Capital Gains Tax: No coalition split says Vince Cable

Business Secretary Vince Cable has insisted the coalition government is not split over planned increases to non-business capital gains tax.
The move could see second home sales taxed at a rate of 40% or 50%.
Senior Tory MPs have attacked it as a tax on the middle classes and a betrayal of Conservative values.
But Mr Cable told BBC News it was a crucial part of the coalition deal and there was no disagreement over it between the Lib Dem and Tory partners.
Mr Cable, who has stood down as Lib Dem deputy leader, said the changes to capital gains tax would help to fulfil the Lib Dem aim of bringing more "fairness" to the tax system.
He told the BBC: "It's very important that we have wealth taxed in the same way as income. At present it is quite wrong and it is an open invitation to tax avoidance to have people taxed at 40% or potentially 50% on their income, but only taxed at 18% on capital gains; it leads to large scale tax avoidance so for reasons of fairness and practicality, we have agreed that the capital gains tax system needs to be fundamentally reformed."
Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

Queen's Speech 2010: Bill by bill

As posted on BBC.co.uk

Here is an at-a-glance list of the bills outlined in the 2010 Queen's Speech programme:

Academies Bill
Will give more schools in England, including primaries, the freedom to become academies allowing them to opt out of local authority control. Will also make it easier for parents and other groups to set up "free schools". A second bill in the autumn will give schools greater freedom over the curriculum and give teachers greater powers to deal with bad behaviour. It will also set up the "pupil premium" to help disadvantaged children.
Airport Economic Regulation Bill
Includes measures to increase the competitiveness of UK airports , having ruled out new runways in the South-East of England. More details to be announced in due course. Would apply across the UK, except Northern Ireland, which regulates its own airports. The government is in discussions with Northern Ireland over whether to adopt the reforms there.

Armed Forces Bill
Will increase support for serving personnel, maximising leave periods and giving more assistance to their families. Will provide extra mental health services for veterans.
Decentralism and Localism Bill
Will give councils more powers over housing and planning decisions and begin a review of local government finance. Will apply to England and Wales but implications for Scotland cannot be ruled out because of the "wide scope" of the Bill.

Energy and Green Economy Bill
Will promote enhanced energy efficiency, including the roll-out of smart meters. Will promote low-carbon energy production. Most of the measures will apply to England, Wales and Scotland with some devolved elements, "depending on the final detail".
Equitable Life Payments Scheme Bill
Will secure compensation for nearly a million policyholders hit by the near collapse of the insurer Equitable Life UK-wide.

European Union Bill
Will mean a referendum must be held to approve any future treaties handing powers to the European Union.

Financial Reform Bill
Will shift responsibility for macro-regulation of the banking system from the Financial Services Authority to the Bank of England . Despite earlier reports there is no mention of a levy on the profits of UK banks.

Freedom (Great Repeal) Bill
Will limit the amount of time that DNA profiles of innocent people can be held on national database. Will tighten regulation on the use of CCTV cameras, remove limits on right to peaceful protest. The storage of DNA is a power devolved to the Scottish Parliament. The Bill would adopt the Scottish model.

Identity Documents Bill
Will scrap identity cards and National Identity Register introduced by Labour and cancel the next generation of biometric passports. UK-wide legislation.

Health Bill
Will seek to give health professionals and patients more say over NHS decision-making. Will cut health service quangos and some central targets and increase focus on "health inequalities".

Local Government Bill
Will block the creation of single-tier councils in Exeter and Norwich.

National Insurance Contributions Bill
Will block next year's 1% rise in NI contributions by employers. UK-wide.

Office of Budget Responsibility Bill
Will provide a "statutory underpinning" to new Office of Budget Responsibility, which will provide borrowing and economic growth forecasts for the Treasury. Main elements of the proposed bill "have yet to be decided upon". No mention of reforming the remit of the National Audit Office, which was predicted in advance media coverage.

Parliamentary Reform Bills
Measures will be introduced to establish fixed-term elections for Parliament, held every five years. Will require 55% of MPs to vote for a dissolution of Parliament between scheduled elections. Will give constituents the right to "recall" corrupt MPs between elections. Will reduce the number of MPs by about 50. Review of reform of the House of Lords may be included in a separate draft bill later in the year. A Bill will also be introduced for a referendum on changing the voting system to the Alternative Vote. Will apply to the whole of the UK.

