The TaxPayers' Alliance - Media Coverage

City AM: Darling left reeling after Black Tuesday

ALISTAIR DARLING was yesterday forced into a humiliating climb-down over his plans to abolish a tax break for the lowerpaid, on a day when he suffered a series of blows to his reputation.

In a bid to defuse anger over the abolition of the 10p tax rate ahead of a key by-election, Darling put up the personal tax allowance by £600 — meaning anyone earning up to £40,835 will gain £120 this year — the measure is officially for one year only. Higher rate taxpayers will not benefit.

Darling’s U-turn on personal tax, equivalent to a tax cut of £2.7bn, will push public sector debt to 44 per cent of GDP in 2009, smashing the government’s fiscal rule, research house Capital Economics said. The emergency statement to Parliament coincided with figures showing inflation jumping from 2.5 per cent to 3 per cent in April on the consumer price index (CPI) measure.

The more established retail price index (RPI) measure surged from 3.8 per cent to 4.2 per cent, led by food and oil prices. This reduces the chances of an early interest rate cut.

The bad news on inflation was accompanied by figures showing that mortgage lending has slumped to its lowest level for more than three decades. In yet another knock, housing minister Caroline Flint accidentally left in photographers’ view a government report conceding that house prices would fall by 5 to 10 per cent “at best” this year.

Darling is also facing another possible U-turn on corporate tax as the number of UK companies quitting the UK grows. Matthew Elliott, of action group the TaxPayers’ Alliance, said: “This is Darling’s very own Black Tuesday.”

George Osborne, Tory shadow chancellor, said: “This is a panic emergency budget from a divided, dithering and disintegrating government that has completely lost control of events.”

Daily Telegraph: Brown's spree 'cost £14bn'

by Edmund Conway

THE Government's spending splurge since 2000 has cost Britain almost pounds 14bn worth of potential economic growth, the European Central Bank believes.

It warns governments cannot raise their spending without damaging growth.

The finding will embarrass Gordon Brown, who boosted government spending in 2000, while many other Western governments were taking advantage of strong economic growth to cut back.

The ECB report shows that a 1 percentage point increase in government spending as a share of gross domestic product reduces growth by 0.13 points, while a 1 point increase in tax, compared with GDP, reduces growth by 0.12 points.

If this is applied to the increases in state spending since 2000, the cumulative loss of output from Mr Brown's spending rises, according to lobby group the Taxpayers' Alliance, is equivalent to pounds 13.7bn, given a current GDP of pounds 1.4 trillion.

Financial Times: Corin Taylor: Freeze spending and match the Irish on tax

A budget for 2008 has just been unveiled. It imposes a real-terms freeze in public spend- ing and uses the proceeds to reduce taxes dramatically. The president is brushing aside protests that the deficit should be dealt with first.

Which government could possibly be so bold? The Bush administration may spring to mind, but George W. has increased spending more than any US president since Lyndon Johnson. In fact, the country is much closer to the UK. Across the Channel, Nicolas Sarkozy is providing a fascinating lesson in how to make, and honour, manifesto commitments.

With the UK Treasury's three-year comprehensive spending review drawing ever closer, this tax-cutting tutorial from our French cousins could not come at a more appropriate time.

Britain's economy urgently needs a change of direction. Since 2000, public spending has increased faster than in any other Organisation for Economic Co-operation and Development country, without anywhere near commensurate improvements in public services, while the tax increases that have partly paid for Gordon Brown's largesse are leaving the UK economy at a growing competitive disadvantage.

The prospect of Britain overtaking France in the high-spending league - currently the UK's spending is 45 per cent of gross domestic product compared with France's 53 per cent - should sharpen the minds of those who see the spending review as a vital opportunity to improve public sector efficiency.

Controlling public expenditure in a serious way is not a unique proposition. Public spending as a share of GDP in Sweden is almost 20 percentage points lower than it was in the early 1990s. Similarly Ireland reduced public spending from more than 45 per cent of GDP 15 years ago to about one-third today. This allowed the main rate of corporation tax to fall to 12.5 per cent by 2003 and the resulting economic miracle is well known.

