The proposals are being put forward by the Office of Communications (Ofcom), the regulator for telecoms. It is included in their latest public broadcasting review. Click here to read the pdf, if you must.
So Ofcom thinks it's a good idea to introduce a tax to pay for such programmes. In their words,
It might be possible to introduce levies on providers not currently part of the formal public service broadcasting model, such as broadcasters, equipment sales, internet service subscriptions or UK online content providers.
Interesting how they use the less aggressive word, "levy", to describe what is in essence, a tax.
Needless to say, this "levy" will not be borne ultimately by the internet service provider. Rather, it will be passed down to the poor consumer, who will have to pick up the tab for whatever passes for "public service" programmes in dumbed-down Britain today.
What rot. Now I have nothing against public service programming - some of the programmes are quite good - but I fail to see why the average broadband user should be made to pay for programmes for which he does not care. If these public service programmes provide value, surely it shouldn't be too hard for them to find some commercial sponsors, and leave the poor taxpayer alone. If, on the other hand, they can find no advertisers or sponsors for their wonderful programmes, then perhaps we are all philistines who do not know what is good for us. Forcing us then to pay for such programmes would not be right, as we obviously do not value them enough to watch them. But perhaps Ofcom does not care whether or not we watch; they are simply satisfied if they can part us from our money.
]]>Gordon Brown will probably calculate that it would be too embarrassing to do a U-turn and keep the 10% rate after all. Even so, he will probably feel he has to do something to give the impression that he cares about the lowest earners and pensioners who will be most affected by this measure. This is my prediction: the announcement of a benefits package "providing targeted help to the most vulnerable in society". Therefore, more tax credits. In other words, more form-filling, more bureaucracy, more complexity, more waste.
It would be easier simply to raise the tax-free allowance to, say, £10,000, thereby ensuring that the lowest earners get to keep most of their income. However, don't hold your breath.
]]>The basic rate is reduced from 22% to 20%, however, this is small comfort to the lower earners who will be hit hard by the loss of the 10% rate.
Will the Government change its mind, and keep the 10% rate after all? Not such a far-fetched idea; this is, after all, a Government whose tax policy consists of blunders and U-turns. The Finance Bill is currently going through Parliament, so until it receives Royal Assent in mid-July, anything is possible.
]]>So much for simplification.
The Bill and Explanatory Notes can be downloaded here. (Very large pdfs - you have been warned)
]]>Hmm. And this is the Government that keeps trying all means to get its hands on our data? How secure is any data that we give to this Government?
I have queried in the past the wisdom of requiring a tax collection authority to pay out benefits. The taxman knows more about collecting money than about paying it out, so getting him to administer child benefits was always going to be tricky. That aside, a security breach is a security breach. It could still have happened even if the taxman wasn't administering benefits (ie it could still have happened in the course of the taxman's handling of taxpayers' records), but the extra role as benefits administrator only made it even more likely.
As a side point, it's a bit strange these days to see a honourable resignation.
Will write more after hearing what the Chancellor has to say.
The answer, from reading today's Telegraph, appears to be 'yes'. That in itself is not surprising; the surprising thing is that the U-turn has come so soon. I was expecting that we would have to wait until the 2008 Budget to find out that the Government had changed its mind in some way or the other.
Apparently, the U-turn consists of reviving some aspects of the old retirement relief rules. Retirement relief was a capital gains tax relief available to taxpayers who were disposing of their businesses after attaining a certain age, or retiring earlier due to ill health. The way the relief worked was that a certain amount of the gain was exempted from capital gains tax, and any amount in excess of that threshold would attract the tax at the normal rates. The relief could only be claimed once in a taxpayer's lifetime.
The U-turn being proposed now is that taxpayers disposing of their businesses would be entitled to the first £100,000 free of capital gains tax, with the 18 per cent rate to apply to any gains in excess of that threshold. Like retirement relief, the £100,000 can only be claimed once in a taxpayer's lifetime. In effect, it is a 'retirement relief', because if the taxpayer went off and started another business, the relief would not be available to him when he came to dispose of it.
As usual, I will wait until I see the actual detail of the proposal before I comment fully on it.
]]>The charge hasn't been shelved after all. It has reappeared in the Climate Change Bill, which gives local authorities the power to levy the charge.
This means that the Government will be able to distance itself if or when a local authority actually introduces the charge. The Government can claim that the decision to levy the charge was an 'independent' one made by that council.
But will it really be an 'independent' decision? A squeeze on local authority funding by the Government could very well lead to a local council introducing the charge. I wouldn't call that an 'independent' decision by the council.
So forget last week's spin by the Government. The threat of bin taxes still remains.
]]>Here are my predictions:
I discussed the lunacy of such a bin tax some time ago. There are all sorts of reasons why this tax was such a bad idea, not least the public health reasons: taxing people for throwing out rubbish will simply lead to fly-tipping and all the hazards that would follow.
