Via the FT:
Nick Clegg, Liberal Democrat leader, will today use a speech in the City to call for the scrapping of tax loopholes that make London the accountancy equivalent of “a Swiss cheese” and to propose using the proceeds to cut corporation tax.
Mr Clegg will accuse the Treasury of devising a complex tax system for the City that encourages behaviour which “by any other name is tax avoidance”, claiming there is no evidence the loopholes are vital for London’s success as a financial centre. “If we create greater stability and transparency in the tax regime we can deliver cuts in the headline taxes that you pay,” he told the Financial Times.
Mr Clegg, whose father is a retired banker, claims the Liberal Democrat front bench – including Vince Cable, a former Shell chief economist – has a better understanding of the City than either Labour or the Conservatives.
You can read the full story here.
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7 Comments
I doubt the City will be too happy about this, seeing as Brown and Darling are already scaring off major companies such as Yahoo and WPP.
Having said that, it would be interesting to see what any final proposals look like.
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‘Who wants to be a millionnaire?’ Nick Clegg! What? He IS a millionnaire! Fancy!
Oh dear. Tax avoidance? That is completely legal that is. Did he mean evasion?
Closing loopholes is a war of attrition needing similar dedication as Forth Bridge painting.
Meanwhile we’re still waiting for Nick’s open book on his expenses and expenditures. Let us hope that there is nothing tantamount to “Tax avoidance” in these.
CP,
What’s wrong with criticising a system that encourages avoidance? Indeed this need not even imply any criticism of avoidance.
It is wrong of the government to give away taxpayers money arbitrarily, but not wrong of anybody to accept it.
“Closing loopholes is a war of attrition needing similar dedication as Forth Bridge painting.”
Of course, after looking at their methods and changing the technology they use the Forth Bridge has finally received it’s last coat of paint. Just shows what can be acheived when you let the experts get to work…
The fact is that Gordon Brown in his former employment as Chancellor presided over the creation of an additional massive volumne of tax legislation, such that we now have roughly three times what existed before he came to office.
That complexity is the route of the tax loopholes and avoidance industry. The best proposals that Vince has puit forward are about simplification and repeal – fairer, smarter and more efficient!
In theory there is logic in the argument (which I’ve heard Vince make recently) that income and capital gains should be taxed at the same rate, to prevent unfair anomalies in the tax rates paid by different groups and to prevent the tax system distorting economically rational decision-making.
However, we have to recognise the starting point – Brown cut capital gains tax in 1998 (albeit through a complicated system of taper relief, now scrapped of course) and even under Labour’s revised plans it is ‘only’ 18%. It would hardly be welcomed by entrepreneurs if we hiked it back up to 40% just for the sake of the symmetry of the CGT and top income tax rates…
On the other hand, the general approach of closing loopholes, removing exemptions and cutting headline rates is the right one in my view. Of course, Osborne has been arguing the same thing, but that doesn’t stop it being right. We should be pushing to cut corporation tax aggressively and phase out reliefs.
I must admit I’m not sure what the answer is on CGT, though.