To be fair, Mr Brown has now woken up to the need for spending restraint. Public spending growth is likely to slow from its recent rapid rise. The March Budget projected spending to increase at about 2 per cent a year in real terms for the next three years - thus the new prime minister has tied the hands of Alistair Darling, his successor as chancellor.

Provided the credit crisis does not spill over into the real economy too much, that rate of spending growth should allow room for a very minor reduction in the tax burden. However, if the economy slows down (ING recently forecast growth of just 1.7 per cent next year), increasing spending by 2 per cent in real terms would mean tax rises or higher borrowing. It is a timid move compared with the French president's energetic reforming zeal.

If Mr Darling has any room for manoeuvre, he could do worse than consider following Mr Sarkozy's example. He would be surprised by how much he could achieve.

If the spending review announced that public spending would increase by no more than inflation for the next three years, close to £12bn annually would become available to reduce taxes. By 2010-11, it would be possible to cut the burden of taxation by about £35bn. According to the Revenue and Customs ready reckoner, this would be sufficient, in just three years, to enact pro-growth tax cuts such as reducing the main corporation tax rate from 28 per cent to the Irish rate of 12.5 per cent and reducing the basic rate of income tax by 3p in the pound, from 20 per cent to 17 per cent. The effect would be electrifying.

Britain's economy would reap the rewards of such bold fiscal policy. The TaxPayers' Alliance recently commissioned the Centre for Economics and Business Research to build a dynamic model of the UK economy, which better captures the behavioural effects of tax changes than the "static" models used by the Treasury. The model reveals that a phased reduction in the main rate of corporation tax to the Irish rate would deliver a 9 per cent boost to GDP, employment and disposable income and a 60 per cent boost to fixed investment, relative to the baseline forecast. Reducing the basic rate of income tax would add still further to the economic benefits.

It was not so long ago that spending restraint was consensus policy in Westminster. Kenneth Clarke, the former Tory chancellor, reduced public spending in real terms for two years, while Mr Brown almost froze expenditure for his first two years as chancellor. Now it is time to turn off the taps again.

The writer is research director at the TaxPayers' Alliance

Daily Express: £10bn shortfall in Brown's accounts

By Gabriel Milland, Political Correspondent

TAXPAYERS could be hit with an average bill of £500 to help fill a looming hole in Britain's accounts, a leading City think-tank has warned.

The UK economy is facing a drastic slowdown next year and the recent global "credit crunch" could yet bring more gloom.

But with Gordon Brown committed to huge budget increases in the public sector, taxpayers will have to fill the gap, says the Centre for Economic and Business Research (CEBR) Economists believe that the shortfall could reach more than £10billion - equivalent to 3p on the basic rate of income tax or about £500 for an average taxpayer.

Economic data released last week shows that the Government has already borrowed about £3billion more than it expected in August, making a monthly total of £9.1billion.

One leading economist speculated yesterday that dark clouds on the horizon could prompt the Prime Minister to press ahead with a general election within weeks before things get even worse.

Howard Archer, chief economist at forecasters Global Insight, said: "There is a very real risk that the economy will deteriorate markedly during the final months of 2007 and into 2008.

"So, from a purely economic point of view, there is a strong case for holding an autumn election."

With the economy growing less quickly than expected, the taxman is set to miss out on billions of pounds.

Doug McWilliams, of the CEBR, said: "We now predict UK growth will tumble to 1.4 per cent in 2008, with gross domestic product almost stationary during the first three months of the new year.

"To misquote one of Labour's favourite songs:

Things can only get worse."

Robert Chote, director of the independent Institute for Fiscal Studies, said:

"There is a danger that the recent turbulence in the financial markets and the banking sector will weaken tax revenues from company profits and City workers, fuelling fears of tax increases to keep borrowing down."

Meanwhile, figures from Revenue and Customs showed yesterday that British families now pay twice as much income tax as they did when Labour came to power.

While incomes have risen by just 40 per cent since 1997, the total tax burden has doubled.

Another set of figures released yesterday - from the TaxPayers' Alliance - showed that over a lifetime an average household pays about £630,000 in direct and indirect taxes.

