Tax

Rachel Reeves has drawn up a plan to cut tax benefits for workers using salary sacrifice schemes to buy expensive manual and electric bicycles, according to a report.

The chancellor is expected to introduce a new limit on how much people can spend on a bicycle through the cycle to work scheme in this month’s budget, the Financial Times said, citing people familiar with budget preparations, amid concerns that subsidising cycle purchases is not the best use of taxpayers’ money.

One government figure told the newspaper: “Cycle to work should be about helping ordinary commuters switch to greener travel, not giving tax breaks to high earners buying £4,000 e-bikes for weekend rides in the Surrey Hills. Taxpayers shouldn’t be footing the bill for luxury leisure.”

Bugger the scheme entirely. And all such as well. If x is the amount of tax we want then x is the amount. Whether you spend y – some amount of x – on a bike, an EV or whatever is nowt to do w’ it.

Rachel Reeves abolished this in April by bringing in a new system that, the chancellor said, would bring in £34 billion of tax revenue over five years.

However, analysis by the consultancy Chamberlain Walker casts doubt on her ability to raise that amount of tax revenue by calculating that 1,800 non-doms have already left — 50 per cent more than a forecast made by the Office for Budget Responsibility.

Mobile money doesn’t sit around to be taxed then, eh?

It is often difficult for people in India to remember life before Aadhaar. The digital biometric ID, allegedly available for every Indian citizen, was only introduced 15 years ago but its presence in daily life is ubiquitous.

Indians now need an Aadhaar number to buy a house, get a job, open a bank account, pay their tax, receive benefits, buy a car, get a sim card, book priority train tickets and admit children into school. Babies can be given Aadhaar numbers almost immediately after they are born. While it is not mandatory, not having Aadhaar de facto means the state does not recognise you exist, digital rights activists say.

You do not exist. Therefore we’re not going to tax you? I can think of workable ways around those restrictions in return for 45% of everything.

Of course, you’d need a non id number id number so that people knew not to charge you VAT…..

Downing Street is drawing up plans to reduce household energy costs and is considering scrapping VAT on fuel bills.

They need – sorry, want – more money. VAT is a not bad way to raise money. Stamp duty, CGT, profits taxes etc etc etc are bad ways to raise money. So, they want money, they’re going to reduce income from a not bad tax and have to make up the difference with worse ones?

Sigh.

Angela Rayner’s constituency home was valued at the exact threshold for inheritance tax when part of it was placed in a trust using a wealth protection firm.

Tax experts told The Times it was a “remarkable coincidence” that the property owned by the deputy prime minister and her former husband was valued at £650,000, the maximum amount allowed before the tax becomes payable.

Of course, of course, we’re going to have Spud thundering on about tax avoidance. Aren’t we?

We, on the other hand, will simply continue to insist there is no such thing. There is tax evasion and x complaiance. Avoidance could be an attempt but it is not a state. For upon examination anything and everything collapses down to one of the two states – illegal evasion of obeying the law compliance.

On the other hand of course she’s lying through her teeth. This hovel is north of the A4, no way it could be worth £650k.

Rachel Reeves’s “insane” plan to raise landfill tax could cause new-build prices to rise by £24,000, critics claim.

Industry leaders believe a 36-fold uplift to the levy will send construction costs soaring, causing developers to either stop building homes or demand higher prices from buyers.

Is it true? Dunno – looks a bit steep to me.

Is it useful? Sure. A good indication that none of these tossers ever look at second order effects.

Just look at when Rishi Sunak released his tax return. He is from one of the UK’s 350 richest families, yet paid the same effective tax rate as an average teacher, despite having income more than 50 times higher.

That doesn’t sound fair to me, and it won’t sound fair to millions of people across the country who are struggling to get by and fed up with politics working for the rich and powerful over everyone else.

So what’s your suggestion of fair then?

At the budget, Rachel Reeves could generate tens of billions of pounds by making tax changes that are overwhelmingly popular with the public and would be paid only by those with the broadest shoulders. Three-quarters of us want a wealth tax on net fortunes over £10m (backed by world-leading economists). Equalising capital gains tax with income tax is favoured by the majority too.

That 2% wealth tax would be a 100% tax upon risk free income.

No, really. Gilts pay 5%, you pay – -ish – 50% income tax on the interest. Then someone takes 2% of the capital value each year and that’s before we account for inflation so your tax rate is well over 100% then.

