Matthew Sinclair

Wednesday

8 Apr 2015
Matthew Sinclair

Ed Miliband is deliberately misleading ‘you and me’ on the non-dom rules

When he announced Labour Party proposals for changes to the non-dom rules, Ed Miliband tried very hard to be as misleading as possible without lying. He seems to have failed. He said that non-doms 'aren’t required to pay taxes like you and me'. They are. Non-doms are required to pay the same UK taxes as the rest of us on their UK income and foreign income remitted to the UK. Most of us don’t have any non-UK income, let alone non-UK income which we do not wish to remit to the UK (regardless of the tax treatment, it would mean we couldn’t spend it here) and therefore we do not pay tax on unremitted non-UK income either. Clarity on the current rules is really important for what could be a question worth billions to the UK exchequer: will this measure raise revenue? After all, non-doms do create revenues for the UK government in three ways: taxes on their consumption; taxes on the UK income and foreign income remitted to finance that consumption; and taxes on the economic activity that consumption creates (e.

Ed Miliband is deliberately misleading ‘you and me’ on the non-dom rules

Friday

9 May 2014
Matthew Sinclair

I’m part of the ‘jilted generation’ – so why do I think things are better than ever?

Having been born in 1983, I am a part of Ed Howker’s ‘jilted generation’.  I think it is quite reasonable for him to argue that governments of all parties have made choices which do not reflect our interests, or those of future generations. They have increased public spending, which will reduce medium term growth and diminish our future earnings; they have borrowed eye-watering amounts of money which we will have to pay back; they have taken far too long to undertake vital reforms like putting in place a reasonable schedule of increases in the pension age. More young people think that the moon landings were faked than think that the Government will be able to provide the same level of benefits available today when they retire.

I’m part of the ‘jilted generation’ – so why do I think things are better than ever?

Friday

6 Dec 2013
Matthew Sinclair

How corporation tax cuts are helping wages

Yesterday's autumn statement included the results of the Treasury's study of the dynamic impacts of the cuts to Corporation Tax, which George Osborne is down from 28 per cent to 20 per cent. This study used the new HMRC Computable General Equilibrium model - as Fraser reported on Wednesday - and the results are impressive. The cuts will increase investment by 2.5-4.5% (£3.6-£6.2 billion in today’s prices). They will increase GDP by 0.6-0.8% (equivalent to £9.6-£12.2 billion). Given the share that we can expect to go to labour, that equates to an increase in wages of £405-£515 a household. As a result of higher profits, wages and consumption, we can expect the cost of the policy to fall by 45-60 per cent in the long run.

How corporation tax cuts are helping wages

Tuesday

24 Sep 2013
Matthew Sinclair

Ed Miliband’s energy announcement may be nonsense, but it could become popular

First politicians banned cheap energy. They are creating an affordability crisis by insisting on the rapid deployment of expensive technologies like offshore wind and by imposing endless green taxes. It is simply illegal to generate electricity at an affordable price with a modern, efficient coal and gas power plant, without bearing all of those other costs. Ed Miliband was one of the people who imposed those high costs on consumers, as the Secretary of State for Energy and Climate Change in the last government. Now his plan is to fix the situation by banning expensive energy too. The Government already decides which technologies are good – wind, solar, carbon capture and storage – and which are bad – coal and gas.

Ed Miliband’s energy announcement may be nonsense, but it could become popular

Tuesday

6 Aug 2013
Matthew Sinclair

Stamp Duty is stomping all over Middle England

65 per cent of the people buying a home in London in 2012-13 paid the 3 per cent rate of Stamp Duty or more. You can pay that rate on a one or two bedroom flat in the capital now. But it would be a mistake to think that Stamp Duty is only an issue in London and its leafier suburbs. Just 200,000 of the 500,000 transactions subject to Stamp Duty in 2012-13 were in London and the South East. Family homes around the country are subject to punitive rates. Imagine you bought a house in the West Midlands for £300,000 at the start of 2007. Not a mansion but just a normal family home in a nice neighbourhood like the one picture below. You will have paid £9,000 in Stamp Duty on top of the price of the house. That is probably the largest cheque you will ever write to the tax man.