Pensions and Savings Bill
Will restore the link between earnings and the state pension from 2012 . Applies to England, Scotland and Wales. Will legislate for the phasing out of the default retirement age and set a timetable for raising the state pension age, depending on the outcome of a review.

Police Reform and Social Responsibility Bill
Will provide for directly elected commissioners to oversee local police forces. There is no mention of monthly local crime statistics, which were mentioned in earlier reports. Will also give police more power to deal with alcohol-related violence and ban sale of below cost price alcohol. Would also establish a dedicated border police force, as part of a refocused Serious and Organised Crime Agency. Applies to England and Wales only, except border police force, the scope of which is "to be confirmed".

Postal Services Bill
Will allow injection of private capital into the Royal Mail, address its pension deficit, guarantee the post office network remains in public hands and seek to improve staff relations with management. Would apply to England, Wales, Scotland and Northern Ireland.

Public Bodies Bill
Will abolish a number of non-department government bodies and limit the powers of other quangos. Applies to England and Wales only.

Scotland Bill
Will grant the Scottish Parliament more powers over taxation and borrowing under proposals made by the Calman Commission.

Terrorist Asset Freezing Bill
Will expand scope of existing legislation to cover new organisations thought to present threat to security. UK wide legislation.

Welfare Reform Bill
Will create a single welfare-to-work programme and make benefit payments more conditional on willingness to accept work. Benefit changes will be UK-wide, but will need parallel legislation in Northern Ireland, where it is devolved.
Other measures will be implemented via secondary legislation, included in future draft bills or remain commitments at this stage.

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

Police to protect passengers from anti-social travellers

One can't help wondering if this coincides with government plans to stop ministers from travelling first class!

Protecting train passengers from anti-social behaviour will be the top priority for officers, the head of British Transport Police has said.
Chief Constable Andy Trotter said more officers would be on duty during the worst hours for trouble - 2000 to 0200.
And he also said that talks were under way with rail firms to improve lighting and make car parks safer.
Launching the force's policing plan, Mr Trotter said he wanted travellers to feel safe at all times on the network.
Night travel
"It's important for us to listen to people's concerns and be responsive to them, and we know that people are more concerned about travelling at night," he said.
Chief Constable Trotter said research showed men aged under 26 were most concerned, adding that this was understandable as they were the most likely to be the victims of assault.
He said: "We need to be out there protecting them and reassuring all passengers that the railways really are a very safe environment.
"By putting more police on patrol in the evenings, we are aiming to address some of those anxieties and boost passenger confidence."
Police figures show that between the hours of 2000 and 0200, a total of 4,270 people were caught behaving anti-socially on the railways last year.
'Good news'
Transport police caught a further 754 people linked to football trouble - an increase of almost 50% on the previous year.
Recorded crime on the rail network was down 7.3%, with decreases of 7% for violent crime and 22% for robbery.
Sexual offences were up slightly by 0.7% - an increase accounted for by seven crimes.
Michael Roberts, of the Association of Train Operating Companies, said it was "good news for passengers" that the overall crime rate was falling.
He said: "Train companies invest significant amounts of money, time and effort into ensuring that passengers are safe on trains and at stations, and these results show that this hard work is clearly paying off."
Transport minister Theresa Villiers said: "Rail passengers and those working on stations and trains rightly expect to be able to travel safely and securely."
Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

Taxes are likely to rise.

At Telegraph.co.uk Edmund Conway posts

THE most interesting thing about income tax is that it is not permanent. When William Pitt the Younger introduced the levy on salaries in 1798, it was supposed to be a temporary measure to pay for the Napoleonic wars. The pretence that it would soon be ditched led to some rather peculiar quirks in British law. The reason Britain has to have a finance bill every year – even if there were nothing of substance in the Budget – is to give the Government legal power to tax incomes for another year.

But now, against all expectation, some people are seriously talking about bringing an end to income tax – or, at the very least, cutting it back seriously. Some experts are imagining a world where you don’t pick up your monthly paycheck to realise with horror that the Government has already extracted half your income.

Before you get too excited, no one is talking about an end to taxation. As long as we have a state – particularly one that needs to provide its citizens with everything from safety and protection to roads, health and unemployment insurance – there will be taxes. No amount of “efficiency cuts” will bring the total tax burden down to zero. As Benjamin Franklin declared back in the 18th century, “In this world nothing can be said to be certain, except death and taxes.”

