The new 2010 Coalition Cabinet ...

[oolon]

As I said, the old divisions between left and right are far less clear than they used to be. They're still there, but less clear, and the dividing point has shifted. Even inheritance tax is more complex than the simple "support the rich" way in which proposed changes were portrayed.

I never understood why Labour reduced capital gains tax from 40% to 18%, with the now 10k allowance to have to be quite an earner or have lots of assists to be hit by it. Shame really as I was playing to do more gain related things, however I believe it is fair. I expect the allowance will remain as most of the general public don't know the need to report gains and a zero limit would make almost everyone commits an offense.

[peterb]

I'm sorry, did that phrase really come out of the mouth of a Conservative Chancellor?!?

Oh brave new world, that has such people in't...

Well more likely to come from a Conservative Chancellor than recent Labour ones, who have seen those on middle incomes as 'Cash Cows' to be milked to pay for the grandiose schemes - while leaving those on the highest pay untouched.

It could be argued that any form of progressive taxation is unfair. Would it be fair if (say) you went into a supermarket to buy a tin of baked beans to find that the price of item was based on the purchaser's income? Or if the VAT payable on your new computer or television was based on your gross income?

However, on income tax, I think it would be an encouragement to savers if income from invested income (up to a set limit) had a tax free threshold, independant of the earned income threshold, as that would provide an incentive for saving.

[Saracen]

I think the problems were way before Gordon Browns time to be honest in other circumstances i think he would of been a good Prime Minister he certainly had the experience to be plus on the other hand I do not have much confidence in David Cameron he can speak posh but can he put the money were his mouth is?

Unfortunately, the nations accounts don't support that. Public spending was in a healthy state when Blair/Brown came to power. And it stayed that way for two or three years. Then Brown started spending.

To be more specific, public sector borrowing peaked in about '94, and then trended down steadily. When Blair/Brown took over in '97, it was still a deficit but trending down sharply. It carried on doing so for a couple of years, and actually went into surplus. Labour maintained Tory spending plans, as per manifesto commitments, for a couple of years, and then turned on the money tap. At that point, the trend reversed, and in a year, we had turned s small (about 2%) surplus into a deficit, that then grew for about 3 years, dipped again for a year or two and then accelerated sharply in about 2006. This is not speculation, it's a matter of official record. Check out the Office of National Statistics blue book, and watch PSNB figures.

[matty-hodgson]

There isn't enough facepalm in the world for that comment, matty. I do hope you're winding me up and not being serious...

Yes, I'm winding you up with the 2nd half.. But the 1st half is entirely valid. Equality means the same for all sides. Therefore Men deserve a Minister too..

[scaryjim]

Would it be fair if (say) you went into a supermarket to buy a tin of baked beans to find that the price of item was based on the purchaser's income? Or if the VAT payable on your new computer or television was based on your gross income?

No, because that would be conflating consumption and income, which are two different forms of taxation. You can tax income, you can tax consumption, or (as we currently do) you can tax both. However, you should not tax someone's consumption based on their income. And of course, beans aren't a luxury item so they're not subject to consumption tax anyway.

Whether a system that taxes high earners (potentially harder working and higher achieving) more is fair is dependent very much on the kind of society you want to live in. That's perhaps the one biggest legacy of the Thatcher years - she eroded society almost to the point of extinction. So we have this culture of the individual where "my" needs are more important than those of the country as a whole.

Personally, I'd probably look to move away from personal (income) taxation and more towards consumption taxation. But I'd still have a progressive system where higher earners pay more tax. If that drives out the high earners who are more concerned for their own back pocket than the society they live in, so be it.

[Lucio]

Yes, I'm winding you up with the 2nd half.. But the 1st half is entirely valid. Equality means the same for all sides. Therefore Men deserve a Minister too..

No, they don't, there should be one equality Minister who is responsible for everyone. Or you know, they could realise that equality will never happen whilst we want to remain individuals

[Saracen]

I never understood why Labour reduced capital gains tax from 40% to 18%, with the now 10k allowance to have to be quite an earner or have lots of assists to be hit by it. Shame really as I was playing to do more gain related things, however I believe it is fair. I expect the allowance will remain as most of the general public don't know the need to report gains and a zero limit would make almost everyone commits an offense.

Strategy probably, and one I agree with.

A lot of capital investments are very risky, and that certainly applies to a lot of business investment. If you want to encourage investment, one way of doing it is to reduce the downside and another is to increase the upside. Government can't do a lot to reduce the risk of losing your shirt if, for example, you back a start-up that goes broke, but it can motivate the risk-taking by reducing the tax penalty if the risk pays off.