Or capital gains. So you own BP shares. BP already pays 20% or whatever corporation tax (and 78% on North Sea). So that’s 20% knocked off the value of your shares there. Now you want 45% income tax upon it as well? And without inflation indexing, so that again your real return will be asymptotically approacing zero. In fact, for long term holdings, will go below zero.

That’s fair is it?

Quite apart from what 100% and more taxation of the returns to investment will do to levels of investment…..

Fair?

Fuck off.

Treasury officials are expected to push the Chancellor to consider a mansion tax on property sales as well as more radical options including annual levies that would disproportionately hit homeowners in London and the South East.

Abolishing stamp duty and – because of course tax cuts are right out – replacing with a property tax, a land value tax, more council tax bands, makes a great deal of sense. Would be hugely beneficial in fact. For transactions taxes are a really bad idea and repeated taxes on real property are the last bad of our varied options.

OK, so, everyone now, hands up for those who think that’s what they’ll do. Rather than another transactions tax on top of current stamp?

At present, unlimited amounts of money and assets can be gifted to friends and relatives without paying any eventual inheritance tax, as long as the transfer happens at least seven years before the person giving the gift dies.

A so-called taper tax rate of between 8 and 32 per cent is applied to gifts given between seven and three years before death. Money given less than three years before is taxed at the full inheritance tax rate of 40 per cent.

A lifetime cap on gifts would allow the Treasury to raid funds given from parents to children many years earlier in an effort to boost the tax take.

My vision of a society is one in which that wealth to be independent flows down the generations. Fopr others it’s pone in which no independent wealth is possible therefore so is that independence impossible.

Ho Hum.

….while the amount that districts can increase council tax is capped, there is no cap for parish councils,

Can we guess, children? Ah, yes, knew we could. So the districts will devolve activities down onto the parish but proffer no budget. Therefore the parish tax will rise.

In April, a total of 11 parishes increased their council tax precepts by more than 300 per cent.

That Charlie Munger, eh?

Donald Trump has threatened to strip Rosie O’Donnell, the actress and comedian, of her American citizenship, labelling her a “threat to humanity”.

Mr Trump said the 63-year-old entertainer, a long-time critic of his, was “not in the best interests of our country” and called for her to remain “in the wonderful country of Ireland”, where she moved following his election win last year.

But a little thought.

If you voluntarily give up your US citizenship that’s a tax event. You pay all CGT up to that point and even, I think, the income tax you would have paid for some years forward.

So, would that apply if you had the citizenship taken away? There are people wh do lose citizenship after all. So, what does the IRS do to them?

He singled out two ideas for new wealth taxes to The Telegraph on Wednesday. The first is a 2 per cent tax on assets of more than £10 million, which is an idea being pushed by the Patriotic Millionaires UK campaign group, and the second is increasing capital gains tax in line with income tax.

“It is the broadest shoulders argument. ‘Distributed to each according to his need.’ That’s not Marx, it’s the Bible,” Mr McDonald said.

“I’ve made the case for the last six months for wealth taxes. I’ll continue to do so in the next six months because it’s right.”

Both such taxes would be above the peak of the Laffer Curve. They’d raise less income, not more…..

A Treasury spokesman said: “The UK remains highly attractive.

“Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is simpler and more attractive than the previous one, whilst it also addresses tax system unfairness so every long-term resident pays their taxes here.”

Fairness is rather in the hands of the person who has to hand over the cheque. Or at least, one of the relevant views of fairness is in those hands. And they’re leaving.

Mr Bessent said the G7 had agreed not to impose what is known as OECD Pillar 2 on US companies. That refers to a 15pc minimum corporate tax rate, which was agreed in principle by 140 countries to be imposed on companies with global revenues of more than €750m (£639m).

Doesn’t that just piss on the tax campaigners’ chips.

Decades of Spud insisting that business must be taxed where the money is made. Which he insisted is where the sales/people are.

But that’s not where value is added. Apple, for example. Some chunk of the value is the brand. Some other chunk is the software, the design etc. All of which are created in Cupertino. So, Cupertino is where theose should be taxed – by Spud’s own valuation. Which is, of course, the old tax system and now again the new one.

But Spud will bitch all the same.

Glastonbury founder could avoid £80m in inheritance tax
The festival could be worth £400m and Sir Michael Eavis, its founder, has moved most of his financial interest to his daughter and a family trust

But, but, it’s charitable!