That much remains the case today, and with the new Government gearing up for its emergency Budget a month from now, the omens – at least for taxpayers – are not good. So large is the hole in Britain’s public finances – and so poor are governments, historically, at cutting public spending – that it is now almost inevitable that taxes will have to go up.

The only question is which taxes. And this is where things get interesting. Historically, Britain, like many of its European neighbours, has tended to raise slightly more money through direct taxes – like income tax, and corporation tax charged on companies’ profits. But there is a growing body of evidence that it should be focusing more on indirect taxes – those which, like VAT, air passenger duties or road taxes – are charged only when someone makes a purchase or uses a product.

According to Robert Chote, director of the Institute for Fiscal Studies, the most likely tax to rise will be VAT – probably from its current rate of 17.5 per cent to 20 per cent. Although shoppers will groan, this would only bring it to around the average level throughout Europe. The International Monetary Fund has also recommended that the Government consider getting rid of some of the exemptions, which mean VAT is not charged on food, children’s clothes and books – although in a letter to this newspaper earlier this week, Lord Higgins, one of the original architects of VAT, warned that such a move would be disastrous.

Why the focus on VAT and not income taxes? In part because policy-makers are starting to realise that income taxes may have swelled too high. This was an epiphany borne not out of a sudden recognition that taxpayers are becoming overburdened, but, predictably, through expedience.

Income taxes, governments are realising, don’t always work. For one thing, they can be relatively easy to avoid. Just look at Greece, where tax avoidance is so rife that, in a country of shipping tycoons with a booming tourist industry, there are technically only 15,000 people declaring a salary of over €100,000. In Britain, where the highest income tax rate has just risen to 50 per cent, thousands of people use clever accountancy to treat some of their annual income as capital gains – conveniently charged at a rate of 18 per cent (although the new Government wants to close this loophole).

In a world where both people and cash are so mobile, high income tax rates either drive people away or encourage them to hire accountants to help them avoid them.

Moreover, other countries seem to be able to get along with a relatively low reliance on income taxes. China manages to raise more than 60 per cent of its taxes by charging indirect taxes rather than direct taxes. In Europe, the figure is more like a quarter. In the US, the proportion raised through sales taxes is 17 per cent.

Our dependence on income tax is all the more perverse when you consider how much it can undermine our economic health. If you were to rank taxes in order of the damage they do to growth, income tax (first on businesses’ profits, then on our salaries) would be at the very top of the list – the most damaging, followed by consumption taxes such as VAT, and with property taxes at the very bottom.

This insight, from the Organisation for Economic Co-operation and Development, is now starting to feed into government. Spain has already pledged to increase VAT from 16 per cent to 18 per cent – and possibly higher thereafter. To the utter horror of many of its citizens, who consider it a suspect foreign form of taxation, even the US is now discussing whether to introduce a VAT of its own.

Here in the UK, it isn’t merely VAT that is likely to rise: taxes on air travel are also on the up; plans to reduce fuel duty (another indirect levy) have been scrapped. Banks are to face a new tax on their profits, which may be seen as compensation for the fact that VAT is not charged on financial products.

So let’s assume that in a few years’ time income tax is lower than it is today, and indirect taxes like VAT are higher: what does this spell for each of our lives? According to the textbooks, not much. Most economists assume that in the end all taxes are paid by people, directly or indirectly. If a company is charged higher corporation tax, it ultimately passes this on to its customers. What we gain by paying less income tax we lose by paying more sales taxes.

But easy as it is for an economist to claim that VAT helps a country to grow faster than income taxes, this is to ignore a whole spectrum of social issues. For one thing, income taxes are progressive: the more you earn, the more you pay in tax. Sales taxes are not: according to the IFS, those most affected when everything from VAT to tobacco and fuel duties rise are lower income families.

Much as economists like to ignore it, taxes are not merely there to raise money: they are one of the most powerful social tools for redistribution of wealth. Given income inequality in the UK and the US is already at the highest level since the 1930s, politicians will have to think long and hard about the social consequences before overhauling the taxation system.

Finally, there are the consequences for the way we live our lives. The rule of thumb is that the higher a tax is, the less willing people will be to do the activity being taxed. So raise taxes on spending, and people will do far less of it. Raise taxes on debt and people will borrow less. Lower taxes on income and people will work harder. So: a hard-working, financially cautious, low-spending society is what we would be left with. That doesn’t sound very British, does it?