In an earlier post on inheritance tax, I suggested that we would need to decide: 'do we want a meritocracy or an aristocracy?' I am pleased to see that the Conservative party has made up its mind.
The changes in the tax system proposed by John Redwood's economic competitiveness task force do very little for those on low or average incomes. Instead they are focused on helping the small wealthy minority that pays a considerable amount of inheritance tax or stamp duty on shares. This not only fails to promote social justice but fails to achieve the committees stated aim of increasing 'economic competitiveness.'
One of the big drags on our economy at the moment is the incredibly high rates of marginal taxation that many low income family face due to a vicious combination of paying income tax and seeing the amount of tax credits they can claim drop of as they earn more. This prevents people from moving into higher paying jobs in which they would contribute more to the economy. This would problem seem to suggest that the best way to make our economy more competitive would be to reduce the amount of income tax paid by those on low incomes. Well at least someone has thought of that.