshold around £300,000 traps many quite ordinary people (and their families, of course, so it is many votes per estate), some of whom might even believe that tax will be levied on the whole amount and not just the excess.
The way for Labour to counter this is not to raise the spectre of cuts in services but simply to raise the threshold one, two or even three hundred per cent. This shoots the Tories’ fox nicely and means any campaign for abolition (were the Conservatives daft enough to continue) can be spun as the Tories looking after their super-rich friends.
The danger for Labour is, as Ken Livingstone remarked after the pre-1992 income tax proposals, that MPs for Northern and Scottish constituencies might not understand the situation and aspirations in the South, leading them to do nothing. As house price inflation has spread, this is perhaps less of a risk.
One imagines the LibDems might follow the local angle, exempting houses below a local or regional average.
It is interesting that gifts to political parties are exempt. Who’d have thought it?
I think the fact that this policy group and announcement is associated with John Redwood is the real gift. When New Labour was forged there was a clear break with a number of old policies, but the people associated with this process were by and large also new.
I think Cameron’s mistake has been to rely on the Redwoods and the Heseltine’s for these policy groups. These were the Tories that were kicked out in 97 and they draw a clear thread between the old Tories and Cameron’s Conservatives. I think bringing in so many of these old characters was a short term hit, but stored up problems in the longer term in that even the sight of Redwood’s face provides a negative reaction among a lot of 40 something non-political people I know.
There is a lack of pool of people on the Conservative benches to push forward the Cameron agenda, or Cameron doesn’t feel strong enough to wholly break from the past yet. I can’t help but think that either way having Redwood parade these policies demonstrates Cameron weakness. Redwood could be offer unlimited free care for the elderly and still lose votes.
2 Million families could benefit - that could take in around 8 Million voters then.
Not a popular tax either as it’s fear of the unknown, a big bill turning up in the post for tens of thousands of pounds when you have recently buried your parents doesn’t sound like my idea of fun?
Tapestry, I looked at the Taxpayers’ Alliance site - they say the thing is bringing in (”only”) £3.6 billion. They reckon this could be saved by reducing government waste elsewhere, which may be true, but that’s very different from saying it’s revenue-neutral in the first place.
Also not sure about the connection you make with IHT and people/families being entrepreneurial; Knowing I was going to inherit a load of cash from my parents in the future wouldn’t do much to motivate me to risk my time and money now building a business; Conversely, of all the reasons why I’m trying to start my own business, passing the money I make to my kids in 40 or 50 years time is a pretty minor consideration… But maybe that’s just me…
BTW, 40% is by no means the world’s highest; Over here the upper rate of inheritance tax is 70%, and we still have a fairly robust family business / small business sector - though like France, Germany etc, the economy here has been far less vigorous than the UK over recent years.
I think a much better argument against inheritance tax is that it’s so widely avoided and encourages people to waste time and money on accountants so that they don’t have to pay it…
The Daily Mash’s take on the market collapse.
http://tinyurl.com/3yxh6r
Although there is a ‘right-wing’ meritocratic argument for IHT as well as the obvious egalitarian argument, there’s polling evidence that IHT is unpopular, so in itself it’ll be popular to promise to abolish it. Like Edmund I don’t think people will buy the idea that it’s revenue-neutral to do it, and vaguely saying that getting rid of waste will pay for it is an old chestnut which people have heard too often - they believe that all politicians are wasteful by definition.
Because most people only pay IHT once or twice in their lives, if at all, it’s not something they think about much. So although I think it will be popular as far as it goes, if the Tories can only plausibly promise to reduce one personal tax, they’re probably mistaken to seize on this one. It’s also very much a southern issue - the number of houses in Nottingham worth significantly over £385,000 is very small.
7 - of course it will help the poor. How many poor people can presently afford to get on the housing ladder? If they get to inherit tax free shares in their parents’ property, they will now have the chance not to rent all their lives.
You know what hurts the poor? Gordon Brown eliminating the 10% tax band and using a hopelessly complex tax credits system that leads to the vulnerable being threatened if they don’t “give back” money the government assured them was theirs.
Tories are now the social justice party, and Brown’s mantra is “squeeze the poor until the pips squeak”
I just don’t understand why Cameron is letting Redwood near the TV cameras. He is such a liability for them, yet he seems to be personally presenting their economic policies. Even if there is some good stuff contained in the report, the public just takes one look and sayd “oh god, its that weirdo Redwood” and that drowns out everything else.
A right-wing Republican teeth-gnashingly praising Hillary:
http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article2274285.ece
I understood that Osborne said on the 10 o’clock news that he didn’t support the removal of IHT? It would apparently all depend on circumstances at the time.
Most people understand that tax has to be collected and IHT has to be as painless as it gets. Your spouse can inherit tax free as can charities and your children £300,000. Whether the 6% of children inheriting from wealthy parents without tax is a more popular cause than extra money for education pensions or the NHS remains to be seen. If I was an ad agency working for one of the political parties I know which I would find easier to sell.
MY MY …The Tories are getting an easy time on Radio 4 this morning. The apology a couple of days ago on earlier coverage seems to have been taken to heart by the editors in charge today.
Could all this have been part of the Tory strategy? Draw the criticism with last weekend’s leaks, attack the BBC’s coverage, thus preparing the ground for today’s big announcement.
