MP Oliver Letwin says flat rate tax could be discussed when UK finances improve

MP Oliver Letwin says flat rate tax could be discussed when UK finances improve

MP Oliver Letwin says flat rate tax could be discussed when UK finances improve

First published in News
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WEST Dorset MP Oliver Letwin has reportedly hinted that plans for a flat tax rate could be discussed.

The Minister for Government Policy was recorded by a national newspaper saying that the flat rate tax policy may be discussed when the financial situation in the UK had improved.

But a Conservative spokesman has said that there will not be a flat tax rate and that they oppose the idea.

The flat tax rate system is one that applies the same tax rate to every taxpayer regardless of income bracket.

The same tax rate is applied to all taxpayers, with no deductions or exemptions allowed. Supporters of the system argue it is fairer it because it imposes the tax on all taxpayers regardless of income.

But detractors suggest it means lower taxes for the richest in society.

It has been reported that Mr Letwin was asked about a flat tax rate at an event by think-tank Politeia earlier this month.

In the taped recording, Mr Letwin allegedly says: “And it may well be we will see sufficiently increased investment to produce more revenue as the elasticity equation. And that is of course is the proposition that the flat tax proponents make about income tax.

“The difference is that on corporation tax this can be achieved within our fiscal envelope without taking any serious risks. Whereas its enormously complicated and a risk to business if we move to a flat tax regime in the hope that we get enough extra revenue to make up for the revenue you will certainly lose.

“And I’d like to draw your attention to the fact that in 2010, indeed now, we were not in a position to take a large fiscal cut.

“There may come a time when the situation is different and that discussion will no doubt open up at that point.”

The Echo approached Mr Letwin for a comment, he said: “As already quoted in the Daily Mirror, the Government's view is that ‘there will be no flat tax - we oppose it - full stop.”

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3:55pm Wed 30 Jul 14

Fred Kite says...

Another hit on the middle classes for the benefit of the super rich, why do people keep voting for these crooks?
Another hit on the middle classes for the benefit of the super rich, why do people keep voting for these crooks? Fred Kite
  • Score: 2

7:12pm Wed 30 Jul 14

JamesYoung says...

Fred Kite wrote:
Another hit on the middle classes for the benefit of the super rich, why do people keep voting for these crooks?
Well the argument is that as the flat rate is fairly low, there is no incentive to avoid it and thus the tax take from the rich actually increases.
I would like to see a tax on the value of land. Presently, if you own rural land you get subsidy and if you own a 50 bed mansion you pay the same council tax as someone with a 4 bed new build shoebox.
If your land increases in value, for example because a new rail link is built, you have benefited from the work of others but you aren't taxed on that benefit.
This encourages people to bank land in areas in which it rises in value.
Therefore a tax on the use and value of land would be fairer since those that own the land would pay the tax rather than those who work in minimum wage jobs.
The side effect would be that to avoid tax you would sell your land, thus freeing up land for development particularly in and around large towns and cities where land comes at a premium.
[quote][p][bold]Fred Kite[/bold] wrote: Another hit on the middle classes for the benefit of the super rich, why do people keep voting for these crooks?[/p][/quote]Well the argument is that as the flat rate is fairly low, there is no incentive to avoid it and thus the tax take from the rich actually increases. I would like to see a tax on the value of land. Presently, if you own rural land you get subsidy and if you own a 50 bed mansion you pay the same council tax as someone with a 4 bed new build shoebox. If your land increases in value, for example because a new rail link is built, you have benefited from the work of others but you aren't taxed on that benefit. This encourages people to bank land in areas in which it rises in value. Therefore a tax on the use and value of land would be fairer since those that own the land would pay the tax rather than those who work in minimum wage jobs. The side effect would be that to avoid tax you would sell your land, thus freeing up land for development particularly in and around large towns and cities where land comes at a premium. JamesYoung
  • Score: 0

8:22am Thu 31 Jul 14

K9 says...

House prices need to come down in relation to incomes. The Government is doing everything it can to stop this.

The tax on owning a house, used to be rates, now its council tax, has come down dramatically in percentage terms, e.g. you'd be paying 6% of your house's value in rates in parts of London in the 70s thank to Ken Livingstone and the GLC. So today, on a 250K house, you'd have to find 15K a year in rates/council tax! With such high taxes on ownership the asset class can't rise in price. Remove it and you removing the ceiling on prices so only those already on the ladder can trade up or down; the bottom rung is too high.
House prices need to come down in relation to incomes. The Government is doing everything it can to stop this. The tax on owning a house, used to be rates, now its council tax, has come down dramatically in percentage terms, e.g. you'd be paying 6% of your house's value in rates in parts of London in the 70s thank to Ken Livingstone and the GLC. So today, on a 250K house, you'd have to find 15K a year in rates/council tax! With such high taxes on ownership the asset class can't rise in price. Remove it and you removing the ceiling on prices so only those already on the ladder can trade up or down; the bottom rung is too high. K9
  • Score: 1

8:32am Thu 31 Jul 14

JamesYoung says...

K9 wrote:
House prices need to come down in relation to incomes. The Government is doing everything it can to stop this. The tax on owning a house, used to be rates, now its council tax, has come down dramatically in percentage terms, e.g. you'd be paying 6% of your house's value in rates in parts of London in the 70s thank to Ken Livingstone and the GLC. So today, on a 250K house, you'd have to find 15K a year in rates/council tax! With such high taxes on ownership the asset class can't rise in price. Remove it and you removing the ceiling on prices so only those already on the ladder can trade up or down; the bottom rung is too high.
Ah yes but it's different here because of population growth.
So the vested interests crow....
What you describe has been done in Hong Kong with the result being a 3% drop in prices this last year (which kind of nails the population argument!).
If you look behind the hype, demand is falling in Central London. Even the Evening Standard has reported this. Once the rot sets in it will spread quickly.
Two things about bubbles: those who think they are benefiting will vociferously deny their existence. And nobody can predict when they will pop.
I find it amusing that papers refer to houses still being below 2007 levels in some areas. 2007 was a huge bubble created by cheap credit. If you wanted to measure the true value of a house 1999-2000 would be a good starting point.
[quote][p][bold]K9[/bold] wrote: House prices need to come down in relation to incomes. The Government is doing everything it can to stop this. The tax on owning a house, used to be rates, now its council tax, has come down dramatically in percentage terms, e.g. you'd be paying 6% of your house's value in rates in parts of London in the 70s thank to Ken Livingstone and the GLC. So today, on a 250K house, you'd have to find 15K a year in rates/council tax! With such high taxes on ownership the asset class can't rise in price. Remove it and you removing the ceiling on prices so only those already on the ladder can trade up or down; the bottom rung is too high.[/p][/quote]Ah yes but it's different here because of population growth. So the vested interests crow.... What you describe has been done in Hong Kong with the result being a 3% drop in prices this last year (which kind of nails the population argument!). If you look behind the hype, demand is falling in Central London. Even the Evening Standard has reported this. Once the rot sets in it will spread quickly. Two things about bubbles: those who think they are benefiting will vociferously deny their existence. And nobody can predict when they will pop. I find it amusing that papers refer to houses still being below 2007 levels in some areas. 2007 was a huge bubble created by cheap credit. If you wanted to measure the true value of a house 1999-2000 would be a good starting point. JamesYoung
  • Score: 0

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