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General Election 2015

Discussion in 'Speaker's Corner' started by Stretch, Jan 5, 2015.

  1. dante6491

    Soldato

    Joined: Jun 30, 2006

    Posts: 5,907

    Location: London

    Very very damning front page for Labour on the Telegraph tomorrow.

    As someone who read economics at university and now work in finance the rhetoric that Labour are coming out with scares me quite a bit. The UK government currently taxes around 36.5% of GDP and spends around 41%. That is the 5% odd budget deficit we are running. No government in the history of the UK has managed to raise more than 38.5% of GDP through taxation. Even if Labour raise taxation to that sort of level, they will still have to have cut deeply. No two ways about it.

    You may think that this is good, less severe cuts, more spending on public services. The problem is most studies are now saying high levels of taxation slow economic growth. If the economy does not grow then there is no chance of achieving the tax revenues, in real terms, to pay down the budget deficit and then onto the public debt.

    Labour are now planning on clearing the current budget deficit but still borrowing £30bn for capital expenditure. I can generally get behind capital expenditure, except of course, the borrowing will be kept off balance sheet. The £1.4tn public debt figure relates only to current debt. Estimates put the off balance sheet debt at an additional £5tn - £7tn. These are the public sector pension liabilities, the state pension liabilities and most importantly all of the PFI debt which the Labour government of 1997 to 2010 used to fund capital expenditure in the UK at a massively inflated cost.

    Rachael Reeves had a car crash interview on Sunday morning where she said, essentially, the only tax rise she had planned was increasing the 45% tax rate back to 50%. Andrew O'Neil correctly said this could raise anywhere between £0 and £2bn. If the change in rate does nothing to increase revenue, or in fact decrease it, then it goes to show Labour are the party of envy rather than aspiration. Just as an amendment to that, believe it or not, the Laffer curve been fairly consistently correct. When the top rate of tax was massively cut in the 80's revenues sky rocketed. The coalition government has cut corporation tax and the revenues collected have increased. They cut the additional rate band and tax revenues increased.

    Why anyone would be compelled to raise taxes I do not quite understand given the damage it could do to revenues and freedom of choice for the individual.
     
  2. Vonhelmet

    Caporegime

    Joined: Jun 28, 2005

    Posts: 48,109

    Location: On the hoods

    Because it's a trivially easy way to win votes. It doesn't matter whether it makes economic sense, so long as you're in power, right?

    NB: The latter sentiment can be applied to the coalition's economic policies as well, if you so desire.
     
  3. Judgeneo

    Capodecina

    Joined: May 15, 2010

    Posts: 10,013

    Location: Out of Coventry

    Off the book book debt (real debt), the UK's record of income as a percentage of GDP (the real budget), and PFI (real borrowing forecasts).

    All extremely important points, however when I try explaining them to people their eyes just glaze over, even the politically astute ones. I have no confidence that any party actually understands these points - see the Tory record on PFI - but conservatives have earnt a bit more of my confidence than labour.


    Actually tell a lie, UKIP mentions off the book debt and PFI...
     
  4. achitophel

    Hitman

    Joined: Sep 6, 2006

    Posts: 730

    Yup. Terribly depressing. On the flip side, the problem with a democracy is we not only get the government we choose, we get the government we deserve. The populace at large only focuses on issues like a 50% marginal tax rate to "soak the rich", irrespective of whether and how much it will raise. The "boring" important issues of how much we're borrowing, how sustainable it is and what the impact would be of say a 3-4% increase in interest rates (ironic, since we've just ensured that households have to model this in when applying for mortgages) just get left by the wayside.

    I am also deeply skeptical of off-balance sheet capital expenditure classifications - corporate accounting wouldn't allow these liabilities to be ignored, so no idea why the Govt (of any colour) thinks it's justifiable.
     
  5. JeditOjanen

    Mobster

    Joined: Feb 7, 2011

    Posts: 4,722

    I think you missed the last week of news where Salmond basically admitted the SNP plan is to force a minority government so he can hold them to ransom.

    It's going to backfire on them hard, though, as the SNP can't even negotiate with the Tories without being destroyed and so their threats are toothless. If the government is Tory there will be a second General Election, and if it's Labour the SNP can't make good on their threats without Ed Miliband reminding the nation of what happened the last time the SNP sided with the Tories against a minority Labour government. Either way it will result in a swing back to Labour in Scotland as people realise that all the SNP are doing is helping the Tories.
     
  6. do_ron_ron

    Sgarrista

    Joined: Oct 23, 2002

    Posts: 9,651

    Do you really think English Labour MPs(if they were the largest party) would allow a minority party to control them? That is like saying Clegg is controlling the current Tory Govt coalition.
     
  7. Terminal_Boy

    Soldato

    Joined: Apr 13, 2013

    Posts: 7,439

    Location: La France

    UKIP it is then.
     
