Lower Taxes for the Lower Paid

Watching Darling spluttering explanations for abolishing the 10p rate this morning it is clear that the Brownies can't see that their preference for taxing with one hand and then paying benefits back with the other hand, is a wasteful bureaucratic merry-go-round that doesn't work - except on paper.

Darling says "tax is complicated". Who complicated it? Simplify it by raising thresholds dramatically. Why should people on earnings of less than £10,000 pay any tax? They only have to fill out endless forms to get it back in welfare payments. Crazy. Raising the threshold on the low paid will incentivise people to come off benefits and work. It will reduce the cost of collection which is disproportionately higher on low incomes.

The Tories are too timid, the mood of the public has changed. New Labour has always referred to "unfunded tax cuts" and demanded to know how many hospitals and schools would correspondingly be cut. The Tories should be pointing to Labour's "unfunded spending commitments" which have given Britain the highest budget deficit in the Western world. We can't afford Labour's reckless spending commitments - they are literally mortgaging our children's taxes to pay for current spending. It is the economics of the "never, never".

Government's Authority Draining Away

26 Labour MPs have signed a motion calling on the government ot reverse the budget tax hike on low income earners. The wording could have been written by George Osborne:

ABOLITION OF THE TEN PENCE TAX RATE

02.04.2008

That this House notes that, despite assurances to the contrary, many people are being made worse off by the abolition of the 10 pence tax rate; notes with concern that this is having a disproportionate impact on people who can ill afford to be made worse off; accepts that this was not the intention of the Government but is dismayed at the response to the plight of those adversely affected; and calls on the Chancellor of the Exchequer to bring forward measures to correct this damaging change to the taxation system.

This is how John Major started to crumble. When even Ministers are getting in on the act you know it is bad. Gerry Sutcliffe follows Ivan Lewis as another ministerial critic...

UPDATE : Just noticed that Ben Brogan has posted almost the exact same thought.

Barred Campaign Photos

Masses of broadcast and print media coverage for the campaign to bar Alistair Darling from pubs. First photo of a pub displaying the "Barred" poster comes from the Jolly Brewer in Lincoln. So no chance of Alistair Darling getting a round in there. Was there ever a chance of him getting a round in?

Send more poster sighting pictures to Guido.Fawkes@Order-Order.com.

Print out the downloaded the poster (pdf) from here. Some cracking entries already in for the sing-a-long campaign song competition. Closes Friday, 5pm.

Picture via John Trenchard.

Barred by the Blogosphere from Bars and Pubs

Cameron picked up on this at PMQs as has the BBC and the Telegraph. Guido first saw it on the Devil's blog, he hat-tips the Reactionary Snob. The Wardman Wire has an amusingly po-faced audio report from the BBC. The Devil-designed A4 poster download is suitable for pub windows. The mandatory Facebook group is up here.

Guido will give a prize of a copy of John McCain's new book Hard Call: Courageous Decisions by Inspiring People to anyone who comes up with a decent campaign sing along in a pub song. Entries in the comments...

Gold, Girls, Brown & Bust Banks

Guido wishes he had bought his daughters more gold each when they were born. Still with gold at $1030 an ounce, tripling in three years is satisfactory. Thanks Gordon for depressing the price.

When Brown and Darling try to present themselves as the safe pairs of hands in this coming time of economic crisis, remember that Brown was the financial whizz who sold Britain's gold reserves at the historic low for dollars. Now as the dollar goes into freefall the total loss from that idiotic decision (he even told the market to get short before he sold off the reserves) will dwarf the few billion lost by the Bank of England on White Wednesday. Brown's judgement is neither good or timely.

We have yet to have the final reckoning for Northern Rock, where some estimate that over 20% of the loans are to mortgagees with negative equity. The Fed arranged the sale of Bear Stearns in comparable circumstances over this weekend. It took dithering Brown months to make the wrong decision on Northern Rock. Remember how Lloyds TSB was interested in buying Northern Rock in much the same way Morgan Chase has just bought Bear Stearns?

The Tory benches are full of people who have worked in financial markets, Letwin, Redwood, even Andrew Mitchell and many more understand the markets far more than the student union activist turned TV producer cum PM and the dull barrister ever will. Faced with the worst financial crisis since the seventies what did they do? Implement a pre-emptive growth package in the budget? No, they threatened to tax plastic bags and put up car duties and taxes for those on lower incomes. Pathetic.