IHT, or the threat of it, now affect vaste swathes of the population. even if, as Nick correctly points out, that it will only be a real issue once or twice in anyones life it is a very emotive issue amongst the older generations. it is simply put a big vote winner.
Test. Most children inherit from their parents sometime in their 50’s so I can’t understand your argument that it helps people get on the property ladder?
20 I think you mean they are getting fair hearing dont you? it just sounds like an easy ride because it differs from the normal sneering BBC coverage.
Osbourne, who i normally find very weak, was excellent today on radio4.
21 IHT does not affect vaste swathes of the population it affects very few people . The number of estates affected in the last year I saw figures for was 30,000 and the majority of those had only a small liability as it is only paid on the value of the estate above the threshold .
@0. Mike. I think the Tories have been reading Cambells book. Lesson one; Demand an apology from the BBC!
PS Osborne is having a very uncomfortable time on Today having to justify Redwoods plans. “Will reducing inheritance tax increase tax revenue as John Redwood has claimed?”…….. The strategy of these ‘commissions’ puts people like Osborne in an impossible position. He can neither ’sell’ their work nor argue against it
From reading the comments on here and watching the coverage in the media this morning, it seems to me that the biggest danger in this report is that a lot of people - average punters and more active followers of politics alike - are perceiving these proposals to be Tory policy already. That’s the result of publishing the proposals so publicly. Any cherry-picking will be presented by opponents as a U-turn or evidence of party infighting.
I’m not sure I agree about the comments re John Redwood. He’s certainly not the most telegenic MP in the house, but in a month’s time how many people will remember his connection with the report? I do think it’s more a case of substance over style.
As for the proposals themselves, the IHT plan has obviously caught the headlines - and rightly so. I agree with John L that Labour does have the opportunity to shoot the Tory fox by raising the threshold substantially before the election (assuming it’s not in October). Even so, I don’t think they will in this case: it’s already been increased a moderate amount and IHT is still popular with the sort of people who are Labour activists. I remember a debate about it at a Social Housing conference (bizarrely!), where a lot of Guardian-reading types were incredibly animated in their passion to see it increased much further.
16
We should remind ourselves, that it was a ‘desire’ to help the poor get on the property ladder, that has led to the present market turmoil.
There will always be people, who will find staying in the property market difficult, they will always be exposed to downturns in the economy. When these downturns occur paying the mortgage, will not be easy, even impossible.
22
Taking up that point, as people live longer, the boomers will live on average well into their eighties, therefore inheritance will not take place until their children will be in their 50’s or even 60’s. The demands for health care will be such, that much of the inheritance will be needed to pay for geriatric care. Geriatric care which is going to become more and more expensive.
In my own case, I had to sell my mother’s property to pay for her nursing home, so bang went the inheritance. I’m sure, that some political party, will pop up and say that shouldn’t be the case. The truth is however, the state will not be able to provide that care, without a large hike in taxation.
That is why of course the Tories ended long term geriatric care in the NHS, and brought in the rules that all assets must be disposed of till savings dropped, to £8,000 the present government raised this to £16,000. This limit should now be reviewed and brought up to at least £32,000.
15. “It’s also very much a southern issue - the number of houses in Nottingham worth significantly over £385,000 is very small”
Oh dear Palmer. Showing up your lack of knowledge there.
The threshold is £285,000 sunshine and virtually every tom, dick and harry buying a house in London is now liable straight away from the year dot and houses elsewhere in the country are fast approaching that threshold.
As for the “middle-class” thing, inheritance tax easily hits any working class ex-council-house property owners in London and the south-east who’ve got a 3 bedroom house or more.
Stupid, stupid tax.
25 i realise the numbers are low but the fear of it is actually widespread as peoples net worth has increased in line with property values
Like Edmund in Tokyo I am unconvinced that inheritance tax is a major contributor to our “wine glass” economy. I’d never heard of that expression, but from my own experience in the past,the entrepreneur who wants to buld a big business is a distinct minority - they most want to build quick and sell on. They are “jam today” guys - so I don’t see IHT making much difference.
In terms of the article, personally I think this a is a good move tactically for the Tories, because sadly people will be swayed by this if it is a part of a bigger package.Also I understood that it was IHT on property which was to be excluded, is this so? If it is then it is a smart move
I will ceclare my interest - £250k is plenty to leave children to give them a leg up. There are plenty of ways to minimise IHT,which is for me about 499th out of 500 as an issue worthy of debate
20. Mike - agreed! I noticed this.
They actually let John Redwood speak, make his point and he was questioned (mildly) from both the right AS WELL as from the left.
Refreshing.
Portsmouth Fratton result last night was a very comfortable LibDem hold LibDem 1196 Con 496 Lab 144 EngDem 137 Ind and Green figures not yet known . May result was LibDem 1391 Con 571 Lab 310 EngDem 212 . No sign of any Brown bounce when people have to get off their bums to vote .
Firstly Conservatives returning to a tax cutting agenda is to be welcomed. But why oh why IHT !!
Sadly Redwood has said the approx £4B cost will be found from economic growth after public spending priorities are allocated. So that’s the 12th of never then !!
If there’s £4B to be had it should be used to put up tax thresholds. Wrong tax and too timid.
