Search

… take the whole tax system to pieces and put it together again in a way that will radically alter the economic climate–the framework of rewards and penalties in which personal and corporate decisions are taken within the economic system. … there are two well-established Conservative principles which ought to be applied to personal taxation. One is to improve personal incentives; the other is to encourage the broader ownership of capital. There may well be a good case for the euthanasia of the share-holder as well as the rentier; equally, high net incomes may have no place in a Socialist society. These are all legitimate objectives. But it is the height of folly, while pursuing these objectives, to pay lip-service to the merits of private enterprise and then simultaneously, ensure that the forces which make such an economy tick are suppressed. Only when the [Labour] Government makes up its own mind as to the type of society and economy it wants to create will it be possible to evaluate the relevance and adequacy of its fiscal policy. ‘A kind of tax prison’: Conservatives in opposition and government, 1964–1974 Conservative fiscal strategy rested on the assumption that economic growth was promoted by personal risk-taking and enterprise in a free market. [ABSTRACT FROM AUTHOR]

Many people think of the Labour Party as a ‘higher taxation’ Party … It is very important that we should establish the fact that we stand for the more equitable distribution of taxation; this means easements for some as well as heavier (but fairer) burdens for others. There was no evidence that high taxation had a disincentive effect. By the time Labour lost power in 1951, leading civil servants felt that Labour's fiscal policy was threatening economic growth and efficiency. Although Labour politicians were less inclined to accept the need for a shift to a free market economy with incentives for higher incomes, many members of the party admitted that the tax system should be reassessed. The Attlee government established a Royal Commission on the Taxation of Profits and Income in 1951. The main lines of Labour's fiscal policy emerged from the memorandum of dissent to its report (largely the work of Nicholas Kaldor), and from a series of internal working parties. When it returned to power in 1964, Labour introduced a major series of reforms to the tax system, escaping from the constraints of the Conservative government, and adding a layer of complexity to the fiscal system. [ABSTRACT FROM AUTHOR]

A high rate of taxes reduces incentive – whether it is an incentive to work a bit more overtime or the incentive to exercise business initiative. A high rate of tax militates against personal saving and leaves companies with less funds to invest in the expansion and modernisation of their business. A high rate of tax inevitably leads to wasteful expenditure and a waste of technical expertise in thinking up new methods of tax avoidance. The system for financing public expenditure is a product of history. It is not necessarily what would have been devised for an efficient economy under circumstances of full employment and still capable of sustained growth. … the effect of taxation on economic development needs a thoroughly new approach. Much of the current talk about the effect of taxation on the economy … is conducted in terms of nineteenth century equity rather than in terms of the effect of taxation on economic development. Discussion of broad issues should no longer be confined to the Revenue and Customs; operational changes must of course be conducted behind closed doors, but this is no reason for failing to look at the wider long-term issues. [ABSTRACT FROM AUTHOR]