UPDATE : The LibDem benches, it has been pointed out in the comments, also have their fair share of brains acquainted with financial markets - Cable and Laws to name two. The Labour benches are devoid of experience.

How Much Have You Been Clobbered for Car tax?

Buried in the small print are some hefty increases on car taxes. Not just big cars either - ordinary family cars are getting whacked as well. The Taxpayers Alliance have put it all online for some 4000 car models in a handily digestible downloadable format. Once again middle-class families bear the brunt of Brown's unfunded spending commitments...

Go to:

www.taxpayersalliance.com/whatsmycartax

UPDATE : Curly points out that taxing a Nissan Micra will cost £40 more!

Scottish Presbyterians Hate Drinkers, Don't They?

Quick, you have only until Sunday to get hammered before beer is up 4p a pint, wine 14p a bottle and spirits 55p. These Calvinistic bastards would tax smiling if they could...

Seventies Socialism Returns

In 1975 Britain was told by Tony Benn that the nationalisation of British Motor Holdings and the Leyland Motor Corporation would be "partial". Alistair Darling today says the nationalisation of Northern Rock will be "temporary".

It is worth taking a moment to reflect on how we got here. When Northern Rock's troubles became critical there was no systemic risk to the financial system. There was a risk to 6,000 regional jobs which was a political risk in a period of election fever in Labour's North East heartlands.

If Northern Rock had been put into administration the shareholders and probably the employees would have lost out. No mortgage holders would have been worse off, depositors would, since we are told by the government the bank's assets are good, have got their money back.

The only cost to the taxpayer would have been the unemployment benefit payments to redundant Northern Rock staff - most may have kept their jobs with new owners of the business (Lloyds TSB was said to be interested). Instead of the normal commercial and legal run off process taking its course, the government intervened. The result is the biggest nationalisation of the century.

Many would argue convincingly that depositors would have not been able to extract their money in the event of a liquidation, or at least not in good time. The government could have in that case guaranteed the deposits and collected the money back as a normal creditor. For a moment in the beginning that did seem to be a real possibility. That would have been a much smaller risk to the taxpayer.

Now we have a situation where £100 billion of taxpayer's money is being bet on the UK property market as it teeters on the edge. Gordon Brown repeats the mantra that the public's money is secured against the bank's assets. The bank's assets are what exactly? The equity in mortgagee's homes belongs not to the bank, it belongs to the homeowners. The only properties Northern Rock has an interest in are it's own branches and offices. The only homes it owns are those where it forecloses, usually and increasingly at a loss due to negative equity (remember all those 125% offers). The other major asset the bank owns is it's profit stream from the spread it makes on lending versus borrowing. That has disappeared because of the credit crunch. Right now there is no profit stream to speak of, that is why the bank is bust.

What is most disturbing about the new legislation being proposed is that it will empower the state to nationalise more banks. Which seems to contradict Darling's claim that this is a "temporary and exceptional" measure. It has always been the objective of British socialists to nationalise the banks. Thirty years ago they wiped out the British owned car industry, now they are coming for the banks. New Labour is dead. Socialism is back...

UPDATE : Anatole Kaletsky agrees - wind-up the bank.

44% Want Chancellor Darling to Go

The damning poll in the Sunday Times this morning reinforces Guido's view (expressed at some length here) that Darling is the fall guy for Brown and Balls. Darling will be blamed for their mess, Balls will be shuffled in to "resuscitate" the economy just before the election in the hope that it will by then be out of the worst and Balls will be in a position to succeed Brown whether Labour win or lose the general election.

So they will need Darling to suffer meekly for another 2 years...

The Mail on Sunday's frontpage reports that the Ed Balls has come up with a plan to plug Brown's black hole in unfunded public spending. Issue Sharia Law compliant "sukuks" designed to allow the government's Debt Management Office to raise money from the Saudis:

Britain is to become the first Western nation to issue bonds approved by Muslim clerics in line with Sharia law, which bans conventional loans involving interest payments as 'sinful'.

The scheme would mark one of the most significant economic advances of Sharia law in the non-Muslim world.

It will lead to the ownership of Government buildings and other assets currently belonging to British taxpayers being switched wholesale to wealthy Middle-Eastern businessmen and banks.