[28] The only intelligent comment on this thread - to ignore the impact of geriatric care on “wealth cascading down the generations” is to live on another planet.
Feeling in a slightly fey mood this morning, having spoken last night a public meeting to 500 people (how many Peebies can say that, I wonder :lol:) so I’ll ask a “left field” question - why does everyone, of left and right alike, think it’s OK for only children to have larger inheritances than those who come from larger families? In other words, why doesn’t IHT reflect the inheritors? I’d put it up for childless people - Nick Palmer’s cats are overweight already
I suspect that the “Brown Bounce” is about to go into reverse.
Much more aggression needed from the conservatives over government waste.
This weeks example
How They Spend Our Taxes
Brown’s bonanza: where it will all go………..some are for pet projects, some are to stave off embarrassment. But most of them are political as well as financial measures,
The government spends a fortune promoting healthier life styles and reward us in old age with: A catalogue of abuse: report demands law to protect elderly in hospitals and care homes
‘I was shocked by the lack of care’
A third of 14-year-olds fail to reach target in key subjects whilst Over the past five years the proportion of A grades awarded to pupils from independent schools has risen by 6.5%. The rate in comprehensive schools is 3%.
Councils warned over clamping for cash
‘BBC party’ caught bang to rights: BBC is forced into second apology to Tories
I am 84. My dustman calls before 7.30am. It is impossible for me to put my rubbish out before that time. I therefore put it out on the previous day. There must be many many thousands of people in the same position. I look forward to the camera man coming (”Cameras spy on ‘wrong day’ bins”, August 5), I look forward to being prosecuted and I look forward even more to putting my case in court.
Golden Trough Award
Chief Executive
5 BOROUGHS PARTNERSHIP NHS TRUST
circa £125,000
The 5 boroughs Partnership is a specialist Mental Health and Learning Disabilities NHS Trust. Following the departure of their previous Chief Executive, an exciting opportunity has arisen to drive this progressive organisation forward
To use a footballing analogy the conservatives need a “striker” to put away the opportunities that are coming their way thick and fast.The sorry mess that Gordon Brown has left the UK economy in should be the number one target.
What of the media? Newspapers, television and radio stations have wealthy owners, and even reporters and “talent”. These people might support abolition for its effects at the top end.
The elephant trap for Labour, and perhaps some on here have already fallen in, is concentrating on the economics and ignoring the politics.
“Ind and Green figures not yet known . ”
Green 56, Ind 17
“No sign of any Brown bounce when people have to get off their bums to vote”
There are been local byelections with Lab up and there are been local byelections with Lab down. On this site Lab posters just pick up the ones with Lab up and no Lab posters just the ones with Lab down.
In many of them there’re special circupstances, espeically when the byelection is caused by a resignation..Lab best result seemed to be in wards where the defending party had a councillor resigning after a scandal. And Lab’s worse result seemed to be either in county byelections that last voted in 2005 (so GE turnout) or when they had the councillor causing a byelection after a scandal.
OTT. What exactly is this fear? If you have a house worth and assets worth £500,000 your middle aged children are left with £420,000. If you leave them £1,000,000 they keep almost £800,000. Surely not the sort of thing to scare anyone into an early grave?
And of course they can leave any amount of it to charity tax free.
Never ceases to amaze the fuss that IHT makes - You are dead you don’t need the money.
I’m in my 40’s my parents in their 70’s - if I get a few quid in 20 years time it will be nice - but is too late to change my life or set me up for the housing market.
If they need to sell it to fund care - fair enough
If you inherit a house worth over the threshold - sell it and still trouser a huge amount of cash after paying IHT.
Fair enough!
Surely this is the sort of small family business we should be encouraging:
http://www.crawleyobserver.co.uk/ViewArticle.aspx?sectionid=496&articleid=3119591
IHT brings in very little money so it could be easily abolished without causing the Government any serious financial difficulty. The more serious issue, as pointed out by Augustus Carp last night, is that its abolition would further distort an already seriously distorted property market. In short, it would increase the attractiveness of property as an investment rather than as a place to live and we are all very familiar with the problems arising from that feature of the market.
It would of course be a different matter if the proposal were part of a package of measures to rationalise the tax treatment of capital assets. A big step in this direction could be made by the abolition the capital gains tax exemption which applies to the disposal of residential property, but since no Party is likely to propose such an unpopular measure, it’s not worth discussing.
Edmund in Tokyo put the best reason for getting rid of IHT. It is a very easy tax to avoid, so it tends to catch the unwary and ill-advised. Its abolition would, incidentally, reduce the amount of easy fees earned by professional tax advisers. Since I am one, I would thank him not to advertise this fact.
I must agree with John Wheatley that this is a tiny issue, calculated to please Daily Mail Readers and induce a big yawn from everybody else.
If you want to ponder some rather more substantial tax measures, consider The Treasury’s proposals for changing the corporation tax treatment of foreign dividends, and related matters.
http://www.hm-treasury.gov.uk/consultations_and_legislation/foreign_profits/consult_foreign_profits.cfm
This has clearly been gestating at The Treasury for some time and is the kind of radical restructuring of the tax system which one might expect from a reformist Chancellor. I would expect Gordon/Darling to make this the centrepiece of their plans to update the tax system in this country. It is a Howitzer of a proposal; Osborne’s is a peashooter by comparison.
