This week the UK government began sending letters to income taxpayers that suggest how the state spends its citizens’ money. For example, someone paying £10,000 in direct taxes will be told that they are “contributing” £1,900 to public spending on health, which accounts for 19 per cent of state expenditure; £100 to overseas aid, which makes up 1 per cent of spending, and so on (see picture). George Osborne says that by giving people bespoke descriptions of how their contributions equate to spending by various parts of the state, he is increasing transparency.
On the contrary, the chancellor is being opaque. What is pitched as an exercise in numerical transparency is also a lesson in how language confuses public policy.
On Saturday, Ed Balls announced that a Labour government would bring back the 50 per cent tax rate on incomes over £150,000. His main justification is that it would raise more revenue than government estimates suggest. Is the shadow chancellor correct? Read more
When triumphant supporters of Colorado’s legalisation of recreational marijuana tried to organise a celebratory party, they called it Cannabition. Perhaps weed makes puns funny. Regardless, the evocation of the prohibition era is apt; there are parallels between the treatment of alcohol in the period from 1920-33 and that of marijuana today. Read more
As Chris Giles explains, the fiscal importance of the policies is dwarfed by the shortfall in tax receipts – at the macro level, today’s announcements changed very little. However, there were several new schemes, which begs the question: how will they be paid for? The answer: with help from HMRC. When it comes to filling holes in the budget, cutting down on tax avoidance is the new efficiency savings. Read more
Margaret Hodge, chair of the House of Commons public accounts committee, is turning her attention to the looming sale of Vodafone’s 45 per cent stake in Verizon Wireless to Verizon. On Monday, the trenchant critic of corporate tax behaviour said that “if Vodafone are manipulating the rules to avoid paying their fair amount they should think again”. The UK tax paid — or not — by multinational companies is a sensitive political topic. Ask Google and Amazon. Or Vodafone. What might Ms Hodge be referring to in this case? Read more