Such is the parlous state of the public finances that the Treasury can no longer rely on the centuries old method of financing government debt, demand for Gilt edged securities. No Western nation has ever relied on Sharia financing and the U.S. Treasury bans banks from engaging in the practise because of potential links to Middle Eastern terror financing. Ed Balls first came up with the Sharia sukuk strategy when he was Gordon Brown's Treasury SpAd and final consultation on the plan closes this Thursday. Alistair Darling is expected to give full approval for H.M. Sharia Treasury issues before the March budget...

Osborne's Non-Dom Policy Now Worse Than Darling's Policy

Polly Toynbee is wailing in her column this morning about the Chancellor's U-turn. She reckons it is the "FT Wot Won It" and that Digby is Jones is the Thatcherite vetoing policy in Brown's Big Tent. On one point Guido is in agreement with her; Labour claim they will take £650 million from non-doms, while the Tories claim they will squeeze them for £3.5 billion. Labour will tax them only after they have lived in Britain for seven years, whereas the Tories will tax them from day one.

So won't the Tory policy drive more globally mobile wealth creators out of London? Isn't Osborne's policy worse for the City and more punitive?

The briefing against Alistair got a little heated in the last week - "Why Darling is a menace to Britain" - William Rees-Mogg; "Darling's confidence seems misplaced" - Anatole Kaletsky; Knives out as Alistair Darling loses trust of City in the Sunday Times and various other City scribblings. It had the feel of the briefing before the non-election, the authors of which were to varying degrees Ed Balls and Douglas Alexander.

Ben Brogan has been briefed on the Brownies' hotline to throw a bucket of water on all this - the Brownies would say that wouldn't they?

Since taking office Alistair has presided over lost data disks containing millions of mum's bank account details, the capital gains and non-domicile U-turns plus the first run on a bank in living memory. Not good when Alistair has in truth already been dealt a very bad hand by Gordon; public and private debt is an albatross around the economy, consumer inflation is over 4% making it hard for the Bank of England to cut rates which is the orthodox solution to a credit crunch. In any event the tsunami of liquidity thrown at the markets so far has not removed the fear in them. Guido's friends in the City all say it is bad with a capital "B" - we are seeing only the tips of the credit crunching icebergs.

Contrary to what Gordon endlessly repeats Britain is not well placed to weather the turmoil. We have a worse balance of payments situation than the U.S., we have a worse government deficit, the golden rule has been shattered, loss of confidence in sterling and the consequent fall is fueling import inflation. Stagflation is returning. The omens in the property market are very worrying.

So if Brown's heir apparent, Ed Balls, wants to become Chancellor he would perhaps be wiser to bide his time, let Alistair take the blame for the coming 2008/9 slowdown / recession, then take the Chancellorship in early 2010. Putting him in a position to go for the leadership following a Labour general election defeat or claim glory for "rescuing the economy" if it goes well. Is Balls wise and patient enough to wait?

Non-Dom Policy Damned By Tory Treasurer

Michael Spencer, the demi-billionaire Tory treasurer and boss of the City money broking powerhouse ICAP, had an article in The Times criticising Brown and Darling's plans to drive foreign businessman out of London to Monaco.

Guido suspects that Spencer doesn't think Osborne's own plans for non-doms are so brilliant either, he implausibly says the Tory version of the policy was "broadly welcomed" when he took City soundings. Broadly welcomed by whom?

Phil Hammond is defending the plans rather meekly, whereas Michael Fallon, a Tory member of the Treasury Select Committee, tells the FT bluntly “Chasing non-doms out of London is a huge mistake ... Why do we want to lose all that business to Luxembourg or Dublin or Geneva?”

The US Embassy has made their view known and is lobbying hard to persuade the Treasury to change the wording of its legislation to ensure the charge falls within the scope of the double taxation treaty. The Chancellor's plans will actually cost the Treasury money, according to a study by the Society of Trust and Estate Practitioners: the £30,000 annual levy will cost £2.1 billion a year as many residents will leave the country. The 116,000 non-doms are mostly not tycoons but bank, hedge fund and private equity staff who bring investment and prosperity. The problem for the Tories with having their policy stolen by Gordon is that they can't attack his even worse version without highlighting the problems with their own. The Treasury and Osborne should realise that the elasticity in the Laffer Curve applies even more to foreigners.