Incidentally, the Foreign Dividend legislation is slated for 2009. This is one reason why I have bet heavily against a 2007 GE.
Finally, to all those who witter on about high tax rates in this country, can I just say that it is the effective rate rather than the headline rate that matters. The current rate of corporation tax, 30%, is pretty standard, but the effective rate of many UK companies is much lower. This is largely because of the ready availability of tax relief for interest, which depresses the effective rate. It is something our EU partners disparage and which is addressed in the aforementioned Paper.
34 Absolutely - raising tax thresholds should be the battle cry of anyone interested in a lower tax economy - it’s simple, benefits the lowest earners the most and is easily understood by all. I would go further and abolish most of the middle class tax breaks and increase thresholds considerably. This would also have the pleasant side effect of removing some of the grit from the economy.
39 i was thinking more of the people I know with a house worth 250,000 plus savings who think this will grow some more before they die and want to leave as much as possible to their kids. these are people who are not financially savvy, have never had to worry about IHT ever in their own family history and thus are ’scared’ of leaving behind problems for their kids. obviously they do not think its fair that that have worked hard all their lives and paid tax so they could leave something to their kids/grandkids, often they will be able to do this for the first time in their own family history. you may not think it a problem but that is how many people see it
Top post Peter - very interesting, but for those of us with very challenged attention spans (and jobs to do) what is the basic import of the proposals
“obviously they do not think its fair that that have worked hard all their lives and paid tax so they could leave something to their kids/grandkids” @ 44.
This is utter tosh The profit on property - which is the asset most people are leaving - is the parable of the talents in reverse. Those that do least profit most. It requires no inovation, no risk, no effort, once you have cobbled together a deposit - which 80% of the UK has
36. 125k for a chief exec of an organisation with hundreds of employees?
Sounds fair enough if they do their job properly.
26. I havent heard a Tory get a softer ride in ages. He was lucky. The problem is that Osborne just isnt a killer performer. Ken Clarke, thats what they need. The bloke will stay on message if he is told to.
If the Tories want to talk about rebalancing the tax system I think the phrase they are looking for is ‘Inefficiency taxation’. Someone needs to move the Green taxes debate along from just save the planet, which they won’t alone, to the benefits of being more efficient. I think Cameron’s green business is overdone. they need to look at mixing up initiatives.
Glos CC Cheltenham Lansdowne , Park and Warden Hill Con hold
Con 2208 LibDem 1605 Lab 226 Green 184
2005 result 2 seats Con 3812/2962 LibDem 2561/2343 Green 968 Lab 998/832
2004 accumulated results in these 3 district wards Con 3214 LibDem 1806 Lab 443 Green 105
2006 accumlated results in these 3 district wards Con 3356 LibDem 1754
Again not much enthusiasm to go out and vote for Labour .
On Radio 2 Jeremy Vine show, they were discussing the Euro-millions win, John Mcirrick? the racing commentator, was asked about the inheritance tax, his answer (no socialist he) amazed me, he said, ‘We should tax inheritance even more, the knowledge of inheritance acts as a de-motivator, and even a life destroyer, people go mad when they are given unearned income’
For a guy who makes his living advising people on betting, seemed a bit strange, although he supported large lottery wins.
Its a point of view!
Agree with those who think its an issue, because it affects so many people who work in the media.
#15 Nick, the average price of a house in Nottingham is now just short of £220,000, so I would imagine quite a few go for more than £285,000.
#25 Mark, …I saw figures for was 30,000 - can you site a link for the figure you give. If the tax take by HMRC is £4 Billion, then that would give an average estate of £618,333?
42. Can you explain in laymans terms what the government’s proposasl mean?
41 Rik W. Are you being lined up for the male range :
Racy Reading Rik’s Ravishing Revelry Rear Requisites
All you ever need to cover your R’s !!
49 Coldstone, it reminds me of George Bernard Shaw’s observation that property for the rich serves the same function as lotteries for the poor - both hold out the hope of an unearned income.
(But he put it more pithily than that.)
50 Sorry , I don’t have the link at the moment although I did post it when we discussed IHT on here some months ago and I can’t remember what year the figure related to , you can probably fing it using google as I did originally .
42. Peter - if IHT is a small issue of interest to only a few voters, how much smaller an issue do you think the tax treatment of foreign profits is to the same voters? Calling it a ‘howitzer’ of a proposal is risible.
The Tories have no chance now. You cannot campaign on poverty and social justice but have loads of policies that redistribute in favour of the rich and you cannot say public services first when you have a long wishlist of tax cuts. Gordon is going to enjoy the next election campaign because the plan he wants to implement was written 15 years ago and the Tories have now given him everything he needs to implement it. My money is on a Labour three digit majority, followed by more Tory infighting.
50, 54 An accountant from Stoy Hayward on Radio 4 this morning said that IHT affected 39,000 estates (i.e. dead people) every year. Hope that helps.
56. Any money willing to be put on that Nick?
Yokel,
Yes, I would happily agree a stake of anything up to £100 that Labour will get a majority of over 100 but you will have to give me the odds I can get at a bookies/betfair, otherwise I would be better off taking their money.