The figures, based on 2007 prices, are calculated on a working lifetime of 40 years followed by 15 years of retirement.

The four biggest taxes are income tax, VAT, national insurance contributions and council tax.

An average household will pay £243,000 in income tax and £113,000 in VAT over a lifetime, the study revealed.

Corin Taylor, research director of the TaxPayers' Alliance, said: "These figures are quite shocking.

"The Government is taxing people until the pips squeak.

"The OECD [Organisation for Economic Co-operation and Development] has warned Gordon Brown to be more transparent about stealth tax rises.

"We hope that these figures will make people aware of how much tax they truly pay."

Scottish Daily Record: £630k tax bill for life

THE average household pays £630,000 in taxes over a lifetime, research has found.

The most draining costs are £243,000 in income tax and £113,000 in VAT.

The figures include direct and indirect taxes and are based on a working life of 40 years with 15 years of retirement.

Campaigners the Taxpayers' Alliance, who carried out the study, called the figures "shocking".

A spokesman added: "The Government is taxing people until the pips squeak."

Daily Mail: £630,000 that's the sixe of tax bill an average household will pay over a lifetime

by Steve Doughty

THE average family hands over £630,000 in taxes over a lifetime, according to an analysis issued yesterday.

Even the poorest homes will pay more than £230,000 to the Chancellor.

The figures come alongside a report showing that the income tax burden faced by wage earners has doubled since Labour came to power in 1997.

Critics said that together, the statistics pointed to the extent of 'stealth' taxation after a decade of Gordon Brown's work at the Treasury.

Corin Taylor of the TaxPayers' Alliance, which compiled the first analysis, said: 'These figures are quite shocking. The Government is taxing people until the pips squeak.'

The greatest bills faced by typical families are for income tax and VAT. The £630,000 total includes £243,000 in income tax and £113,000 in VAT.

The poorest homes have the greatest difficulty in paying VAT, which takes £65,000 in a lifetime, and council tax, which soaks up £31,000.

'Gordon Brown has been warned by the Organisation for Economic Co-operation and Development, the club of developed nations, to be more transparent about stealth tax rises,' said Mr Taylor. 'We hope that these figures will make people aware of how much tax they truly pay.'

The study was based on figures from the Office for National Statistics which set out the effect of taxes and benefits on household income.

Researchers took into account the effects of current taxation for nonretired households for 40 years and added 15 years of retired income to produce the impact over a lifetime.

Their calculation was based on current taxation levels. 'This does not take into account changes in taxation in the past or in the future, but has the advantage of providing an illustration of the sheer magnitude of the current level of taxation,' it said.

Mr Taylor added: 'The high tax burden facing families has not yet been addressed in the party conference season. We look forward to the Conservative Party highlighting this crucial issue in Blackpool.'

The second report, by the Centre for Economic and Business Research think tank said the Treasury collected £143billion from pay packets last year, up 10 per cent in a year, and more than twice the income tax take in 1997. In the same period, incomes had risen just 40 per cent, the report said.

The centre's chief executive, Douglas McWilliams, said: 'To misquote one of Labour's favourite songs, things can only get worse.

'We predict UK growth will tumble to 1.4 per cent in 2008.'

The slowing economy and the credit crunch that threw Northern Rock into trouble will, some economists say, push the Government into raising income tax by three pence in the pound to stabilise public finances.

The Sun: Tax total is £630k

HOUSEHOLDS in the UK cough up an average Pounds 630,000 EACH in taxes over a lifetime, new figures show.

Income tax accounts for Pounds 243,000, VAT takes Pounds 113,00, Pounds 79,000 goes on National Insurance while council tax gobbles up another Pounds 48,000.

The rest comes from levies like stamp duty and fag and booze taxes.

Corin Taylor, who carried out the study for the TaxPayers' Alliance, said: "These figures are quite shocking. The Government is taxing people until the pips squeak."

Daily Express: Brown's secret £400 tax raid on middle earners

Matthew Elliott, chief executive of the TaxPayers' Alliance, said:  "Apparently the past ten years of wringing more out of the middle classes with raids on pensions, trapping more people in inheritance tax and new stealth taxes wasn't enough."

