I WONDER if your readers picked up on Truss saying in her Kuenssberg interview that she wants to simplify the tax system? Sounds good? Definitely not, because she is so in thrall to the libertarian lobbyists of Tufton Street that what she means can only be the introduction of flat taxes.
Michael Fry will be pleased but, with due respect, I don’t think Michael has fully understood the implication of flat taxes. He always points to the eastern European countries that have adopted flat taxes but what they have done is a far cry from what Americans Alvin Rabushka and Steve Forbes, the two main political promoters of these taxes, have in mind. At best the eastern Europeans have single rate income tax, capital gains tax and corporation tax systems with all the resulting complexity that flow from retention of such structures. In fact, Russia, Lithuania and Serbia even manage multiple rates of income tax, which somewhat negates the claim to have flat tax systems.
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Moreover, there is no evidence that tax revenues increase with flat taxes, nor that the mega-rich become more tax compliant. Nor does it seem that the administrative burden on individual taxpayers and, particularly, small and mid-size enterprises gets reduced.
What flat taxes do is to reduce taxes for the rich and increase taxes for those earning between about £22,000 and £70,000. Big corporations would also gain, but above all they would reduce the role of government. The last point will resonate loudly with anyone familiar with the agenda of the Institute of Economic Affairs (IEA) and the Taxpayers’ Alliance because that is what they most want to see.
To finish, two quotes. The first is from John Meadowcroft who writes for the IEA: “It seems fair to conclude that some in the mainstream the right wing now think democracy can be sacrificed to the market, and I believe that flat tax is part of that process. Which leads to the conclusion that two writers (Hettich and Winer) have put forward that: ‘it is possible to have a flat tax, or to have democracy, but not both’.”
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It is worth giving Alvin Rabushka the last word: “I think we should go back to first principles and causes and ask what government should be doing and the answer is ‘not a whole lot’. It certainly does way too much and we could certainly get rid of a lot of it. We shouldn’t give people free money. You know, we should get rid of welfare programmes, we need to have purely private pensions and get rid of state-sponsored pensions.
“We need private schools and private hospitals and private roads and private mail delivery and private transportation and private everything else. You know government shouldn’t be doing any of that stuff. And if it didn’t do any of that stuff it wouldn’t need all of that tax money so that’s the fundamental position, and as long as you’re going to have government do all that stuff you’re going to have all those high taxes.”
Andrew M Fraser
Inverness
TRUSS has forced Kwarteng to U-turn on only one of the toxic mini-Budget items – the 45p tax break for top earners has gone. There are other policies which should be considered.
Kwarteng and Truss still think that the policy is correct, but it has been described as being “a distraction”. They still believe in removing the 45p rate, so it will come back, just some months down the track, if they get re-elected in 2024.
The support for people suffering from the energy and cost of living crisis is still being reduced. It is a case of giving with one hand and taking away with the other.
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People need direct help now to survive, and by borrowing from “the market” to fund all of the assistance and making future taxpayers pay for it, without extracting some of the profits of the energy extractors/producers that have done nothing to warrant their increased their profit, is nothing short of criminal.
The EU has agreed to raise €140 billion through a windfall tax on energy companies. It admits that gas is not settled yet. But it has made the right moves in my opinion. Not borrowing from future generations.
Normally, a new party leader gets a bounce in the polls but Truss did not get any bounce in the polls after her elevation to leader. The polling was flat before and stayed flat afterwards, a bit like her speech delivery. Truss and Kwarteng and the Conservative Party are still on the slide.
Alistair Ballantyne
Birkhill, Angus
AS the pound and economy slide into a winter of discontent, just maybe the men in suits have rescued the Tories!
In stark contrast to the UK’s disastrous mini-Budget, the Republic of Ireland’s budget package did not offer massive tax cuts. Instead it is tackling the cost of living crisis by increasing welfare and pensions along with increased subsidies on energy bills and childcare. This is being funded by a tax collection from thousands of foreign multinational companies based in Ireland.
In truth, while pensioners in Ireland get one of the best deals in Europe, Scottish and indeed UK pensioners get one of the worst. Ireland again demonstrates that independent European nations the same size as richly endowed Scotland have a happy and successful future.
Grant Frazer
Newtonmore
I EXPECT the “Rent to Buy” housing policy due to be announced by Douglas Ross will be greatly applauded by the Conservative Party because at its heart is another way for the wealthy to gain more wealth at the expense of people who have less. How much longer will our nation accept government in London by the rich for the rich?
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On the evidence so far, I see no reason to place any hope in the prospect of Sir Keir Starmer’s latest incarnation of New Labour doing much better than the main Conservative party. Our best prospect is for an independent government of Scotland to create a state where social justice is the essence of everything it does. Get Scotland out of this toxic union.
Ni Holmes
St Andrews
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