Reply to: Any views on potential increases to Corp Tax?

[Paralytic]

Subscribe to read | Financial Times

(Behind a paywall, but you may get around it by searching for the title and following the link indirectly.)

This direct link from Twitter got me to the full article.

https://twitter.com/FT/status/1353371767549652992

[ladymuck]

Interesting, but I'm not sure there is actually much substance in there. It is pretty much a list of straw man arguments that are then knocked aside. Reads like hindsight journalism now that there's rumours of CT increasing again.

Sadly that's a feature of most articles on The Conversation. You start off thinking they're going to do something in depth on an interesting topic and then the articles fizzle out. Regarding this particular one, I think it's a reasonable aid to understanding some of the wider arguments but to understand the detail one would need to look elsewhere.

[jamesbrown]

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[Paralytic]

Interesting PoV here
Corporation tax: 'race to bottom' may be ending after 40 years – here's why it never made sense

Interesting, but I'm not sure there is actually much substance in there. It is pretty much a list of straw man arguments that are then knocked aside. Reads like hindsight journalism now that there's rumours of CT increasing again.

[ladymuck]

Interesting PoV here
Corporation tax: 'race to bottom' may be ending after 40 years – here's why it never made sense

[Andy Hallett]

A rise in corp tax is at odds with our potential Brexit strategy of looking an attractive place to do business.

You only have to look at the companies that HQ’d themselves in Ireland (pre vote) to see that corp tax rates is a consideration for business.

[jamesbrown]

As I said above present the option of this tax alongside the withdrawal of Stamp duty against keeping stamp duty and the 10 year overdue Council tax revaluation and the political issues don't look so bad.

They look pretty terrible, regionally, and the Council Tax revaluation isn't going to happen either.

This is absolutely standard Treasury kite flying before a budget. "All hands to the stupid box folks, we need an outlandish idea to smooth the path for some small, incremental tax rises". It's how they operate.

[eek]

Yes, I think the kite flying even suggested 0.48%, so this is definitely what they're talking about, not a one-off tax.

However, it would generate such a backlash within the Tory party that Johnson wouldn't have the bottle to push it through - he's pretty weak in that regard.

Most of the big ideas represent Treasury kite flying and they invariably fail the political smell test, which is why they never happen.

Instead, we can expect more of the same, i.e., regular increases in council tax.

As I said above present the option of this tax alongside the withdrawal of Stamp duty against keeping stamp duty and the 10 year overdue Council tax revaluation and the political issues don't look so bad.

[jamesbrown]

It's not going to be a 1 off demand, the plan is to replace council tax and stamp duty with it.

So it would be (0.5%) so £5000 instead of £3000 in council tax with incentives designed to allow people to downsize (no stamp duty) and not pay immediately by adding it as a charge to the property.

People have spent years working on this in the treasury and the other option is a council tax revaluation and rebanding (and that would be worse).

Yes, I think the kite flying even suggested 0.48%, so this is definitely what they're talking about, not a one-off tax.

However, it would generate such a backlash within the Tory party that Johnson wouldn't have the bottle to push it through - he's pretty weak in that regard.

Most of the big ideas represent Treasury kite flying and they invariably fail the political smell test, which is why they never happen.

Instead, we can expect more of the same, i.e., regular increases in council tax.

[eek]

Hugely unlikely. You're a pensioner in South London with a fixed income of around £15k a year and a house worth £1m (and there are tens of thousands like that). How would you cope with a one-off tax demand at 15% of your house value for £150k? Or an annual demand for £15k?

Even expanding it to the average wage earning household of around £50k a year and an average house price of £280k, it's still a bill for £42k each, or £4.2k a year, which is still double the council tax...

Like most of the current round of threatened tax increases in the press, they ain't going to happen, they will be much more subtle.

It's not going to be a 1 off demand, the plan is to replace council tax and stamp duty with it.

So it would be (0.5%) so £5000 instead of £3000 in council tax with incentives designed to allow people to downsize (no stamp duty) and not pay immediately by adding it as a charge to the property.

People have spent years working on this in the treasury and the other option is a council tax revaluation and rebanding (and that would be worse).

[malvolio]

I expect this years budget to feature a lot of consultations ready for announcement in 2022 for implementation in 2023.

It really wouldn't surprise me that we will see a land / house value tax replacing stamp duty and council tax.

Hugely unlikely. You're a pensioner in South London with a fixed income of around £15k a year and a house worth £1m (and there are tens of thousands like that). How would you cope with a one-off tax demand at 15% of your house value for £150k? Or an annual demand for £15k?

Even expanding it to the average wage earning household of around £50k a year and an average house price of £280k, it's still a bill for £42k each, or £4.2k a year, which is still double the council tax...

Like most of the current round of threatened tax increases in the press, they ain't going to happen, they will be much more subtle.

[NotAllThere]

I remember when it dropped to 20%. Happy days.

But who makes a profit nowadays?

[ShandyDrinker]

And that gets the house market moving which will would result in younger voters moving towards the Tory party.

After all who are the house owning voters going to vote for (Labour and Lib Dems will happily increase wealth taxes).

Not that I would read political memoirs but this is precisely what was mentioned in Sasha Swire's recent book, effectively the Tories concentrating on wooing younger voters.

Older generations had better watch out, as all of the main parties are coming for the property value increases that many (myself included) have enjoyed over the last couple of decades.

The only way to avoid the catastrophe would have been to move out of mainland UK, which Brexit has of course has just made much more difficult for many destination countries.

[eek]

This would really surprise me - it would have too much detrimental impact to too many Tory donors. It would also drastically impact the people who have benefited from the house price risks in the south east but who's income and other assets have not matched that rise. They could literally have to sell their house/downsize to afford such a tax.

And that gets the house market moving which will would result in younger voters moving towards the Tory party.

After all who are the house owning voters going to vote for (Labour and Lib Dems will happily increase wealth taxes).

[DrStrange]

You're right actually. I need to stop consuming news 24/7 like it actually means something - getting myself all wound up for nothing really!