Sunday Times: Taxes drive more out of UK

By David Smith

TWO people in every five are either planning to move abroad or have seriously considered doing so, according to a new poll.

The poll, carried out by YouGov for the Taxpayers’ Alliance, a pressure group, suggests that unhappiness over living in Britain has doubled in the space of a year. The equivalent poll carried out this time last year showed that 22% had seriously contemplated emigrating or were planning to do so. In the latest poll that figure is 40%.

“With a record tax burden, rising prices and barely improved public services, people feel that they are working harder and harder just to stand still,” said Matthew Elliott, chief executive of the Taxpayers’ Alliance. “In these circumstances it’s unsurprising that so many people are looking for a better life abroad.”

He added: “Voters want better government and lower taxes and the party that adopts this modern agenda will reap the elec-toral rewards.”

Last month official figures showed that more people left the UK in the year to mid-2006 than in any year since records began in their present form in 1991. The Office for National Statistics said 385,000 people left Britain permanently - 196,000 British citizens and 189,000 long-term migrants who had been living in Britain for more than a year.

A recent analysis showed that 5.5m people born in Britain now live permanently abroad. The most popular destinations are Australia, Spain, France and America, but there is a growing list of countries - 41 in all - with more than 10,000 permanent British-born residents.

Those who emigrate tend to be younger people without family ties and those retiring. The poll shows that 50% of 25 to 34-year-olds have either given serious thought to moving abroad permanently or are planning to do so.

Their main financial bugbears in Britain were high utility bills (65%), council tax (61%), rising prices in general (54%), the affordability of housing (51%), the rising tax burden generally (37%) and high levels of debt (36%).

Other surveys have pointed to nonfinancial concerns such as crime and antisocial behaviour, overcrowding, poor transport and high levels of immigration.

With worries about job security and unemployment coming low down on people’s list of financial worries, the Taxpayers’ Alliance says that the Conservatives, in presenting an alternative to Labour, should focus on high council tax bills and the overall tax burden.

Financial Times: Letter: It is VAT and NI that have direct, negative impact

From Mr Mark Wadsworth.

Sir, I am puzzled as to why Corin Taylor (Letters, August 29) and John Redwood ("Government defends business tax regime", August 29) focus so much on reducing corporation tax. I agree that it slows the rate at which businesses can grow, but at 30 per cent it is the lowest rate of the Group of Seven advanced industrialised countries, and as it is only levied on net profits, it does not drive companies out of business.

On the other hand, UK plc pays two-and-a-half times as much in value added tax and employer's national insurance as it does in corporation tax.

VAT does not just increase the price paid by the customer; it also reduces the net price received by the producer. Thus low-margin producers are forced out of business and output is reduced quite significantly. NI adds to the cost of labour; so it reduces net wages and employment levels. Thus VAT and NI have a direct, measurable, negative impact on the economy.

Imagine that corporation tax were replaced by a fiscally neutral tax of 5 per cent of turnover tax, with no deduction for expenses. Those businesses with high profit margins would pay far less than now, but those with a profit margin of 5 per cent or less would go to the wall. This would damage the UK economy and tax receipts would fall. Similarly, VAT could be replaced at minimal overall impact with a turnover tax of just under 15 per cent (£17.50 divided by £117.50) and the system of reclaiming input VAT could be sidestepped by simply exempting business-to-business supplies. This would surely cause three times as many businesses to go to the wall as replacing corporation tax with a flat turnover tax of 5 per cent.

Thus, while I share Mr Taylor's and Mr Redwood's enthusiasm for deregulation and cutting the tax burden overall, it strikes me that they are starting at completely the wrong end when it comes to detailed suggestions. The taxes we should reduce first are VAT and NI.

Mark Wadsworth,

London E11 4QX

Financial Times: Letter: Reduced corporation tax would pay for itself

From Mr Corin Taylor.

Sir, Your assertion that we should not "fool ourselves into thinking" that a lower rate of corporation tax will pay for itself is unduly conservative ("An unbalanced tax", August 28).