IHT is a tax that “strivers” fear - the Essex Man of Thatcher’s era. Just as Smith’s proposal to raise NI thresholds as seen by that group as threatening their futures so is IHT. Is a message targeted at those voters that the Tory party cares about them.
It needs to be matched by raising tax thresholds at the bottom level and a fully thought through move to taxes on inefficiencies and green taxes but this was a policy group on Competitiveness not Osborne’s draft budget.
53
David Niven, took his children on a tour of his home in Switzerland showed them the garden, the house, the contents of his bank account etc, and assured them of one thing, they wouldn’t be getting any of it. The reason, he said was becuase he’d seen the children of so many of his friends end up totally useless because they thought that Dad’s wealth would bail them out. So Niven told them, work hard at school, and earn your own, I believe it worked.
#39 Roger,
Or to put it another way for a £500K estate, you leave your children £414K and a tax bill for £86K, or for a £1M estate, £714K and a tax bill of £286K.
For most people this will be the first time they have ever had a bill from the taxman, as the collection of tax is largely sanitised through the PAYE system.
…And of course they can leave any amount of it to charity tax free… this is true, however I think you will find the collection method means that the tax has to be handed to HMRC and then reclaimed. In fact before an estate can be considered for Probate, IHT must be paid.
59. Let me go have a look on 100+ majority then.
It was fascinating to hear this morning how the Today programme was bending over backwards to give a fair wind to John Redwood’s proposals, even the completely loony ones. The way Sarah Montague was attacking the transport expert who was rubbishing the rubber tyres for trains idea was cringeworthy.
45 Thank you, John.
The key proposal is to exempt foreign dividends and capital gains from UK corporation tax.
Now, such a proposal has a big knock on effect for other related matters, such as the tax treatment of interest, the taxation of foreign ‘passive’ income, and Treasury Consent regulations which affect the transfer of overseas assets. You cannot deal with one without impacting all the others, which is why the proposals are currently open for discussion.
The really big sub-text is that if successful, they would make the UK very competitive as a Head Office location for interntional investment companies. At present, the UK is the last place on earth you would want to house such an Office.
There is a clear intention here to make the UK more competitive with other financial centres. That’s big news, for all of us.
Big mistake to focus on this. If there’s money for tax cuts, it should be channelled into something more meaningful. Sure, IHT is an unjust tax, but then so are many others.
What has Gordon done to deserve such continuous good luck, day after day since becoming PM? Certainly hasn’t merited it from his record over the past 10 years!
43. Is that you Kingbongo? I couldn’t agree more!
The tax breaks for the wealthy that dont exist for the rest are embarrassing. During Thatchers time you got 40% miras tax relief on a mortgage whereas standard rate tax payers only got 25%.Same with pensions. Higher rate taxpayers got a 40% gift from the taxman. Even national insurance stopped after earnings of about £20,000.
This is a good and sensible proposal that will appeal to Middle Britain. 62 is exactly right that you have to pay the tax before you get the estate proceeds; a nightmare for many people.
The tax system should be simple and fair. Under Brown it is neither and is less so than in 1997. If the Conservative party is not a tax cutting party for the aspirational then it is nothing IMHO.
I hope Osborne adopts the IHT proposals in toto!
(But the big story today is going to be the Aberdeen City Council AV By Election. Are we relying on Andrea to get the facts for us? Or do we have someone on the inside who can give us some information?)
“OTT. What exactly is this fear? If you have a house worth and assets worth £500,000 your middle aged children are left with £420,000. If you leave them £1,000,000 they keep almost £800,000. Surely not the sort of thing to scare anyone into an early grave?
And of course they can leave any amount of it to charity tax free. ”
Roger, you fail to point out that £86,000 of tax in the first place and £286,000 in the second has to be paid for.
If the assets are tied up in a home, then the family home has to be sold. Let us not forgot, the rich usually avoid IHT, so it is family-run businesses, farmers and other small-scale property owners that get hit by this.
It is very cruel to force a family out of their much-loved family home when they are in the middle of bereavement for a loved one. Unfair because it is an asset they already own and have already paid for out of already taxed income.
59. Nick I’m not awake but are you effectively looking at 373 Labour seats or more including my wee mates in Sinn Fein?
51 Yokel (and Platbini at 55)
Does my post at 65 help? If not, try this link
http://www.solomonhare.co.uk/solomonhare/Documents/Taxation%20of%20foreign%20profitsSH.pdf
The Tories are not committed to abolishing Inheritance Tax. George Osborne explicitly said on TV that all tax cuts would be put second to economic stability. However, they won’t mind Daily Mail headlines suggesting they will. It’s called having your cake and eating it. Isn’t that what every political party tries to do?
49 Coldstone - I’m a great fan of ‘Big Mac’, but as a tax guru? No, no, no…please, no!
44-And presumably the house was bought after they had already forked out a proportion of thier income in taxes. Even more so if some of the increase in the house value is due to repairs:
Income 100
Tax+NI 35 (say…)
To buy house 65
For repairs: take another 10 on VAT
So on the increase due to repairs/refurbishments, you are already taxed on 45%.
Whatever the bookies terms are - presumably Labour has to have 50 more seats than the halfway line but not sure how the speaker is dealt with. If there is a dispute we just have to use an agreed bookie as reference.
