I have deeply admired the comprehensive and engaging performances given by John Redwood in Parliament and on other platforms in regards to how to manage the economy. He is so right when he states that tax cuts are necessary. The only people that will get the UK out of recession are entrepreneurs who employ people and deliever economic growth by setting up business', managing business' and sustaining business'. The increase of the top rate of tax from 40p in the pound to 50p in the pound is simply a deterrent to aspiration and therefore will lead to decreased tax revenues. To add further to that, those earning around the £150,000 mark will go underneath the threshold because they will receive more in untaxed income then if they were just above the threshold where more of their income would be taxed. For example:
Person earning £140,000 (taxed at 40%) - taxed income: £56,000; untaxed income: £84,000
Person earning £160,000 (taxed at 50%) - taxed income: £80,000; untaxed income: £80,000
As you can see, the higher earner ends up with less. It absurd when you think about it really. You earn a higher wage and yet lose more in tax and end up with less. Why is that fair? Labour think its fair, but common sense says no.
The Conservative led coalition must abolish this unfair tax and instead give out a clear message indicating that business is open in Britain. Abolishing the 50p tax rate is a start. But it needs to go further.
I want to see the 10p tax rate re-instated for the poorest in our country and the tax threshold for that tax band raised to £20,000 (from £20k+, that's where the 20% rate should begin). Taxing them at 20% is another one of Labour's shameful mistakes. A party that prides itself on serving the poorest in this country and yet it has disregarded them with contempt by pushing some of the poorest people in the country into poverty by taking more money away. No Labour activist or politician can ever say in public that they are the only party that care for the poor - that is simply nonsense.
Even Margaret Thatcher treated the poorest in our country with more respect in her time as Prime Minister (people may be surprised but I'm not. She governed with dignity and compassion for everyone in the UK and the country's overall health after all). Why? Because she regarded those people as people. She didn't get everything right I know, for example regarding the poll tax (but that was a genuine miscalculation of which she did NOT deliberately inflict on the people of this country) but she liberated the incomes of millions of people in her time as PM from tax. Labour's attitude towards the people is selfish - they treat them like names and numbers on databases. They'd be more than delighted to take out more and more money from them without ever feeling the compassion of how hard people have to work to earn their income. New Labour. Same old socialism.
John Redwood echoes most of the opinions in this blog entry. His analysis may be simple to understand, but its the most effective, makes the most sense and is the healthiest solution to beating the recession and heading back towards long, sustained and sensible economic growth.