The TaxPayers' Alliance recently commissioned the Centre for Economics and Business Research to investigate the effects of a reduction in the main corporation tax rate to the 12.5 per cent Irish rate, phased over nine years. The simulations revealed that such a cut would not only boost gross domestic product, employment, fixed investment and household income, but after five years tax revenues would be higher - precisely the Laffer curve effect that you deny would occur.

These higher tax revenues would come in the form of increased income tax and value added tax receipts - as more people would have better-paying jobs - more than offsetting the reduction in corporation tax revenues. By the end of the simulation period, government borrowing would be almost £30bn lower than under the baseline scenario.

Across eastern Europe and beyond, economies and public finances have reaped the benefits of lower corporation tax rates, so much so that western European countries are now following suit. Is it too much to ask our Treasury to take note?

Corin Taylor,

Research Director,

The TaxPayers' Alliance,

London SW1H 9JA

The Business: Corin Taylor: The economics of happiness: just state control with a smile

There is the pursuit of real happiness – and then there is the economics of happiness, a Brave New World of artificial well-being to which many deluded scientists have chosen to pin their hopes.

In Aldous Huxley’s masterpiece, soma was the perfect fake happiness drug; it infamously had “all the advantages of Christianity and alcohol; none of their defects”. In the dystopia envisaged by the so-called happiness economists, officials armed with clipboards and regression models would know what makes us happy – a poorer but more egalitarian society.

The seminal article on happiness economics was published by Richard Easterlin, a professor at the University of Southern California, as long ago as 1974. He claimed that average happiness in the US had remained at the same level between 1946 and 1970, despite a doubling of income per head over this period.

More recently, a flood of papers in learned journals have argued the same central thesis: economic growth and increases in income per head do not affect well-being; governments should therefore cease trying to maximise growth in favour of explicitly targeting happiness.

Not to be outdone, David Cameron, the Tory leader, has thrown his weight behind this fad, saying recently: “It’s time we admitted that there’s more to life than money, and it’s time we focused not just on GDP (gross domestic product), but on GWB – general well-being.”

One of the key pieces of evidence that happiness economists rely upon are statistics spanning several decades in various countries showing increasing GDP but happiness flatlining. The reason for this, given by Lord Layard from the London School of Economics, and others, is the persistence of income inequality, which they claim offsets any happiness gained from a larger economy.

Critics put a rather different gloss on the theory, explaining it as follows: people are jealous of the possessions of others, and strive to catch up by taking better jobs or working harder, in turn triggering a commensurate reaction from their rivals. We are all constantly striving to be better than the Joneses; we all are made unhappy as a result; so we should all be forced into greater equality for our own good, with the help of punitive tax rates and red tape.

Analysing the responses of a large number of individuals at a single point in time (say 2007) suggests that while richer people are happier than the poor, the increase in happiness associated with higher income gets progressively smaller. If the difference in happiness between earning £100,000 ($198,557, E147,236) and £1m a year is insignificant, it’s easy to see why some believe this can justify higher taxes on the rich.

But a new book by Helen Johns and Paul Ormerod published by the Institute of Economic Affairs blows apart the arguments of the happiness economics crowd. For a start, happiness is often measured in surveys using a three-point scale. This means it is impossible to measure any increase in happiness for those ticking 3, the highest happiness box – a considerable number of people given that the average score in such surveys tends to be around 2.2.

There is therefore always an upper limit to happiness, compared with no obvious upper limit to GDP, a devastating problem for proponents of happiness economics. The authors also calculate that to obtain a 10% increase in average happiness, 22% of people would, net, have to move up one category, or 11% move up two categories. A substantial share of the population would have to enjoy a significant rise in happiness, confirming that the statistics are biased against detecting any rise in well-being.

The central argument constantly wheeled out is that happiness and economic growth are unconnected; but happiness has in fact no correlation with a large number of other variables that might be expected to affect people’s well-being. Over the last 30 years or so, real public expenditure has risen 50% in Britain and hours worked have fallen by 16% in (West) Germany, while in the US, crime has doubled and then fallen back almost to where it was in 1971, female earnings have grown by 30% relative to male earnings, and overall income inequality has greatly increased. The effect on happiness? None.