57 My memory estimate not very far off beam then , I can repeat IHT affects very few people and the majority of those affected will pay very little anyway and still enjoy a comfortable inheritance windfall . The Conservatives may be a tax cutting party but mainly for those who need it least .
6 ,7 56.
So far the only Tory tax cutting announcemenmcts have been to the benefit of business and the well off.
Since thay have to be paid fro from somewhere it looks like the poor are being squeezed out.New tories I- I don’t think so.
Rogerh
66 Bob: ‘Sure, IHT is an unjust tax, but then so are many others.’
IHT is an unpopular tax not just for the usual group of voters the Tories want to attract. If you are going to abolish a tax it’s best to pick an unpopular one.
Labour posters rubbishing abolition of IHT should watch it - Gordon will announce it if we adopt it.
76. My problem is finding odds on that kind of majority to compare against. If you have any sources post them and I can work against that and see if there’s anything in it.
72. Yeah, makes sense.
78 Roger. Give us your verdict on Brown abolishing the 10% tax band for low earners please?
IHT is a hot potato with voters (even those who won’t pay it) because it is seen as desperately unfair to tax people on assets on which they have accumulated from already previously taxed income.
When it only affected the landed gentry most people didn’t care but now its a common tax most voters see the unfairness; also there is almost something indecent about already grieving families having to cope with a rapacious taxman.
Finally, it’s a tax on aspiration. Many many ordinary working people work hard precisely with the intention to to leave something for their kids - something champagne socialists like Roger never realise.
I think this announcement is a well timed reminder that the Conservatives are the party of aspiration, Labour will (and have already) tried to argue that this is some kind of lurch to the right but it will fail because this release comes after the IDS social justice one a few weeks ago and before the Gummer environment proposals due in a few weeks time.
72. Not really Peter. This proposal will go completely over the heads of most voters, even if it does have some long-term benefits in attracting foreign firms - which is far from clear given how other countries have already stolen a march on us on this. IHT by contrast is an issue which an increasing number of people understand all too well. Still, keep the GB flag flying old boy.
70 Casino
Double taxation is something to which I am opposed in principle, which is another reason why I disapprove of IHT. However, rather than weep for its unfortunate victims, may I suggest that what they need is not more legislation, but a decent tax adviser.
It is the most avoidable of taxes.
I keep hearing about IHT being an unpopular tax.
Can somebody provide me with a list of popular taxes?
86. The National Lottery
Excellent news. Well played that man !
Anyone that underestimates the resonance that this will have with Middle England needs to get out and knock on a few doors.
The LibDems will now HAVE to respond with something similar or
face obliteration down South.
We’ve been crying out for something like this for the thick end of two years now.
Even if Labour now try to ’spoil’ the policy by raising the threshold it’s still ‘a win’ and can be sold as such politically.
Bursts into chorus of ‘Happy days are here again’ !!
Please keep the pressure up JR.
84. In the context of its potential for the exchequer and money in the conomy though it is fairly sizeable, even if its not a man on the street kind of issue. Depends on wehat level you measure impact on.
#54 Mark
this could be the link you refer to - 30,451 estates (most worth less than £500K).
Article is dated 1996. Halifax was then expecting a further rise of 22% to 37,000 estates by 2007. These rates may well compound very quickly.
Over an average lifetime (which is a probably more correct timescale to view this over, since inheritance is usually a once in a life event) that means around 3M estates will be caught. If there are say 2 children per family that means around 6 Million caught, and that’s without the compounding rate of increasing house prices.
I think a wider proplem with the tory policy reports is that they dont seem to have enough quality control.
They seem packed with an array of stuff so its easy for anything good or interesting to get sidelined by the dafter propopsals.
It leaves the Tory’s open to the attack that is typically thrown at the LD’s- “this isnt serious it falls apart under examination”.
For example this morning I missed Osborne but did hear the ‘Railway expert’ belittling Redwoods Proposals about train’s - it was a pretty devastaing attack and gave the impression that Redwood was talking complete bollocks in the report. imagine this was just one of several Ideas in the report but it undermines the overall credibility.
The only Bit of Breakthrough britain ( the IDS one)Ive read in full is the section on Addiction (its the field I work in) and I can tell you it has some absolute howlers and oddities in it, not least that 110 pages of it is given over to the rantings of a retired headmistress ( ?)
Its like they are publishing their notes from a brainstorming session.
Peter the P
Spot of advertising there?
84 Platebni
When the time comes, no doubt Gordon/Darling will dress it up and publicise it in a way that makes it both appealing and comprehensible to the general public.
The business community, which is quite a wide one, will not however need to be spoon fed, nor are the implications likely to be lost on its numerous employees.
92 My usual rate of £80 per hour is discounted by a generous 10% for regular poster on PB.com, Blue Moon.
93. At last the identity of the Professor is revealed.
http://news.bbc.co.uk/1/hi/northern_ireland/6949153.stm
O/T a surreal story about one of Ireland’s best loved politicians. It isn’t clear whether the edit was to the benefit or detriment of said politician and his mucky hands…..
89 No, Yokel, not ’sizeable’, colossal.
It would, if successful, turn the UK into a Tax Haven in some important respects. (In fact, in some respects, it already is one.)
