A few weeks ago I sat watching Question Time. This is something I rarely do as my wife complains I disturb her naps with my irate screaming at the screen.
This time she was jerked from her slumbers when I could stand no more of Labour’s guileless shadow foreign secretary, Emily Thornberry. The subject had come round to the NHS funding. Keen to display her socialist principles Ms Thornberry complained about corporation tax being cut.
Ok, so perhaps a shadow foreign secretary might not be totally at home with the tax system. But if you are representing Her Majesty’s opposition on national television and you have pretensions to be in a future government, would it not be an idea to gain at least a passing understanding of it?
Corporation tax raised £44.4bn in the last tax year when it stood at 20 per cent. In the 2013/14 tax year when it stood at 23 per cent it raised £40.3bn. Get it Emily? Lower corporation tax helps to create business and jobs, thus raising more tax.
Lower corporation tax helps to create business and jobs, thus raising more tax.Admittedly some jobs go to those funny people in Kent who fly the flag of St George – but, you never know, they might vote Labour if you stop sneering at them on Twitter.
The real point as Mike Warburton, Grant Thornton’s tax director, once explained to me, is that only three taxes can raise significant sums: income tax, VAT and National Insurance. These raised £169bn, £115bn and £113bn respectively in the last tax year. Add a couple of percentage points to any of them and the money comes rolling in.
Other taxes such as stamp duty land tax (£10.7bn), inheritance tax (£4.7bn) and even insurance premium tax (£3.3bn) are tiddlers in comparison.
Next month Philip Hammond as chancellor will face what Emily Thornberry is never likely to face and that is laying out in his Budget how the country can make ends meet while having one hand strapped behind his back.
David Cameron removed wriggle room when he pledged before the last election that income tax, VAT and National Insurance would not be raised. I suspect Theresa May is far too wise to make such a foolish promise before the 2020 polls.
Because sooner or later we must decide whether we are willing to pay for the type of health service and education systems everyone claims to want. That will mean being honest with the electorate and saying if you want it we must all pay for it – and the money needed will not come from raising corporation tax.
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Triple lock is still essential
A report by the Resolution Foundation into generational fairness has led to more calls for the scrapping of the triple lock on pensions.
Coverage of this report has centred on suggestions that pensioners are better off than those in work and that average incomes of millennials have not progressed beyond those of the generation before them.
But this report needs to be read with care. The key point is that those entering retirement are better off, often because many are still working and they have good pensions.
However individual pensioners may not have experienced rising incomes as they grow older. So older pensioners may still be struggling with low incomes even though a new generation of wealthier pensioners is pushing up the average pensioner income.
As I have pointed out before the triple lock has not yet achieved the aim of getting the state pension back to where it was in the early 1980s before decades of erosion began. The lock remains essential for now if only to help the older and often poorer pensioners.
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AE: what's not to like?
Sometimes you only realise just how wonderful a policy is when you come face to face with it. I have always been strongly in favour auto-enrolment into pensions. What’s not to like? A pension is free money.
Now I have seen it in action twice. I have two stepsons. The older one is Mr Frugal. He’s sensible, he saves and he’s in a final salary pension fund. There was never any question he would sign up the first chance he got.
The younger one is Mr Profligate. Money burns his palms until he spends it. So I was really pleased the other day when he mentioned his pension into which he had been auto-enrolled a couple of years ago.
Without auto-enrolment he would not have saved a penny towards his future. With it he will at least have a fund to build on if he ever decides to start planning for his future.
Tony Hazell writes for the Daily Mail's Money Mail section