...or, you're having a Laffer. An officinal drug or preparation is something that is readily available in the chemist's counter; something not requiring special preparation. George Osborne needs something as Paul mentioned last week - but nothing that 'special' or innovative - partly, IMHO, to counteract [one of] Gordon's poison pills:
"Mr Osborne’s political antennae tell him cutting tax rates on enterprising people is against the spirit of the times. His economic antennae should also waggle and tell him the way to tax the rich more is to make it more worthwhile for them to stay here and invest here. The UK is simply no longer competitive on tax. That was Mr Brown’s idea, his farewell present, his poison pill. 40% and 18% were good rates for Labour in power. In irresponsible opposition they will go the way of socialists not in government and send out a message that all we need to do is to soak the rich, even at the expense of less revenue from them . The priority today should be more jobs and more activity."
A case in point could be HSBC - "which makes most of its profit outside Europe and the US - has repeatedly warned it would up and leave if new rules became too onerous,"[Citywire]; HSBC are also in current wrangling over possible unpaid tax, a dispute which focuses on a decision by the bank "to hold shares in its Asian and some European subsidiaries through a Dutch company, which it has done since moving its main holding company to the UK. HSBC believes it should not pay UK tax on dividends it receives", ironically the dispute covers the period from 2002 to 2009. HSBC moved its HQ back to the UK but has arranged it's tax matters accordingly: so, hit them for more tax or risk them moving back to Hong Kong: is this a classic case for the 'law of diminishing returns'?
3 comments:
Yes GB's tax rates were political and not economical. It is Corporation Tax rates that should concern the wealthy not income tax rates because the lower the CT rate the more remains in the company for investment. I couldn't get the argument last week by the 280 odd 'entrepenuers' claiming that the 50% rate was stifling growth and investment. They simply came across to me as people who were rich and wanted to get richer.
Thanks for the link.
hi Paul, thanks for the comments, yes, I don't quite get that either (listened to a phone-in on the radio for the first time in a long time and there were a few options: VAT, fuel tax, 50% rate etc. I too got the impression that those for the 50% rate cut were more wanting to fill their pockets than employ more people and invest more. Mind you, you know better than me that the 50% is really a 60% anyway.
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