{"id":8407,"date":"2022-11-17T09:30:31","date_gmt":"2022-11-17T09:30:31","guid":{"rendered":"https:\/\/www.taxpolicy.org.uk\/?p=8407"},"modified":"2022-11-17T12:02:56","modified_gmt":"2022-11-17T12:02:56","slug":"autumn2022","status":"publish","type":"post","link":"https:\/\/heacham.neidles.com\/2022\/11\/17\/autumn2022\/","title":{"rendered":"Autumn Statement proposals: ten good, three bad, three meh"},"content":{"rendered":"\n<p>If some idiot was to make me Chancellor, I&#8217;d do something like this, none of which are likely to actually happen:<\/p>\n\n\n\n<ul>\n<li>Announce that, when fuel prices return to normal, there will be a <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/09\/05\/designingwindfalls\/\" target=\"_blank\">retrospective windfall tax<\/a> on the energy sector raising a target \u00a330bn. But absolutely don&#8217;t announce any further details. More on the design principles <a href=\"https:\/\/heacham.neidles.com\/2022\/09\/05\/designingwindfalls\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>. <\/li>\n\n\n\n<li>Follow Nigel Lawson&#8217;s lead, and <a href=\"https:\/\/heacham.neidles.com\/2022\/10\/14\/increase-cgt\/\" target=\"_blank\" rel=\"noreferrer noopener\">raise the rate of capital gains tax<\/a> so it is equal to the rate on income. Raises at least \u00a38bn.<\/li>\n\n\n\n<li><a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/09\/27\/non-dom-reform\/\" target=\"_blank\">Abolish the non-dom regime<\/a> and replace it with a straightforward exemption on foreign income\/gains for the first three years after people come to the UK. Will be more useful to the workers we want to attract than the current <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/non-dom-nerd-2\/\" target=\"_blank\">mess<\/a>, but won&#8217;t enable oligarchs and oil sheikhs to live in the UK tax-free. Plausibly raises \u00a32bn.  <\/li>\n\n\n\n<li>Close the <a href=\"https:\/\/heacham.neidles.com\/2022\/10\/25\/sdlt_1bn\/\" target=\"_blank\" rel=\"noreferrer noopener\">stamp duty loophole <\/a>that means most commercial real estate is bought and sold inside &#8220;special purpose companies&#8221; so that no stamp duty is paid. Will probably raise at least \u00a31bn.<\/li>\n\n\n\n<li>Raise the annual tax on homes held in companies &#8211; <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/11\/04\/ated\/\" target=\"_blank\">ATED<\/a>. Should yield \u00a3200m.<\/li>\n\n\n\n<li>Eliminate the tapers and clawbacks that result in <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/10\/04\/marginal\/\" target=\"_blank\">anomalously high marginal income tax rates<\/a> of well over 50% and sometimes higher than 90%. Pay for it by increasing the additional 45p rate, or reducing the threshold at which it applies. <\/li>\n\n\n\n<li>Scrap\/cap <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/05\/17\/iht-mystery\/\" target=\"_blank\">over-generous inheritance tax exemptions<\/a>, and use the revenues to reduce the rate from 40% to around 25%. <\/li>\n\n\n\n<li>Pensions tax relief costs <a rel=\"noreferrer noopener\" href=\"https:\/\/www.gov.uk\/government\/statistics\/personal-and-stakeholder-pensions-statistics\/private-pension-statistics-commentary-september-2022\" target=\"_blank\">over \u00a348bn<\/a>, with most of the benefit going to highest earners. Capping relief at 30% should raise at least \u00a32bn<sup class=\"modern-footnotes-footnote \" data-mfn=\"1\" data-mfn-post-scope=\"0000000000002f4e0000000000000000_8407\"><a href=\"javascript:void(0)\"  role=\"button\" aria-pressed=\"false\" aria-describedby=\"mfn-content-0000000000002f4e0000000000000000_8407-1\">1<\/a><\/sup><span id=\"mfn-content-0000000000002f4e0000000000000000_8407-1\" role=\"tooltip\" class=\"modern-footnotes-footnote__note\" tabindex=\"0\" data-mfn=\"1\">Source: HMRC <a href=\"https:\/\/www.gov.uk\/government\/statistics\/personal-and-stakeholder-pensions-statistics\/private-pension-statistics-commentary-september-2022\" target=\"_blank\" rel=\"noreferrer noopener\">statistics<\/a> and my napkin<\/span>.<\/li>\n\n\n\n<li>Announce the long-term objective of ending employer&#8217;s national insurance, so that all <a href=\"https:\/\/heacham.neidles.com\/taxthelawyers\" target=\"_blank\" rel=\"noreferrer noopener\">income is taxed at the same rate<\/a>. This will mean tax-cuts for employees, and tax rises for others &#8211; but it will benefit the economy as a whole.