Of course, common sense then suggests that a distinction between business capital investment and, say, speculating on gold or fine art would be a good idea too. And that appears to be what the Lib/Tory alliance is planning, from the noises I hear. CGT on non-business assets to go up, but not on business assets precisely to encourage innovation and entrepreneurship.

It's a balancing act.

A common left-oriented policy is to tax capital gains at the 40% because people use CGT to avoid income tax and you have to be relatively well-off to do that. To some extent, no doubt true. But, at the same time, it's that investment that feeds economic growth and investment is nearly always a risk. A differential between CGT and IT reflects that economic imperative to encourage growth by encouraging investment. Otherwise, why take the risk?

And a major factor of our current predicament that wasn't much mentioned in the election campaign was that all parties plans, especially the Chancellor's budget claims on which their deficit reduction plan was based, were for very optimistic economic growth. I'm not aware of any serous economist that put much faith in those growth figures being correct, and if they weren't, Labour were going to fall way short of their planned deficit reduction.

At the end of it all, the best sustainable way out of our problem is growth. You can cut public spending, but you can only cut it by so far (and not much) before you start hitting service levels. Do the public want actual services to be heavily cut? Less police, longer NHS waiting times and fewer doctors and nurses? No, they don't.

But then, those services have to be paid for. To do that, there are only two options - tax more, or earn more. The public aren't much going to like large tax rises (and they're going to get some, IMHO).

So, if you don't like service levels being cut, and you don't like taxes going up, economic growth is absolutely imperative. And you don't get it by discouraging the risk-taking in investment.

It might be ideologically sound to not let the well-off "avoid" tax by using capital growth as opposed to income, but if you want to grow your way out of trouble, and we do, best to swallow the bad taste and encourage business activity and risk-taking.

It other words, to Labour (or the LibDems) it might have an idealogical bad taste, but it's sound pragmatic political economics. It's worth putting up with only because it works, and is necessary.

[scaryjim]

Equality means the same for all sides. Therefore Men deserve a Minister too..

Ooooh, no. Equality means equal opportunity for all sides. Women currently have less opportunity, so they need the extra support. Men have an unfairly high level of representation / opportunity already - giving them their own minister would increase that imbalance (or at least, maintain the status quo, which is imbalanced).

[Saracen]

Yes, I'm winding you up with the 2nd half.. But the 1st half is entirely valid. Equality means the same for all sides. Therefore Men deserve a Minister too..

If the premise is that women are disadvantaged (and IMHO there's hugely clear evidence they are) then they perhaps need a Minister to address the causes of that disadvantage. Do you really want a Minister whose job is to address the advantages men have, to achieve equality? Isn't that akin to Turkeys wanting a Minister for the advancement of Christmas?

[Saracen]

Contrary to expectations, Michael Gove is confirmed as Schools Minister.

I wonder what, if anything, David Laws (LD and one of the negotiators expected to get a cabinet job) will get now?

[Saracen]

Iain Duncan Smith confirmed as Work & Pensions Sec.

This, presumably, is one of the "right wing" posts that were expected. I wonder about David Davis and even Michael Howard, both of whom have been the subject of a lot of speculation.

[Saracen]

Contrary to expectations, Michael Gove is confirmed as Schools Minister.

I wonder what, if anything, David Laws (LD and one of the negotiators expected to get a cabinet job) will get now?

To answer my own question, he got Chief Secretary to the Treasury (effectively, deputy Chancellor).

He is to George Osborne what Nick Clegg is to David Cameron.

It's a sign of the sincerity, or perhaps desperation, or the Tories that such influence positions, and departmental access, have gone to LibDems.

This might, after all, just work.

[Saracen]

And Scottish Sec is Danny Alexander, as expected.

[oolon]

It's a sign of the sincerity, or perhaps desperation, or the Tories that such influence positions, and departmental access, have gone to LibDems.

It also gives Liberals access to the books so the have blood on their hands/wee the mess we are in, if we end up having another election sooner than they hope. If just the conservatives saw the books, labour would claim they are lying.

[pollaxe]

I wonder about David Davis.

I have a lot of time for this chap - I hope he's in there somewhere.

[Saracen]

I have a lot of time for this chap - I hope he's in there somewhere.

Not so far, that I can see.

It's a bit surprising, I must admit, given that he's taken a very strong civil liberties stance that I;d have thought would have gone down well with the LDS, especially over ID cards, etc.

Mind you, I'd guess he annoyed the Tory hierarchy when he stood down forcing a by-election over ID cards. He might still be in the wilderness for that reason.


Oh, and by the way, the scuttlebutt is that there;s a MAJOR rollback of Labour's civil liberties erosions in the LibTory agreement. A "Freedom Act", apparently, repealing a lot of legislation, presumably including ID cards (as both Tory and LD campaigned against them), and probably aspects of the DNA database, and so forth. Bring it on.