Is George Osborne Schizophrenic?

george-osborne

In “Alice Through the Looking Glass”, the White Queen prided herself on believing six impossible things before breakfast.  I don’t know if Chancellor George Osborne can do that, but he can certainly believe two incompatible things at the same time.

He seems to “get it” that high taxes are bad for business, growth, jobs and economic recovery.  He’s reducing corporation taxes with the express objective of attracting companies and inward investors to the UK.  It’s due to come down to 22% next year (though it still compares poorly with Ireland’s 12½%).  Indeed his approach has been noted by accountants KPMG, who are reporting that the UK is now “the most attractive place to do business” because of low tax rates. Great news for the Chancellor ahead of his budget statement (though as my old mother would have said, “I wonder what they want to borrow?”).

Yet a recent news story says that the government will abandon the Tory pledge on raising thresholds on the Death Tax, “in order to fund social welfare costs”.  How many times do we have to say it?  High tax rates don’t raise extra revenues.  The may have the opposite effect, driving away investors and wealth-creators.  Whenever we hear that taxes are to be raised “to fund something else”, alarm bells should ring.  Economics doesn’t work like that.  George, if you understand the damage that high tax rates do — why not do the right thing, and cut rates?

I have been encouraged to see heavyweight commentators, including Allister Heath and Jeremy Warner, arguing the case for lower tax rates.  Heath was specific that lower rates would pay for themselves in economic growth before the next election.  And I see that the excellent Graham Brady (champion of Grammar Schools, and Chairman of the 1922 Committee) has also urged further tax cuts in next month’s budget.

On the top rate of income tax, I suspect Osborne actually knows that the 45% rate does more harm than good, and reduces revenues, but he lacks the moral courage to do the right thing, terrified that Ed Balls will accuse him of “tax cuts to the rich”.

A perfect example of a tax that does more harm than good is the Air Passenger Duty.  Of course the airlines have an axe to grind, but nonetheless a report by PWC says that scrapping the tax would create 60,000 jobs, would increase economic growth, and would benefit the economy by £16 billion by 2015. It’s a no-brainer.  Will George have the guts to do it?

I recently came across a good example of the damage done by airline taxes.  The Philippines decided to introduce a tax on incoming flights based on the length of the flight.  But (as I constantly say), you can’t change taxes without also changing tax-payer behaviour.  In this case the airlines responded by adding a stop-over somewhere near the Philippines — for KLM, that’s in Taipei, about 80 minutes from Manila.  So the tax collected is much less than planned, on the shorter flight.  And Manila has just become much more difficult and tedious to get to (the Taiwanese have passengers leaving long-haul flights and going through security on the short stop-over in Taipei).  So tourism and inward investment suffer.  I understand that the Philippine government now realises it’s scored an own-goal, and is reviewing the tax.

Just a thought: a few months ago, the EU was proposing to put a very similar tax on incoming long-haul flights.  Fortunately they backed down in the face of almost universal opposition from the rest of the world.  Had the tax gone ahead, it would have created exactly the same problems in Europe that the Philippines have faced.

About these ads
This entry was posted in Uncategorized. Bookmark the permalink.

12 Responses to Is George Osborne Schizophrenic?

  1. maureen gannon says:

    Roger, I am old , I am not aged or elderly to make it sound better old is old, let me tell you people in my age group ,are not really judging his sanity on corporation taxes,however they certainly think Odbourne [thats not a freudian spellling error] he is an oddball, anyone who can look at people who have worked some still working, who paid into the pot all their lives are now afraid YES afraid of going into hospital or being fleeced if they have to go into a home , believe he is certainly either warped or a member of a society that is a in favour of “Logans Run” renamed “Liverpool Pathway of Care”
    We are the children of WW2 who have had the tenaciity to believe that we would work hard and achieve a retirement that was going to be a fulfillment of a lifes work and not a concern that what we have worked long and hard for is now looked upon as something for worthless politicos to see as cash cows., we started with nothing I am the product of what is today termed inner city where my shoes had cardboard insoles where there was no money to have them mended, and where when I told my teacher my ambition I was told you have two options cannon or factory fodder ., well I have proved him wrong and now have a nice house paid for by hard work, never been a drain on to-day’s corrupt society, where my husband and I were seriously talking of selling up keep enough to live on give the rest to our children buy a caravan/ mobile home type. they have some like houses for fifty thousand , join the travellers just outside of the town I live in, and and get protection from the predetors that reside in downing street.
    I do not know if this conveys the anger being felt amongst the older generation , but believe me if you want votes start talking about the political abuse of us OAPs we are the largest group in this country, we need someone to start expressing what we feel and not seeing us as cash fodder.I have worked for myself and family, not to provide for benefits for those that have never contributed or to build houses for non indigenous who see us as a gravy train and if any of what I have said offends or is non PC, tough thats how I and my friends collegues think and talk.

    • David says:

      Well said Maureen!

