The Art of Prediction

Swift wonders if perhaps the new Chancellor might have better spent her Monday evening watching the PopConversation with Art Laffer...

 

Readers of Swift’s last blog on the subject of Art Laffer and his Amazing Curve (surely there’s a children’s TV series in that?) might appeciate this little postscript.

The nation (or at least the nation’s newsrooms) are being briefed to expect tax rises in Rachel Reeves’s first budget.

Having taken a straight punch via an expected Treasury report which will explain how dire the financial situation situation is (not from the OBR, note: this is a political document), voters will then receive a left (geddit?) hook by way of added taxes. Ouch.

According to the FT (here) analysts are speaking of tax rises of £10-25bn a year, including targeting pension pots (by bringing them within the scope of Inheritance Tax); reducing the amount of tax relief on pension savings for higher earners; and hiking Capital Gains Tax.

Right on cue the Grauniad publishes a shock horror ‘exposé’ (here) of the ‘super-rich’ being advised on how to shelter their pension savings from tax by taking them offshore. Living up to its characterisation as being ‘always essentially priggish and slightly dishonest’ (Harold MacMillan) the rag – which should rename itself Labour Daily as soon as possible to avoid confusion with a real newspaper – does admit that tax avoidance on these lines is perfectly legal but it would be ‘immoral’.

Swift looks forward to the Guardian’s senior editorial and management teams publishing their tax returns so we can see what virtue looks like. Or not, as the case might be.

May Swift first point out that attacks on pensions and CGT are attacks on prudent savings and enterprise?

And may he also salute the inimitable Dr Laffer, whose proposition that tax rises will encourage avoidance (and evasion, avoidance’s naughty younger brother); discourage enterprise; and end up raising less than politicians hope, has just been demonstrated yet again?

They never learn.