87 Nice try, Test!
The NL is indeed an effective tax but I was thinking more of something one might have to put on one’s tax return.
#86 Peter,
Can somebody provide me with a list of popular taxes
Anyone you can avoid paying of course!
97. Colossal it is then.
“However, rather than weep for its unfortunate victims, may I suggest that what they need is not more legislation, but a decent tax adviser.”
More legislation?
We’re talking about repealing legislation!
It’s the least financially aware and eduated who get caught out, they may not have the nouse or money to get a decent tax advisor, nor should they need one. They should have a right to keep their home.
Furthermore, you’re right, no taxes are popular, but most are ‘accepted’.
Inheritance Tax is seen as mean and unfair and rightly so.
85 All forms of taxation ( except Income Tax ) for example VAT are double taxation in that they are paid on money spent which has already been taxed .
90 See post 57 for a figure of 39,000 , and of course the majority of those estates will not be a vast amount above the threshold and IHT will be very low .
88 Sorry I don’t see Middle England rushing out to vote Conservative on this issue at all . Not one person in the monthly Mori surveys mentions IHT as an Important Issue facing Britain today .
97. Perhaps we could have some estimates of the net benefit to the government’s revenues, to illuminate us?
101 I do not see IHT as mean and unfair , if we must have taxes to me it is one of the most just and fair .
100 LOL!
Thanks Yokel.
You know I expect when the full implications become a little more apparent, they will not go over everybody’s head. Even some Daily Mail Readers will be able to perceive them.
Going back to the main point of the thread, I would say that the IHT proposals are good Politics. They catch the eye, and reassure supporters that the Tories are still about what they have always been about - keeping taxes down and containing the role of The State.
Longer term, they are of less significance. In terms of both economics and politics, they will need to come up with some meatier stuff in due course.
101 Casino - Sorry, I meant that repealing a piece a legislation (which is itself a legislative act) will result in other legislative changes to deal with the knock-on effect. Clumsiness through trying to be brief. Apologies.
It is always the least financial aware and ill educated who are most adversely affected in this, as in most matters.
I have indicated elsewhere that I disapprove of the tax, though not for your reasons.
48. Don’t gt carried award. This ward is rock solid Tory. The Labour vote is always very low. The town has one Lab cllr.
Kudos to the Tories for getting good exposure for their proposals. However:
1. August is a dead month news wise and it would be hard for them not to gain publicity. How many will pay attention though?
2. If these proposals do NOT turn into policies, then a lot of people will be mightily peed off with Cameron. If he cherry picks, he will inevitably disappoint some. I can see the merit in these commissions as the *perception* is that tories will cut taxes, even if the proposal doesn’t make it into the manifesto. However most people are not that stupid (well, not all of the time!) and will soon suss that a lot of what is proposed was just hot air rather than concrete policies.
101 I do not see IHT as mean and unfair , if we must have taxes to me it is one of the most just and fair .
Mark, if you think that, you are - frankly - delusional.
What about a farmhouse that’s been in a small family for centuries, farm workers who work on the land earning only £15K a year suddenly suffer a death in the family, but because of property prices rising, find they’re liable for £80K of inheritance tax? How do they pay? They lose their much-loved home which has been in their family for generations.
What if they just scrape enough cash together to pay IHT and they suffer ANOTHER family death soon after? Then they definitely lose the home.
People work all their lives to own a property only to be finally robbed of it on their deathbed. The average price of a detached family home in the UK is now over £285,000. Every owning one will have to sell up something to pay for it when one of their family dies.
Who benefits? Only the rich who can either avoid it, or snap up the properties dumped onto the market to pay for IHT.
Let’s see how YOU feel when you lose your family home over IHT.
99 Join to Choose
In that case, IHT should be one of the most popular taxes!
Nick12 if you have any joy on finding a some market prices on a Labour figure of 373+ seats or a majority of 100 do come back to me. The odds will most likely be long and I’m not naturally a layer at long odds but that kind of gain for Labour looks a stretch to me.
101. Peter the punter
You can say that about virtually any piece of legislation the government passes. Effects of new laws are never 100% predictable. Unknown possible future side effects is not a reason to ignore a problem in the here and now. If we took that attitude, the government would never pass any legislation!
Also, what on earth do you mean by ‘not for my reasons’?!
On what grounds do you oppose it then?
105. This slagging off of the Daily Mail and its readers is just outrageous.
People forget its plus side, like the Garfield cartoon strip, which after reading 40 pages about how I’ll probably catch a disease, be mugged, have my house roof fall in on me or be attacked by a group of rabid birds that have moved north due to global warming, provides some amusement.
Given that Garfield is god awful, thats some going.
109 Or they could spend a couple 100 quid or so on financial advice and let an insurance company pay the tax.
112 Casino
There’s nothing unknown about the side effects. If you had been following the thread from the outset, you would have noted, for example, the interrelationship with capital gains and the fairly obvious impact of both cgt and iht on the housing market.
My earlier posts have given plenty of indication of what those reasons are but to repeat, double taxation and the absorption of time and energy on the avoidance of a relatively trivial tax feature prominently.
113 Mea culpa, Yokel.
In the interest of balance, I should state that I think The Daily Mail has an excellent financial section.
I think the Redwood report is to be welcomed.
