Magazine article The Spectator

Low, Simple, Compulsory - Let's Start Again with the Taxes on Savings

Magazine article The Spectator

Low, Simple, Compulsory - Let's Start Again with the Taxes on Savings

Article excerpt

Nigel Lawson thought that taxes should be low, and simple, and compulsory. What a shame that he never got round to reforming the taxes on savings. Few chancellors are tax reformers, and the next to come was Gordon Brown, at whose christening some wicked fairy caused the gift for simplification to be passed to him the wrong way up. His approach to tax is manipulative, his last Finance Act was the fattest on record, and he has even contrived to make capital gains tax more complicated, twice. The only beneficiaries are the tax accountants, and even they have begged him to lay off. Now his shadow chancellor, Michael Portillo, has homed in on savings, promising not to tax the income that they bring to those of modest means. Having got so far, he ought now to promise to take his billhook to the tangled jungle of obsolete incentives and aimless penalties which now serve as a tax code for savings. He should ask why somebody who puts his savings into shares should be taxed on his gains at the highest rate in the developed world (yes, Nigel Lawson set it) when his pension fund can own the same shares and its gains are free of tax. Why should the whole system be slewed towards indirect ownership - through life assurance, for example, with all the costs and obfuscation that go with it? …

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