Category Archives: Politics

Britain, Economic, Government, Politics, Society

Tax policy and the hidden truths

BRITAIN

Tax Return

For various reasons it has suited both the Labour and Conservative parties not to have tax policy turned into a central issue in the election campaign.

Under a Labour government led by Jeremy Corbyn a significant rise in public spending would be envisaged. The party leadership, too, has made no secret of its intention to raise taxes on the better-off – on those, as the saying goes, ‘who have the broader shoulders’. But, the definition of broad shoulder has, for some time now, been left conveniently undefined, while the resort to higher borrowing, the mantra of any socialist party, is unlikely to assuage voters after the calamitous borrowing and debt of recent years that has necessitated such a lengthy period of austerity and spending constraint.

The Conservative Party have also been markedly reluctant to be drawn into the discussion on tax, having long symbolised itself as the party of low tax. While it may claim to have lower spending commitments than Labour this does not necessarily mean that taxes will not rise. Chancellor Philip Hammond, for one, has made known his desire for greater financial flexibility and for the party to drop the ‘tax lock’ pledge. Ultimately, this begs the question of what Conservative tax policy is now.

Policies of taxation are especially sensitive at this point in time given the background of a slowing economy and forecasts of a deepening downturn. There have been signs over the last few days that the election battle – largely focused till now on the personalities of the respective leaders – is swinging back towards more practical and tangible issues.

Both parties have pledged not to increase the 20 per cent rate of VAT until 2022. As matters stand, though, the total tax burden is set to rise to its highest level in 30 years – even were the tax lock to stay in place. The March Budget stipulated that the tax burden will rise to 37.2 per cent of national income by 2019-20. And with overall government debt approaching 90 per cent of national income, voters deserve more informative answers on future tax policy than the rhetoric currently on offer.

The likelihood is that continuing low growth for the foreseeable future and a worryingly high level of government debt will act as a powerful restraint for whoever wins the election: any increase in government spending will have to be found from improved productivity and efficiency gains. That is not a particularly comfortable message to portray for any party aspiring to be the next government. It is, however, an unavoidable truth whatever the political rhetoric may claim.

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Britain, European Union, Government, Politics, Society

Britain will be entitled to walk away without a deal with the EU

BREXIT

brexit

When the 27 EU leaders met to review their Brexit talks guidelines last Friday, it took them less than a minute to approve the draft. They then burst into open applause – the grandstanding almost akin to a Soviet-era meeting of Warsaw Pact comrades. The guidelines are provocative and blatantly breach the UK’s own red lines. Britain, in turn, must spell out that it is prepared to walk away if it is unsatisfied with the deal that the talks produce.

The EU’s mask of collegiality and high ideals is slipping. As it does, so the decision of the British voters to walk away last year looks even wiser. Britons should be aware that walking away is a valid and legal option that the UK is entitled to exercise if talks with the EU irretrievably break down.

Extracts from Yanis Varoufakis’s memoir of the 2015 Greek crisis depict an EU where the Germans dominate and the Union, they insist, must be preserved at all costs. He claims that Emmanuel Macron, probably France’s next president, described the EU’s deal for Greece as a latter-day “Versailles Treaty”. Angela Merkel apparently overheard and barred Mr Macron from talks.

But Greece is not Britain: a great deal more for the Union is at stake this time around given the UK’s historic position of generating handsome contributions to EU coffers in Brussels.

Theresa May attracted shrill criticism for pointing out that continental security might be affected by the course of negotiations, yet the EU has shamelessly put absolutely everything on the table: the cost of the so-called divorce, from which they are determined to wring every penny, Gibraltar, UK bases in Cyprus and, in a concession to the French, an effort to stop any financial deregulatory drive by Britain.

The UK cannot accept a settlement that would, say, tie its hands on tax and regulation after it leaves the EU: the country voted to get out in part to liberate its economy. And there are matters on the table that have nothing to do with the EU – such as the future of Ireland. Britain therefore has to make it absolutely clear that it will not be drawn into diplomatic traps or be landed with bills and commitments that reduce its status and undermine the raison d’être behind Brexit.

The EU needs to be reminded that it relies so much on the UK’s markets, intelligence and military that it would be foolish to act so bullishly over the terms of settlement. It is in everyone’s interests to separate amicably and agree as soon as possible on a new trade arrangement. That is what Britain should aim for. If the Europeans will not play ball, however, they must be in no doubt that Britain has the strength and will to go it alone.