Stamp Duty is stomping all over Middle England

Thursday

4 Jul 2013
Matthew Sinclair

How the government’s energy policies will benefit a rich sheikh at the expense of the poor

Today Ed Davey launched the London Array, an enormous offshore wind farm, and the Prime Minister posed for pictures with a sheikh whose sovereign wealth fund put up part of the money to finance it. But HH Sheikh Abduhall Bin Zayed is not backing this project out of the goodness of his heart. The Emiratis aim to make a return out of the lavish subsidies on offer. Just last week, the Government announced that from next year offshore wind will get a guaranteed price – under the new 'contracts for difference' in the Energy Bill – of £155 /MWh. Electricity currently sells on the wholesale market for about £50 /MWh. Offshore wind therefore gets three times the price of conventional energy. The London Array will presumably be supported under the earlier Renewables Obligation scheme but the level of subsidy is similar.

How the government’s energy policies will benefit a rich sheikh at the expense of the poor

Thursday

13 Jun 2013
Matthew Sinclair

Energy special: The green jobs myth

Tim Yeo MP called his proposal for yet another draconian target to decarbonise Britain’s power sector the ‘green jobs amendment’. It was defeated last week by 290 votes to 267. One sweeping new regulation was apparently enough for the day as the Commons settled for casually renationalising the energy sector by passing the government’s bill. The amendment’s defeat is a setback for environmentalists, who had campaigned for it aggressively, but not for Britain’s two and a half million unemployed. ‘Green jobs’ are an utter farce. More expensive sources of energy will destroy more employment than they create. That is not to say that no one has a green job. Tim Yeo has several and in the latest parliamentary scandal he appeared to be pitching aggressively for another one.

Energy special: The green jobs myth

Monday

18 Feb 2013
Matthew Sinclair

Why no conservative should support a mansion tax

The Government is expected to raise around £550 billion in tax revenue this financial year. The Centre for Policy Studies estimates that a mansion tax (of £20,000 on properties of £2 million), would raise at most £1 billion, less than 0.2 per cent of revenue. The tax is, however, likely to weaken the market and reduce prices – reducing receipts from other taxes; so even the CPS’s static analysis is probably optimistic. This proposed tax would be a huge burden on those forced to pay. The rate is not 1 per cent of the property’s value. The standard lifetime of a lease on a new build is 125 years, over which time the government will have confiscated 125 per cent of the value of a £2 million property. And there will be people who own a £2 million property, but can’t afford the £20,000 a year fee.

Why no conservative should support a mansion tax

Saturday

24 Nov 2012
Matthew Sinclair

Why do-gooding ‘sin taxes’ always stink of politics

Nutella may have been created by Italians, but it is the French who really love it. The hazelnut spread is a fantastically popular accompaniment for everything from bread for breakfast to crêpes for a delicious dessert. Yet the French Senate, in its infinite wisdom, decided that Nutella should be taxed. The proposal was voted through the Senate, before being stopped by a very unlikely coalition of Communists and conservatives. The plan to impose a ‘sin tax’ on Nutella in France was obviously ludicrous; but it was also full of politics. Sin taxes and green taxes may look like an efficient intervention on an economist’s blackboard; but they never live up to the wide-eyed optimism of enthusiastic technocrats. They always end in an ugly political stitch-up.

Why do-gooding ‘sin taxes’ always stink of politics

Sunday

7 Oct 2012
Matthew Sinclair

Why George Osborne had to kill the mansion tax

This morning the Mail on Sunday reported that George Osborne has promised there will be no mansion tax, no wealth tax and the council tax freeze will be extended. Homeowners are safe for now, but why has Osborne made that call? It might be something to do with a past Conservative Party Conference back in 2007 when the party was in a similarly dire situation. The then Shadow Chancellor pledged to cut inheritance tax by increasing the threshold, put Gordon Brown off calling an early election and ended the honeymoon it is now hard to believe he ever enjoyed. Britain already has the highest property taxes of any developed economy and council tax is desperately unpopular. You could argue that a new, more progressive, property tax would win people over.

Why George Osborne had to kill the mansion tax

Thursday

13 Sep 2012
Matthew Sinclair

The problem with George Osborne’s debt target

Q: Why will George Osborne miss his debt target? A: The Government is spending a lot more money than it is taking in taxes. Q: Why is the Government spending a lot more than it is taking in taxes? A: Jonathan Jones answered this one yesterday. In short: disappointing growth means that debt needs to be lower to meet a Debt/GDP target, increases spending on benefits and reduces both direct and indirect tax receipts. Beyond that, things get a lot more complicated and controversial. I won’t get into the debate over supply-side reform versus Keynesian economic stimulus now. That debate has been covered at length elsewhere, particularly in the final report of the 2020 Tax Commission. Maybe the problem isn’t just the attempts to meet the targets.