Finally, there is a body of research on happiness based on surveys that track changes in specific individuals over time, rather than looking at random samples of people at a single point in time, and compares their levels of happiness. It shows stable family life, being married, good health, religious faith, feelings of living in a cohesive community where people can be trusted, and good governance contribute to happiness; perhaps not unsurprisingly, chronic pain, divorce and bereavement detract from it.

The only role this suggests for governments is to ensure a well-functioning democracy with a large public space for a flourishing civil society. But happiness economics is really little more than an attempt by opponents of economic freedom to bring in state control by the back door. Their doctrine has no proper empirical basis and few worthwhile policies emerge from it.

The US Declaration of Independence did not stipulate that government should ensure that everybody was happy; rather, it gave individuals the right to pursue their own happiness in the best way that they themselves saw fit. Hardly perfect, for sure, but the only way we know.

Daily Express: No promises on cutting taxes warns Osborne

By Alison Little, Deputy Political Editor

Corin Taylor, from the TaxPayers' Alliance, said "We wish the Tories were bolder because people are increasingly realising that they are overtaxed and money is being wasted in many cases."

The Sun: Thumbs-up for Tories tax axe

RADICAL Tory plans to cut taxes and slash red tape won massive backing last night.

Senior MP John Redwood was hailed for outlining a raft of measures to win over hard-pressed voters.

Business also said the proposals would boost the UK economy.

A policy review — co-chaired by Mr Redwood and Next boss Simon Wolfson — called for inheritance tax to be SCRAPPED and stamp duty to be REDUCED.

The threshold for the 40 per cent top rate of income tax would be RAISED from the current £34,600.

Corporation tax — 28p in the £1 from next year — would be TRIMMED to 25p, or 20p for small firms.

Business would also benefit from the sweeping away of £14billion worth of regulations, including the introduction of simpler workplace laws and opting out of EU diktats.

Shadow Chancellor George Osborne hailed the report as “impressive and comprehensive”.

He pledged to look “very carefully” at the blueprint — but warned that any tax cuts would have to be offset.

Mr Osborne said: “Any reductions in specific taxes will have to be balanced by higher taxes elsewhere — most notably green taxes.

“We are not going to be able to offer an overall reduction in tax at the General Election.”

Ex-minister Mr Redwood said: “We believe a lower tax economy would be a more successful economy.”

Fellow Tory MP Philip Davies said: “Inheritance tax is morally unfair and punishes those who have worked hard and saved hard all their lives to provide for their children.”

Corin Taylor, of the TaxPayers Alliance, said: “Exempting the family home from death duties is a step in the right direction.”

Miles Templeman, director general of the Institute of Directors, said: “There is some welcome radical thinking here. The proposals on tax reductions are particularly strong.”

And Sally Low, of the British Chambers of Commerce, added: “The report correctly identifies solutions to improving our competitiveness.”

But there was a note of caution from Martin Temple, the director general of manufacturing employers group EEF.

He said: “Manufacturers will welcome proposals for a cut in the rates of corporation tax but will also be looking for a genuine reduction in the overall tax burden.”

And Labour attacked the 210-page document, accusing Tory leader David Cameron of “caving in” to his party’s Right-wing.

The report also recommended measures covering transport, energy supply, curbs on the health and safety culture and planning issues.

Comment is Free: Tim Montgomerie: Right on tax

John Redwood and his suggested abolition of inheritance tax on the main family home are covered throughout this morning's newspapers. I think John Redwood is right to recommend an economy-boosting series of tax reliefs but, for different reasons, George Osborne is also right to kick his recommendations into the long grass.

Why John Redwood is right. If Messrs Cameron and Osborne are surprised that Mr Redwood has recommended lower taxation then they haven't paid much attention to the former Welsh secretary's writings over the last 20 years. Mr Redwood once said that the Conservative party is a party of lower taxation or it is nothing. He recognises what an increasing number of countries are recognising: low-tax economies tend to be faster-growing economies. Ireland is the poster-child economy for tax cutters. Its low rates of corporation tax have attracted companies from all over the world to its shores. Lower taxation rather than EU subsidies explain its Celtic tiger reputation. The nations of central and eastern Europe that are most economically successful have kept tax systems simple and tax rates low.