Brexit | Some of The European Union’s draft negotiation principles

 . The EU wishes to have the United Kingdom as a close partner in the future

. Preserving the integrity of the Single Market means that the UK will not be able to participate on a sector by sector basis

. The EU “four freedoms” are indivisible and there can be no cherry-picking

. A non-member of the Union cannot have the same rights and benefits as a member

. The EU will negotiate as a bloc, rather than 27 individual countries, so as not to undercut the position of the Union

. Brexit negotiations will take place as a single package. They will only be considered settled when all individual items are agreed

. The United Kingdom and European Union must agree on their future relationship, but these discussions can only take place when there is sufficient clarity on the process of the UK’s withdrawal from the Union

. The Union is open to a transitional membership agreement, but this must be very clearly defined, time-limited and dependent on the UK maintaining EU membership obligations

. Negotiations must be completed by 29 March 2019

. No part of these negotiations can affect Gibraltar without an agreement between the United Kingdom and Spain

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Britain, Government, North Korea, Politics, Society

UK hands £4million in foreign aid to North Korea

BRITISH FOREIGN AID

It has emerged that Britain has sent more than £4million in foreign aid to North Korea in the past six years despite the communist regime’s threat to spark nuclear war.

Official figures reveal the UK spent £740,000 of taxpayers’ money on aid projects in the despotic regime in 2015 alone – a 167 per cent increase on the previous year.

The Foreign Office, which is responsible for most of the spending, has said it had no plans to axe the aid programme.

While there is little evidence that aid payments to North Korea have had much impact since the payments to the country began to be increased in 2010, some believe that aid could help improve relations with the pariah state.

The money also counts towards the Government’s controversial target of spending 0.7 per cent of Britain’s income on international development.

It is believed that ministers are now facing fresh calls to end all aid to North Korea in response to the increasingly bellicose threats from dictator Kim Jong-un. A view gaining traction is that it is unacceptable to hand taxpayers’ money to a country bent on attacking the West and its allies.

Sir Gerald Howarth, former Tory defence minister, said: ‘It is completely absurd to be giving aid to North Korea at this time… There are some very poor people there because of the regime’s actions, but the country is a communist basket case.

‘They are trying to build a nuclear missile to hit the United States, they are destabilising the entire region. Why on earth are we giving them aid?’

Sir Gerald said the case highlighted the problems caused by the 0.7 per cent aid target, which was enshrined in law by the Coalition government.

He added: ‘Ridiculous cases like this are just more evidence of the need to re-examine the whole basis of the aid programme. We need to repeal the legislation, slash the aid budget dramatically and spend the money on priorities like defence and social care.’

The prominent UKIP donor Arron Banks described the spending on North Korea as ‘shocking’.

‘In the past, we’ve had issues with the wastefulness of the foreign aid budget, but this is beyond ridiculous,’ he said.

‘While we funnel money into this failing state, they are spending most of their resources developing nuclear weapons designed to wipe us off the map.

‘What’s next? Giving foreign aid to Islamic State?’ The aid programme is also potentially embarrassing for Foreign Secretary Boris Johnson who has warned the despotic regime it ‘must stop these belligerent acts and comply with UN resolutions’ after a failed missile test last weekend.

North Korea has been upping the ante again this week in its stand-off with the West, telling the United Nations that ‘nuclear war may break out at any moment’.

But the Foreign Office insists its aid policy is helping to improve relations with the communist country.

In 2009, British aid to North Korea stood at just £32,000.

But spending was increased rapidly by the Coalition government from 2010 onwards as it pursued the new aid target. In the past six years, more than £4million of taxpayers’ money has been spent on aid projects in the country, with spending peaking at £1.3million in 2013.

Projects include schemes designed to promote Western values – such as English lessons for regime officials and workshops for entrepreneurs.

But money has also been spent on projects to provide equipment and training for physiotherapy units in the country, potentially allowing the regime to free up resources to spend on its murderous military programme.

The Foreign Office has defended the programme, and has stressed that money is spent on individual schemes rather than handed directly to the regime.

A Foreign Office spokesperson said: ‘The projects we carry out in North Korea are part of our policy of critical engagement, and are used to promote British values and demonstrate to the North Korean people that engaging with the UK and the outside world is an opportunity rather than a threat.

‘We conduct a range of small-scale project work, many of which help to improve the lives of the most vulnerable members of society.’

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