I would also suggest Mike that you are a little off beam with your suggestion on World markets leading to House prices falling. If anything it makes them more likely to rise as interest rates may go down as a result of the falling markets and the recent fall in the CPI.
I would also suggest that if the share markets are not such a good bet then other investments like “buy to let” become more attractive! What does this mean, thearetically house prices will continue to rise! Particularly if immigration continues to swamp this green and pleasant land!
Of course with economics you can argue it the other way but i am just telling you how i think it is!
109 That is the most inaccurate and scare mongering posts I have seen on here for quite some time . Why should I lose my home through IHT , even if IHT is payable on my estate I will be dead anyway and have no need of a home , if I am lucky enough to get an inheritance then anything I will get would be a bonus after payment of any IHT . Even if IHT is payable on my estate , my children would inherit far more than any payment of IHT .
Noone owning a home worth more than £ 285,000 would have to sell it or anything else just because a family member dies , you are talking utter claptrap .
Martin you don’t get what is happening.
Stocks are falling because of bad loans. This means that mortgage lenders will greatly tighten up their lending criteria. This means fewer buyers for homes, landlorads going bust etc. This in turn means falling prices.
67 yes roger it is I!
117. Re Average UK house prices. I see spreadfair go 199.5K for Sept 07 and 194K for September 08 so the punters think house prices will fall over the next 12 months.
Even if only 39,000 estates a year attract IHT, presently, rising property prices have propelled a far greater number of estates into the IHT bracket. Anyone who owns a three bedroom house in London now has an estate that falls into the IHT bracket. That means plenty of middle aged voters of just above average incomes. I write plenty of Wills each year, and the vast majority of people whose estates fall into the IHT bracket want to mitigate it as much as they can (which is why they are willing to pay me several hundred pounds to arrange their affairs that way).
And that’s why abolishing IHT, at any rate on main residences, will be popular among voters in marginal seats in and around London. Of the 39,000 a year (and rising) the majority will be located in this part of the country.
Blaenau Gwent-Blaina ward byelection
Ind 381
Lab 315
Ind 310
Ind 49
If I’ve understood correctly the winner was a “real” Indy, the third placed Indy was the Davies/Law Indy and the 4th Indy was a former Lab nomination hopefuls who claimed to have been threated unfairly in the selection process because he said he didn’t know when the selecion meetin took place and so he didn’t attend it. He then said his inclusion in the ballot as an Indy was a mistake and he would back Lab.
Sorry to sound silly, but how can you be included in a ballot by mistake?
As expected Redwood was intelligent, calm and persuasive on the Today Programme this morning. Osborne was surprisingly impressive too. (Has he been having voice coaching, I wonder? He no longer sounds like he’s been at the helium.) I went off to burn some toast. On my return I caught the tail end of an interview with some shrill, deranged chap ranting about the Tories ‘lurching to the right’. It was Alistair Darling the Chancellor. Poor man.
102 Fine. Carry on opposing it and see what happens !
What is fairer:
1 Paying tax on money you’ve slaved all week to earn
2 Paying tax on money you did absolutely sod all to earn
If even one single persona can give me a sound reason why 2 is fairer than 1 then I’ll back the Tory plans.
IHT does need reform. It should be paid by the recipient, in order to aid wider distribution of wealth. And there should be a lifetime IHT tax allowance, which should be roughly equal to or lower than the lifetime equivalent of a working person’s income tax allowance.
122. Yes this is the real point - the current number of estates hit is not the issue. What concerns people is the much bigger number that will potentially be hit over the next 10-15 years as a result of the lagged effect of massive house price rises.
A lot of people in their 40s and 50s will be relying on inheritance to pay off the colossal mortgages they have had to take on to be able to live at a similar level to their parents.
#118 Mark,
Noone owning a home worth more than £ 285,000 would have to sell it or anything else just because a family member dies , you are talking utter claptrap.
If the property is not jointly owned then that is indeed possible.
If one more economically illiterate MORON uses the phrase “double taxation” I swear I will scream. Dont they teach anything about money in schools these days? Tax occurs on transactions, and gets taxed as many times as there are transactions. There is NOTHING unusual about this!
118 Mark, have you been on the funny tobacco today ??
That’s the silliest thing I’ve ever seen you post.
Alistair Darling is not a puppet chancellor, repeat after me ‘Alistair Darling…’ etc.
At least he proved he’s still alive by making a comment.
The IHT things is aimed at swing voters, with FPTP there are so few voters that matter that the whole system is skewed. The labour abandonment of the working classes is for similar reasons, their votes aren’t as important anymore, so it’s something that happens on both sides of the political spectrum.
117. I’d be careful with that idea Martin.
The problem, even if interest rates get cut a little is that access to credit is being tightened all over the place so the free flow of money to keep buying is going to be disrupted. In addition, those who had fixed rate mortgages for a period at lower rates 2-3 rates ago are still going to be hit when the time comes round for the rates to be adjusted.
Thirdly there is a fair amount of debt out there, not just mortgage based and this has to be paid back at some point so people will have to pare back at some point, again affecting the flow of money available.
In the UK house prices may not fall but the rate of increase will almost certainly fall dramatically if not stall.
129 …
IHT isn’t double taxation in any event. It’s triple Taxation.
Income, Investments/Savings and Death.