<\/li>\n\n\n\n<li>Start a review of other features of the tax system that penalise growth: top of the list, the <a href=\"https:\/\/www.adamsmith.org\/blog\/is-vat-to-blame-for-the-productivity-puzzle\" target=\"_blank\" rel=\"noreferrer noopener\">high VAT threshold<\/a> and the never-ending changes to corporation tax rates and reliefs. <\/li>\n<\/ul>\n\n\n\n<p>On the other hand, here are some things the Chancellor will probably do, and which are neither brilliant nor terrible:<\/p>\n\n\n\n<ul>\n<li>Let fiscal drag collect an additional <a rel=\"noreferrer noopener\" href=\"https:\/\/www.ft.com\/content\/a3698777-99a1-4165-9d9d-be11b421c073\" target=\"_blank\">\u00a330bn of tax<\/a> with minimum political pain. The easiest way to collect lots of tax is to tax everyone, and this certainly does that. And conventional wisdom is that voters don&#8217;t notice fiscal drag; but until this year it was also conventional wisdom that voters don&#8217;t notice <a rel=\"noreferrer noopener\" href=\"https:\/\/www.theguardian.com\/society\/2021\/sep\/07\/what-has-boris-johnson-announced-social-care-plan\" target=\"_blank\">rises in national insurance<\/a>.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.dailymail.co.uk\/news\/article-11421267\/Chancellor-Jeremy-Hunt-set-clobber-countrys-earners-cutting-45p-tax-threshold.html#:~:text=Moving%20the%2045p%20rate%20to,spooked%20the%20markets%20and%20handed\" target=\"_blank\" rel=\"noreferrer noopener\">Lower the threshold<\/a> at which the 45% additional rate applies. As Arun Advani points out <a rel=\"noreferrer noopener\" href=\"https:\/\/twitter.com\/arunadvaniecon\/status\/1592993284712173568?s=20&amp;t=hX5ec6-xYKpBpiUBbguU6g\" target=\"_blank\">here<\/a>, this is something of a &#8220;poll tax&#8221; on moderately high earners, as it has the same cash impact on someone earning \u00a3150k as it does on someone earning \u00a31m.<\/li>\n\n\n\n<li>Slight expansion of the existing windfall tax, perhaps extending it past 2025. It&#8217;s a <a rel=\"noreferrer noopener\" href=\"https:\/\/heacham.neidles.com\/2022\/09\/05\/windfallflaws\/\" target=\"_blank\">poorly designed tax<\/a>, and we&#8217;d be better off replacing it, but the case for taxing people who&#8217;ve obviously made a windfall is politically and practically irresistible. <\/li>\n<\/ul>\n\n\n\n<p>And here are some things we absolutely shouldn&#8217;t do:<\/p>\n\n\n\n<ul>\n<li>Change the tax treatment of already-existing pensions or ISAs. People used these products believing they worked a particular way. It&#8217;s unfair, and will damage faith in the tax system and savings vehicles as a whole, if we change the rules of the game after people start playing.<\/li>\n\n\n\n<li>Introduce a wealth tax. Almost all previous wealth taxes around the world have failed, raise little\/no revenue, or both. Most wealth tax proposals ignore this, and can be discarded as unserious populism. The few that are <a rel=\"noreferrer noopener\" href=\"https:\/\/www.ukwealth.tax\/\" target=\"_blank\">intellectually rigorous<\/a> end up being politically unfeasible (because they tax pensions and homes). <\/li>\n\n\n\n<li>Create more points in the income tax\/national insurance system where the marginal rate is over 50%. Chancellor Neidle would impose a 200% wealth tax on anyone proposing tax changes without saying precisely what they mean in terms of marginal rates.<\/li>\n<\/ul>\n\n\n\n<p>Any other suggestions?<\/p>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Image by <a href=\"https:\/\/labs.openai.com\/auth\/login\" target=\"_blank\" rel=\"noreferrer noopener\">DALL-E<\/a>: &#8220;a tree in autumn, with its branches covered in brown leaves and one dollar bills, digital art&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If some idiot was to make me Chancellor, I&#8217;d do something like this, none of which are likely to actually happen: On the other hand, here are some things the Chancellor will probably do, and which are neither brilliant nor terrible: And here are some things we absolutely shouldn&#8217;t do: Any other suggestions? Image by [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8430,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[88],"tags":[157],"jetpack_featured_media_url":"https:\/\/heacham.neidles.com\/wp-content\/uploads\/2022\/11\/DALL\u00b7E-2022-11-17-09.43.05-a-tree-in-autumn-with-its-branches-covered-in-brown-leaves-and-one-dollar-bills-digital-art.png","_links":{"self":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8407"}],"collection":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/comments?post=8407"}],"version-history":[{"count":7,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8407\/revisions"}],"predecessor-version":[{"id":8434,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/posts\/8407\/revisions\/8434"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media\/8430"}],"wp:attachment":[{"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/media?parent=8407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/categories?post=8407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/heacham.neidles.com\/wp-json\/wp\/v2\/tags?post=8407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}