Financial experts suggested that Eavis may have decided to transfer the assets after tax advisers told him that HM Revenue & Customs would not accept a valuation of his companies for IHT purposes based upon the festival having some “quasi-charitable position”. While Glastonbury operates with a strong charitable ethos — last year it gave more than £5.9 million to good causes — it remains a private company and is not a charity, so HMRC is likely to value it as such when considering an IHT bill.

Yes, but being able to distribute £9.5 million a year to your favourite causes is wealth. So, it should be taxed as wealth, right?

The fiscal watchdog assumed that 12pc of non-doms without trusts and 25pc with trusts would go. However, the OBR warned that predicting behavioural responses was difficult.

“How many?” is the important question about an awful lot of economic ideas. We can theorise about who will do what as a result of this or that change. But we only actually find out when we see how many do, in fact, do that.

This is the very base of that Laffer Curve of course. The substitution effects says some will, at some tax rate, say bugger it I’m off fishing. And the income effect means some will work more at a higher tax rate in order to make their nut before they go off fishing. The overall effect on tax collection of a higher rate is the combination of how many do each.

Empirically – counting the actual numbers – we tend to find that the reaction of the lower paid, especially pieceworkers, is domainated by the income effect. That of the richer by substitution. Which is, of course, darkly amusing. For it means that at proper high tax rates we end up shifting the tax burden from the highly paid to the lower. Because that’s how the reactions to the higher taxes change behaviour.

Most socialist and equitable, eh?

But in large part this boils down to the US’s low-tax, low-regulation environment, which has helped keep wages there above those of the rest of the West for more than a century.

Tax in Britain levied on income, property and all purchases, are forecast to hit a historical high of 37.7pc of GDP in 2027 to 2028. The equivalent US rate is expected to come in at less than half, at 17.8pc.

Low taxes might well increase growth. And thereby wages. But low taxes on wages themselves won’t create higher wages.

Also, they’ve just measured the US tax burden as the Federal one. There’s another 8 or 9% of GDP levied by states, counties and so on….

Tsk.

Labour politicians told us again and again during the election campaign that closing the non-dom rule that allows wealthy foreigners to be taxed only on their UK instead of their global income, would bring in billions in extra revenue to be spent on public services. They dismissed warnings that they would simply leave as “fear-mongering”. It turns out they were wrong. There were already anecdotal reports of hundreds making an exit. It has now emerged that one of the wealthiest non-doms in the country, Lakshmi Mittal, is planning to get out.

As I’ve pointed out elsewhere this morning.

So, we change the social contract. Those with the ability to accept or decline that change get to accept or decline that change. Some will decline it.

And there we are.

After all, each cut inflicts more pain than the last, hacking away at a public realm and social expenditure already shrunken by the previous round of slashing.

What cuts? We’re still spending more than we were in 2008 as a portion of everything. Taxes are up, spending is up, in real, nominal and %ge of GDP terms.

Yet this week, our supposedly Labour chancellor, Rachel Reeves, will take a scalpel to departmental budgets already devastated by 15 years of austerity.

What austerity?

But I do think he really believes this shite:

Back in 2020, a team of accountants, economists and lawyers set up a Wealth Tax Commission. They weren’t messing about: one of its main architects specialised in helping private clients navigate the British tax system, and therefore knew its loopholes inside out.

Their proposal: a one-off wealth tax on millionaire couples for five years would raise £260bn.

Ah, yes, that was Arun Advani’s idea for flat out theft. Unlikely to work really….

Spain will struggle to match Nato defence spending targets because of political divisions and the weak position of the country’s Left-wing government.

But there is another factor that is making it difficult for the country to spend 2 per cent of its GDP on its military: its booming economy.

Pedro Sánchez, Spain’s prime minister, is meeting the heads of other parties on Thursday to seek support for his objective of accelerating the 2 per cent target in response to the call from Ursula von der Leyen, the European Commission president, for an €800 billion spending rise across the EU to face the threat of Vladimir Putin’s Russia.

Spain’s buoyant economy, with GDP growing by 3.2 per cent in 2024, only makes the target harder to reach. Countries such as Germany and France are barely registering economic growth, meaning such GDP-based spending objectives are static and not such a moving target.

No, it works the other way around. Tac revenues are leveraged towards growth.

Say – just an example – you get 40% of GDP in taxes. If you get 3% of growth then you – probably, a guess – get 60% of that 3% of growth in taxes.

Because everyone’s already using all their tax free allowances, any increase in income gets taxed at full whack – and perhaps more as people are pushed up income bands. Etc, etc, across the economy as the money circulates.

The marginal tax rate in the economy is always higher than the average rate…..