A Timely Reform by Ian Ridley

Blog & web site of Ian Ridley

Archive for the ‘Tax’ Category

The Tories – Surprisingly Irresponsible

Friday, May 1st, 2015

money notesThe Conservatives. Supposedly careful with tax-payers’ money. To the point of driving through policies to remove benefits from the genuinely disabled, cut the armed forces and put up VAT to reduce the deficit.

However, during this election campaign they have made a whole series of uncosted spending promises. These are based on ideology rather pragmatic control of spending. Had other parties done the same, the right-wing press would have torn into them.

It really does call into question their priorities and ability to think in the longer term. The “costly” policies that stand out are:

  • Inheritance tax cut –  this would cost £1 billion;
  • Selling Lloyds shares cheap to small investors – The Financial times says the cost to the taxpayer of, “..the giveaway … would depend on the size of the discount and the Lloyds share price at the point of the privatisation.”;
  • Discounted Right to Buy for Housing Association tenants. Offering these houses at a knock-down price is estimated to cost £5.8 billion.

Given there is still a large deficit in government spending and the Tories want £billions of spending cuts, the above policies are irresponsible to say the least.


Small Beer?

Thursday, March 21st, 2013
Pint Of Beer

Photo: Ian T CC-BY-SA-2.0, via Wikimedia Commons

One of the changes in yesterday’s budget was a 1p cut in beer duty. Could it have been better targeted?

Making a pint cheaper by 1p is probably neither here nor there for pub-goers. Yet how much is it costing the Treasury? According to the House of Commons Library beer duty accounts for about 40p a pint and HMRC states that it raises just under £3.5 billion per annum. So a 1p cut is worth about £90 million.

The pub trade has been under pressure from duty and VAT increases, declining disposable income and more people drinking at home. Assuming that pubs are something that we want to keep, would it have been better to use this money to directly help individual pubs? The latest BBPA survey shows there are around 50,000 pubs in the UK. So if beer duty had not been cut, about £1800 per pub would have been available, more than double that if you targeted help only at the 20,000 or so Free Houses.

Many pubs are small business, so the budget should help anyway with the reductions in Employers’ NI rates. This extra pot of money could have further assisted pubs, perhaps in lower business rates or other tax breaks, rather than the broader approach of a token cut in duty that mostly helps big drinks firms and pub chains.