The problem with George Osborne’s debt target

Tuesday

21 Aug 2012
Matthew Sinclair

Promoting tax transparency at the petrol pumps

Too many taxes are buried in prices. From Value Added Tax to the cost of extravagant subsidies for renewable energy, all people see is the shop charging them a higher price. That is convenient for politicians trying to hike our taxes, but it distorts democratic decisions over the level of taxes and spending, and which taxes to increase and decrease. That is why we have seen steady increases in Employers’ National Insurance. It is why climate regulations are structured so a huge part of the cost is buried in the electricity market. And it is telling that the taxes people resent most are the lump sums they have to write a cheque for each year. Making the tax system transparent is therefore the right objective for anyone who believes in a more honest, competitive and efficient tax system.

Promoting tax transparency at the petrol pumps

Monday

23 Jul 2012
Matthew Sinclair

The Treasury sides with the consumer over climate policy

Tim Yeo is now posing as a friend of the consumer. Launching the latest report from the Energy and Climate Change Committee this morning, he attacked the Treasury for ‘refusing to back new contracts to deliver investment in nuclear, wind, wave and carbon capture and storage’. The report argues that could ‘impose unnecessary costs on consumers’. The basic logic of his claim is this: investments are more expensive when they are riskier. Investors expect to be compensated for the risks being taken with their money. If the Government offers guarantees that reduce the amount of risk energy companies run by investing in expensive sources of energy like offshore wind, then those firms can invest at a lower cost. They can then pass those lower costs on to their customers.

The Treasury sides with the consumer over climate policy

Tuesday

19 Jun 2012
Matthew Sinclair

End the #endfossilfuelsubsidies subsidy

The European Union has been handing out grants to environmentalist groups since 1997. New research by the Taxpayers’ Alliance today shows just how much the different groups have received. The European Environmental Bureau, an umbrella group for a number of the others who are funded directly, has received nearly €11 million. More familiar names funded under the LIFE+ programme include Friends of the Earth Europe, which has received over €7m million, and the European Policy Office of the World Wildlife Fund, which has received nearly €8 million. The European Union isn’t the only government to hand taxpayers’ money over to the environmentalists. But they are particularly shameless. When DEFRA funds the radical left New Economics Foundation for example, they at least pretend the £58,308 project to commission a report titled Moments of change as opportunities for influencing behaviour is a serious piece of research, though it looked to Communist Cuba for examples of ‘effective government-led intervention.

End the #endfossilfuelsubsidies subsidy

Monday

18 Jun 2012
Matthew Sinclair

What fossil fuel subsidies?

The environmental movement hasn’t responded well to the setbacks it has suffered seen since the failure of the Copenhagen climate conference.  The #endfossilfuelsubsidies campaign — trending worldwide on Twitter this morning — is the latest example of their descent. To be clear, fossil fuel subsidies are not a good idea; that is why governments like ours don’t offer them. Fossil fuels are huge cash cows for every western government.  When someone fills up their car with petrol, around sixty per cent of the pump price goes to the Exchequer. When an oil company drills in the North Sea and extracts a barrel the amount that the Treasury gets varies but it is invariably a substantial share of the price, and the sector was raided again at Budget 2011.

What fossil fuel subsidies?

Friday

8 Jun 2012
Matthew Sinclair

Stop funding Argentina

One of the justifications for Britain’s large, and rapidly growing, international development budget is that it promotes our national interests. Politicians are wary of appealing to a public sceptical of the benefits of aid purely on the basis that it will help where it is spent. The idea is that by supporting poorer countries we increase their stability, and thereby create a safer world for British people as well. But the evidence that foreign aid promotes political stability is weak. Harvard economist Nathan Nunn and Yale economist Nancy Qian found in a Working Paper published this January that ‘an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries.

Stop funding Argentina

Wednesday

30 May 2012
Matthew Sinclair

The deeper problem behind Europe’s rising carbon emissions

The Government takes a lot of stick for blaming the weather when there are queues at airports or lacklustre growth figures. Now the European Union is blaming a ‘colder winter’, as well as ‘economic recovery in many countries’, for emissions in 2010 being 111 million tonnes of CO2-equivalent higher – about 2.4 per cent –than they were in 2009. They are insistent that ‘the increase could have been even higher without the fast expansion of renewable energy. ’ Looking at the record of emissions in the European Union and the United States though, it is clear there is a deeper problem. Even ignoring emissions exports — the amount emitted in places like China instead of Europe — the developed European economies have been reducing the amount they emit for every pound of income at the same rate as the United States.