Digby Says Taxing Non-Doms is a Dud

Digby Jones is a pro-business Thatcherite so going into Gordon's big tent was always going to involve him holding his nose. In the morning's FT he says he wasn't consulted over Labour's copycat plan to tax foreign businessman, that it is not popular with businessman he meets as he tries to drum up inward investment. Shooting the golden goose is crazy, wealthy foreigners boost the economy. Osborne should know better. Digby knows it, the City knows it, but they don't have any votes.

Joined Up Government Thinking?

Brown Seeks Support for Increasing Bank Transparency
Brown "There is a lack of openness, banks put rather too much off the balance sheet"

Source : Bloomberg, Tuesday 29 Jan.


Alistair Darling Seeks Secret Bank Takeover Powers
"The move will enable the Bank of England and Financial Services Authority (FSA) to launch a secret takeover of a failing bank...for a period of non-disclosure".

Source : Politics.co.uk, Wednesday, 30 Jan.

Courageous Gordon to Use Alistair as Human Shield

The PM's monthly news conference will be a laugh* in ten minutes. Notice it is called the PM's monthly news conference, yet this month he is bringing Alistair Darling along to take the blame for the inevitable questions about Northern Crock. He couldn't do his usual Macavity trick and disappear so he is going to try to hide behind his Darling Chancellor instead.

*Maybe not.

EXCLUSIVE : Darling Spoke at Deutsche Bank Hosted Labour Fund-Raiser

An outraged City co-conspirator has tipped off Guido that this morning Labour's London Business group held an £80 a ticket breakfast fund-raiser with Alistair Darling.

Guido is stunned that in the current circumstances the Chancellor of the Exchequer attended a Breakfast fund-raiser hosted by Deutsche Bank at their City offices on Great Winchester Street.

The invitation from Labour's Victoria Street HQ states that "the format will follow our usual arrangements: our guest speaker will make a short address and then take questions from the floor. There will be an opportunity for guests to network..."

This morning Deutsche Bank is threatening to walk away from the Virgin Group bid for Northern Rock, because it has serious issues with Virgin's takeover proposal. Is it really appropriate to be holding a Labour party fund-raiser at the offices of a bank bidding for Northern Rock? Doesn't Darling see that it smacks of Cash-for-Access?

Incidentally Guido got stonewalled by government SpAds and Press Officers on this all morning. Public servants? Guido thinks not. Unfortunately for them the Deutsche Bank Press Office is more helpful.

Advertising Pays

Some people say Guido has sold out to commercialism, in fact Sir Michael White includes in his critique of Guido the quantity of adverts on the site. (Hint: they might have something to do with why Guido is more profitable than the Guardian.)

This topical ad featuring the Chancellor from data back-up specialists www.TotalRecallUK.net made Guido laugh out loud. They do of course have an obligatory Facebook "Help Track Down the Missing Benefits Disks" site as well.

Guido was not paid for this extra plug.

An Apology to Readers

Below you can see that yesterday Guido suggested there had been some kind of policy U-turn on Death Taxes by the ventriloquist's dummy that is the Chancellor of the Exchequer. Guido even illustrated it with a big blue U-turn just to drive the point home.

As the sharper readers have pointed out, it was no such thing. In fact it was just essentially a re-presentation of, what Alastair Darling let slip this morning on the Today programme, was an already scheduled raising of the IHT threshold from £300,000 to £350,000. It additionally removed the necessity for spouses to visit a financial advisor for one aspect of estate planning. There was no new tax cut. It was a U-turn in rhetoric only.

Darling and Brown will still be rubbing their hands every time a middle-class, family-home-owner dies, the uninvited smiling guests at the funeral wake to present the bereaved with a tax bill.

Guido apologises for any confusion caused.

So How Many Schools and Hospitals Will Darling Cut?

Alastair Darling seems to have decided to split the difference between the status quo and the Tory proposals on inheritance tax. A big reversal from last year when he told The Times

“Inheritance tax brings in about £3 billion a year. If you get rid of it, it follows that some other tax has to go up or you have to cut some public spending, on health and education and so on...Ninety per cent of estates don’t pay it, it is paid by 6 per cent, and I don’t think this proposal really has much support across the political spectrum. The Tories and the Liberals have looked at it and backed off from it. It may make for a headline, but I don’t think it makes for a prudent and sensible tax and spend policy.”

Quite a big U-turn by Darling. It is as if he has vicariously brought George Osborne into the "government of all the talents"...