Anyway, according to the Telegraph, Gordon Brown has intervened to scrap the plans, out of fear that they could cost the Labour Party dear in next year's local government elections.
Hmm. So does this mean that the plans could be revived once the danger of the local elections is past? We will find out soon enough.
]]>I mentioned in yesterday's post that, in typical Gordon Brown style, any inheritance tax relief would be 'stingy, complex and extremely difficult and wasteful to administer'.
Stingy: check.
Complex: let's wait and see the paperwork claimants have to fill.
Extremely difficult and wasteful to administer: it shouldn't be too hard to administer this tax allowance, but I will wait until I see the paperwork before I give my conclusion. This, remember, is a Government that never does things the simple way.
The abolition of taper relief is being spun as a necessary measure to deal with the private equity issue. However, they are not the only people affected. Taper relief is available to every taxpayer who disposes of chargeable assets, so they are all affected. See Bel for an interesting piece on the effects of the abolition.
Also with the abolition of taper relief is the 'withdrawal' of indexation allowance. What does this mean? Does it mean that any indexation allowance accrued to date, is lost? When selling a capital asset, allowance is normally made for inflation from the date the asset was acquired, or March 1982, whichever is earlier. This inflation is calculated as an 'indexation allowance', and deducted from any gain on sale. Indexation allowance is abolished for sales by individuals with effect from 1998, and replaced by taper relief. So what would happen would be that, on a sale after that date, indexation allowance is calculated from the date the asset was acquired until April 1998, and then taper relief would be calculated from that period onwards. So the indexation allowance that was built up was preserved.
I assume that, when the April 2008 changes take effect, any indexation allowance accrued until April 1998 will be preserved - there will be a huge outcry otherwise.
Indexation allowance still continues for companies, and I assume that this remains the case even after April 2008.
£30,000 levy on non-domiciles.
Well, you know where they got that idea from. They just added an extra £5,000 to the Conservative Party's proposal.
To read the Pre-Budget Report notes in full, click here.
Wow. So tax cuts are popular, after all? Who's have thought it?
The Pre-Budget Report is being delivered tomorrow. Expect Gordon Brown to come up with a copycat inheritance tax cut. But expect it to be, in typical Brown style, stingy, complex and extremely difficult and wasteful to administer.
There might not be any detailed inheritance tax relief in the Pre-Budget Report, but listen out for a statement about wanting to ensure 'fairness' in the inheritance tax system.
But what does it matter if Brown nicks the Tory policy? If he does, everyone would know that that was what he did, and that can only be good for the Conservatives, and the taxpayers who will benefit. If, on the other hand, he introduces a less generous relief than that being promised by the Conservatives, everyone will see that, too.
Arguments about the Conservative Party's promise being 'uncosted' and 'unaffordable' won't work, either. Even if Brown manages to put out figures to claim that the expected tax from 'non-doms' won't be enough to pay for the Conservative tax promise, all the Conservative Party has to do is point to the almost £2bn mistakenly overpaid every year within the tax credits scheme. Those wasted funds should go a long way to paying for the inheritance tax promise. Somehow I doubt that Brown would much welcome attention being drawn to the annual £2bn tax credits overpayments, seeing as he was the Chancellor who presided over the whole shambles.
]]>Gordon Brown may have handed over nominal control of the Treasury to Alistair Darling, the Chancellor, but only the very naive would assume that the latter has any real control over what goes into the Pre-Budget Report.
]]>Some big shipping companies in Norway, in protest at proposed changes to the tonnage tax system in that country, are threatening to re-domicile to the UK. It is estimated that the proposed tax rules will have the effect of landing the Norwegian shipping industry with a tax bill of just over $2bn. This is because, under the old rules, payment of tax could be deferred so long as certain conditions were met. This rule has been in place since 1996, with Norwegian companies taking full advantage of it. Now, it is proposed that two-thirds of the tax deferred over the past ten years be paid by the shipping companies concerned.
Outrageous, and it is easy to see why the shipping companies are threatening to leave. Never mind that the companies are to be given ten years in which to pay over the deferred tax, whatever happened to certainty in the law? The shipping companies, on meeting the conditions imposed by Norwegian tax law, were quite entitled to retain the tax credits. To then be told that the Government had changed its mind, and wanted the money after all, one can see how that would rankle.
I am interested to see if Norway gets away with imposing this retrospective tax. Maybe the threat of a mass exodus of shipping companies would force them to think twice. Closer to home, though, I wonder whether the British Government is watching all this, and wondering what, if any, lessons it can learn from Norway's brazen behaviour. The prospect of levying a blatantly retrospective tax would be too tempting an opportunity to pass up. Heaven knows there are so many areas in the UK tax system that could be vulnerable to such an attack.
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