    • Jane Davies says:

      Same here Maureen, I’ve worked hard all my life in the NHS, up the sharp end on the wards. I loved my job although the pay was appalling, had to work in an office whilst between husbands so I could afford to live. As soon as I was married again we could afford for me to go back to low pay and return to the rehab job I loved. And yes the care then for seniors was good, at least where I worked. On retirement we joined family in Canada, now our hard earned state pension is frozen at the amount when first paid two years ago, no cost of living increases, just because our family lives in a “wrong” country. We get no help from the Canadian government until we have lived here for 10years, unlike the UK who hand out our tax money to all and sundry even non-taxpayers. To cap it all, we still pay tax into the UK government coffers. Now Osborne has declared war on jewelry and wants the power to send inspectors into peoples homes to check you are being honest about how much your baubles are worth to assess tax liability. If these outrageous policies were not so serious they would be laughable. This bunch of clowns need a reality check, the good honest hard working folk will take only so much of this treatment, they ignore it at their peril then (I hope) the British bulldog spirit will reawaken and bite them on the arse.

    • Hugh Davis says:

      Maureen, I am with you all the way:- same age, same background, same moderate success through hard work, and now the same anger.

      The future financial security of my children and grandchildren is being imperilled by lying nose-in-the trough politicians. I don’t want them (my children and grandchildren) to have to live in a country where -

      a) where the mislabelling of food products is regarded by government as more serious than the deaths of thousands of hospital patients through callous ill-treatment and neglect, and where those in charge are allowed to go free (Sir David Nicholson would have been hanged in China for less! – and a good thing too)

      b) where thousands die every winter of hypothermia through fuel poverty created by an insane government (i.e. EU) energy policy which enriches wealthy landowners and foreign manufacturers of useless wind turbines at the expense of the poor.

      c) where the definition of words is changed to satisfy vociferous minority opinion (the definition of marriage has for thousands of years been “the union of two persons of opposite gender” and changing it serves no useful purpose). When governments change the meaning of words we are on the slippery slope towards an Orwellian dystopia.

      d) where the very foundation of science is corrupted to satisfy the demands of politically motivated environmental pressure groups such as Greenpeace and the WWF (I refer of course to the promotion of the AGW scare).

      e)where the national broadcasting service is allowed to promote its own political agenda (ie that of a small metropolitan Guardian-reading elite) and where no dissenting voices or alternative viewpoints are permitted)

      f) where it is government policy to corrupt the national currency by creating £300 billion of fake money – thereby wrecking the pension plans of millions and impoverishing further millions of pensioners who are trying to live on the interest from their savings

      g) where 85% of the nation’s laws are decided by a foreign bureaucracy of unelected and unaccountable commissioners – who include among their number former communist apparatchiks, failed politicians in their own countries and even alleged embezzlers and fraudsters.

      I could go on. The list is endless. Most of my friends and contemporaries who have voted Tory all their lives will be voting UKIP at future elections. It is realised that this could facilitate the return of a Labour administration, but it is only by destroying the Conservative Party in its current form that a truly fresh start can be made which will return our Country to democracy.

    • Maureen, As an OAP myself, I understand and sympathise with youyr concern. If we weren’t wasting so much on the EU, we could afford to take better care of our elderly (sorry, “old”) people.

  2. DougS says:

    Nobody in their right mind believes that Air Passenger Duty is saving the planet from the non-problem of man made global warming – it’s simply a convenient way for the coalition to raise taxes and at that same time pretend that it’s for a good cause.

    Of course, any tax that actually worked would put the airlines out of business. This tax is pitched at a level that allows the government to sell CO2 indulgences to a powerless public and pretend that it’s not there to swell the tax coffers – which, of course, it is!

    AGW is simply the biggest scam to be perpetrated on a hapless public, in the history of the world.

  3. David says:

    Yes good points Roger, we have donkeys being led by asses.

  4. mikestallard says:

    Roger – I, too, am an OAP but here is some encouraging news:
    1. Here in Wisbech a group of fellow OAPs were in the Market recruiting for UKIP two Saturday mornings running. They meant it, followed up and were efficiently organised.
    2. The beef scare has shown everyone that it is down to the EU, not the locals.
    3. I have just written a couple of lesson plans: one about leaving the EU and also about the crisis in the EU and there has been a very satisfactory take-up.

  5. Roger Helmer said: “a few months ago, the EU was proposing to put a very similar tax on incoming long-haul flights. Fortunately they backed down in the face of almost universal opposition from the rest of the world.”

    My experience of the EU is that it never backs down, just waits until it perceives the time is right to try again, and again. That is the case with this tax. The EU has not backed down – the express train will continue down the line, without diversion, until it runs over the bridge of collapsed dreams.

    • DougS says:

      I’m sure that you’re correct Alfred, I seem to recall that the EU simply deferred the introduction of that tax. They’ll reintroduce it as soon as an opportunity arises.

      It is indeed a one way process, to a bigger, unelected, elitest and more centralised EU. The sooner we leave it behind the better.

  6. Patryk says:

    All very well said Roger but for cases of schizophrenia you don’t have to look as far as the Tories because Ukip’s very own P Nuttall just proposed extension of free school meals provision… I know you’re a small party with little chance of ever getting anywhere near the government but, who knows, one day you may be held responsible for the populist promises.

  7. Jane Davies says:

    Maureen, Hugh, Doug, Mike and Alfred we are all of like minds I so agree with your comments. I hope the vast majority of true UK citizens are of like minds, if not a once great country is doomed and I’m glad I no longer live there. But I do miss the country I remember in my childhood, the fifties and sixties, and the English countryside. Alas we cannot reverse time, but the sooner the UK leaves the EU the more likely the rot that has taken hold can stopped.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s