  8. Quartz

    Sgarrista

    Joined: Apr 1, 2014

    Posts: 9,761

    Location: Aberdeen

    There was an unintentionally amusing moment on the BBC earlier. They were talking about that open letter of 100 businesspeople and trust in business. They had a chart to show how trust had changed over the years. What they studiously avoided mentioning was that on the same chart was the trust in media down at about 30%!
     
  9. mattyfez

    Sgarrista

    Joined: Apr 12, 2007

    Posts: 9,315

    I've always voted conservative, but I'm genuinely not sure this time around.

    I don't think they've done enough work to claw back tax from large companies, yes I am aware that if they do, large companies may invest less in the country, the balance seems to be too far weighted in favour of big business at the moment, at too much cost to pubic service. (I know, I know, what do you expect from a tory gov).

    It just seems to me we are cutting funds which are a drop in the ocean compared the vast tax revenue that could be generated by tightening up big business taxation just a little bit, possibly just by micro managing HMRC better to ensure it's more effective using laws that already exist.

    I fully understand big business needs incentives to invest, and they in turn will generate jobs, but if they are not paying much tax.. as I said, the balance seems off-kilter to me.

    I think I'll vote lib-dem as they seem the lesser evil, I've never been a labour voter for too many reasons, and UKIP seem like they could be dangerous, I'm disillusioned with the conservatives so I don't have much choice.
     
  10. MadMossy

    Soldato

    Joined: Oct 25, 2004

    Posts: 6,100

    Location: Sunny Torbaydos

    I find it highly amusing for a party that is often accused of "catering for the rich kids" has something published in the press about how a 100 rich boy corporations are all signing in favour of the conservatives.

    Well of course they will, as it will help the rich get richer, while everyone else in the country suffers.
     
  11. Monkeynut

    Soldato

    Joined: Nov 7, 2007

    Posts: 6,406

    Location: Cheshire

    Is this really true though? Unemployment is still coming down. Would Labour have somehow done this better?
     
  12. DisrupTor75

    Mobster

    Joined: Sep 30, 2009

    Posts: 2,513

    Location: Merseyside. UK

    Is it really though? a lot of those figures are no doubt due to the zero-hour contracts, which don't count as real jobs at all to most people.
     
  13. Quartz

    Sgarrista

    Joined: Apr 1, 2014

    Posts: 9,761

    Location: Aberdeen

    The economy is not a zero-sum game.
     
  14. mmj_uk

    Capodecina

    Joined: Dec 26, 2003

    Posts: 23,405

    It's a big con, the government have been pushing part time/zero hour work because as far as the jobs figures go two or more people in part time/zero hour employment is better than one person secure in full time employment, the quality of employment is not important to them. Then there's the 'workfare' whereby people working for their benefits are counted as employed and which will be expanded to the 18-24's soon to hide all of the school leavers who can't get a job either. Then there are benefits sanctions which have driven most people to food banks:

    All in all, the Tories seem more interested in winning the next election by deception, lies and generally preying on ignorance than actually fixing the economy.
     
    Last edited: Apr 1, 2015
  15. Vonhelmet

    Caporegime

    Joined: Jun 28, 2005

    Posts: 48,109

    Location: On the hoods

    Politics is the art of promising 51% of the population something with the assurance that the other 49% will pay for it.

    Labour are doing exactly the same, except with different groups of people.
     
  16. kitch9

    Soldato

    Joined: Aug 13, 2008

    Posts: 6,474

    The reason that this nut hasn't been cracked is because it's next to impossible to sort in a worldwide economy. There's no way to stop multi nationals setting up in a low tax country and funnel the profits through it..

    The only way to solve the problem is for every country to charge the same tax and that ain't happening any time soon as geographical position will become the advantage for some (We have the advantage of being the centre of the earth time wise. ) so we have the weird scenario of companies volunteering just enough tax to make the newspaper headlines go away.
     
    Last edited: Apr 1, 2015
  17. kitch9

    Soldato

    Joined: Aug 13, 2008

    Posts: 6,474

    Someone should tell the office for national statistics that they are lying.
     
  18. mattyfez

    Sgarrista

    Joined: Apr 12, 2007

    Posts: 9,315

    I agree, but the tax screw on multi nationals needs to be seen to be tightened up a bit, I'm not suggesting draconian measures, we don't want to put off investment seeing as we have no home grown industry to fall back on, even 'baby steps' on this scale would generate a massive tax cash influx.
     
  19. V F

    Capodecina

    Joined: Aug 13, 2003

    Posts: 15,917

    Location: UK

    …and don't want zero hour contracts to end.
     
  20. kitch9

    Soldato

    Joined: Aug 13, 2008

    Posts: 6,474

    The screw is being tightened, hmrc now has the power to decide what I overly aggressive tax avoidance and what isn't without loads of legal red tape, but there's no way to stop anyone setting up a company in Ireland and selling into the UK using products bought at inflated prices from the Irish office.

    You could directly tell a hmrc tax inspector that is what you are doing and they would just nod in agreement