Brown hasn't learned this lesson and, as a result, the good of the Thatcher years is steadily being undone. If Britain is to compete in this world then we need to change course and we need to change course fast. For years we were more competitive than Germany but Germany's tax burden has now fallen below that of our own. Our taxes are not even being spent well. The TaxPayers' Alliance has documented the huge variety of ways in which government wastes our money. I only have to mention the Millennium Dome, the NHS computer system and Olympics-sized cost overruns to illustrate my point. Lower tax rates offer the only long-term guarantee that our country will continue to be able to afford investment in schools, hospitals and welfare services. Without low taxes, Britain will continue to slide down the league table of international competitiveness. High taxes produce lower growth and lower growth necessitates tough decisions on public spending. Gordon Brown has a limited recognition of this fact. Although most of Britain is over-taxed, he has kept the tax and regulatory burden on Britain's financial sector pretty light. That light touch has meant the City of London has prospered under his reign. The approach he has adopted for the City needs to be adopted for the whole of Britain.

Why George Osborne is right. Speaking on this morning's Today programme, the shadow chancellor declined to say that he would embrace John Redwood's proposals. If John Redwood believes that lower taxation is essential to provide growth, Mr Osborne wants to wait until the proceeds of growth are available before he'll start to do something about the highest tax burden in British history. Although I'm intellectually on Planet Redwood, I think the politics of Planet Osborne are more sensible. For the last 18 months, Osborne and David Cameron have consistently said that there will be no upfront promises of tax cuts unless they are paid for by commitments to increase taxation on other things. We may therefore see promises of tax breaks for marriage and businesses, but they will be offset by increases in taxation of, for example, alcohol and air travel. Mr Osborne cannot embrace Mr Redwood's recommendations immediately without looking weak and inconsistent. Big tax cuts will have to wait until the Conservative party is in office and then Chancellor Osborne will start to share the proceeds of growth between lower taxation and higher public spending. That's what I hope for anyway.

Daily Express: Tories' £14bn pledge to slash red tape for firms

Anti-tax groups were sparing in their praise yesterday.  Matthew Elliott, chief executive of the TaxPayers' Alliance,  said he welcomed the fact that the Conservatives were now talking about cutting the tax burden.  But, he said, Mr Redwood's proposals did not go far enough.

"It's welcome that the Tories are now talking about this.  But I do not think that ordinary people buy the argument that tax cuts on business help them too."

Mail on Sunday: The Week Ahead

OFFICIAL figures due on Tuesday will give some clue as to whether Chancellor Alistair Darling is on course to meet the Government's tough rules on borrowing.

Supplementary quarterly figures for the public finances come after data last week showed high levels of borrowing in June. Darling is expected to announce at the end of the year whether the Treasury has met the rules, which state that the budget for day-to-day current spending must balance across the economic cycle.

By coincidence, Tuesday is the day the average taxpayer starts earning for themselves, having spent the previous 204 days paying for Government spending and regulation, according to the Taxpayers' Alliance.

Darling is expected to say the rules were met during the 1997-2007 cycle, but he will start the next cycle in a less healthy position.

Sunday Times (letters): Tax reform

Sir,

David Smith’s Economic Oultook column last week referred to Liberal Democrat plans for tax reform. I note that he added back the proposed local income tax rate (3.5p) to the proposed national rate (16p) in his assessment. Perhaps he sees the hypocrisy and unnecessary cost involved in “local” tax, whether of property or income.

Local is not local if controlled from the centre. Scrap council tax by all means and set the revenue loss of £23 billion (a tiny percentage of all local spending anyway) against savings from better government – overspending on large projects was recently detailed by the Taxpayers Alliance, and another report revealed that £80 billion had been wasted by poor decision-making.

It needs people who can think from professional and industrial experience, and who are not taxation addicted, to realise that there are techniques for moving tax revenue – techniques not understood by politicians and senior civil servants who do not have subject knowledge and managerial experience.

Yours,

Peter Webb, chairman of Surrey Tax Action Group, a member of the Taxpayers Alliance, Godalming, Surrey