The deeper problem behind Europe’s rising carbon emissions

Monday

9 Apr 2012
Matthew Sinclair

We need a crack down on tax avoidance

After the Budget there was a lot of anger over the pasty tax and the granny tax. Another big rise — in tobacco taxes — didn't make as many headlines, because it wasn't much of a surprise. But for someone smoking a pack a day it almost wiped out the entire value of the rise in the Personal Allowance. Given that most smokers earn relatively low incomes, it was probably the most regressive measure in the Budget. The idea is that smokers are supposed to be grateful for this impetus to give up. Many will keep smoking though, and this will just be yet another strain on their household budgets. Some will respond by buying more from the illicit market. Many people who don't want to move abroad are pushed towards doing so when Income Tax rates rise, driving a greater and greater divide between their post-tax incomes here or in Switzerland.

We need a crack down on tax avoidance

Thursday

23 Feb 2012
Matthew Sinclair

Why property tax rises aren’t the answer

When Tim Montgomerie first started calling for new wealth taxes I was horrified. Sweden has only just abolished its wealth tax after seeing hundreds of billions of kroner leave the country in capital flight over a number of years. Other countries have found wealth taxes are associated with narrow bases, high costs of collection and often very unfair treatment for different classes of assets. We should not replicate that here. As his proposals have been refined though, it isn’t that bad. More bands would be a relatively reasonable way of making the Council Tax system more progressive. It might require a revaluation which would be politically toxic, and it would be a shame to take Council Tax further from being a simple charge towards local services — but it certainly wouldn’t create the horrible economic consequences of higher marginal rates on income or an outright wealth tax.

Why property tax rises aren’t the answer

Tuesday

10 Jan 2012
Matthew Sinclair

A green-light for HS2 — but the coalition’s political instincts should tell it to stop

Earlier today, the Government announced that it is still planning to go ahead with a new high-speed rail line that will reach Birmingham by 2026, and then be connected to Manchester and Leeds. And it's doing so in the face of widespread scepticism among the public and business leaders. When we at the TPA commissioned YouGov to test public support for different cuts in public spending, 48 per cent of the public supported cutting the project against just 34 per cent opposed. While organisations like the CBI back high-speed rail, the Institute of Directors (IoD) actually asked their members and found that 38 per cent thought HS2 would represent poor value for money, against 30 per cent who thought it would represent good value.

A green-light for HS2 — but the coalition’s political instincts should tell it to stop

Thursday

15 Dec 2011
Matthew Sinclair

The Climate Change Committee’s suspiciously opaque report

The Climate Change Committee, a quango set up to advise the Government on its emissions targets, make a big claim in their report today. They have, they suggest, disproved the argument that climate policy is set to drive substantial increases in energy bills by 2020. They say that ‘policies to achieve a low-carbon economy will add a further £110 to bills in 2020, almost entirely due to support for investments in low-carbon power generation’, less than other estimates. And so the Guardian have used that as a pretext to let climate attack dog Bob Ward accuse the TaxPayers’ Alliance and Nigel Lawson’s Global Warming Policy Foundation of an attempt to ‘confuse and misinform the public with blatantly inflated figures’.

The Climate Change Committee’s suspiciously opaque report

Monday

12 Dec 2011
Matthew Sinclair

Whatever Chris Huhne says, Durban hasn’t changed anything

This morning the Department of Energy and Climate Change (DECC) told us that the climate summit in Durban, which concluded over the weekend, has been ‘heralded a success’. As they say, the ‘talks resulted in a decision to adopt the second commitment period of the Kyoto Protocol next year in return for a roadmap to a global legal agreement covering all parties for the first time’. Should anyone be heralding that as some kind of step forward? Was I wrong to be sceptical last week? As it happens, the various parties were actually trying to secure that ‘global legal agreement’, covering all of them, two years ago in Copenhagen — not just talking about securing it in the future. The new roadmap, the ‘Durban Platform’, merely pledges an agreement by 2015, and succeeds the Bali Roadmap that was agreed four years ago and pledged an agreement by 2009.

Whatever Chris Huhne says, Durban hasn’t changed anything

Monday

5 Dec 2011
Matthew Sinclair

Disappointment in Durban

Will Durban break the cycle of climate change meetings that repeatedly disappoint those hoping to replace Kyoto with an upgraded model? With so much else on, most people seem to be ignoring the latest summit entirely. Scanning the major newspaper websites, only the Guardian and the Independent mention “Durban” on their homepages.    First Copenhagen failed to live up to the massive hype. Then Cancun continued the stalemate on the big picture and negotiators contented themselves with addressing some relatively minor points. But Kyoto’s commitment period ends at the end of 2012, so those hoping for new mandatory targets can’t content themselves with stalling forever.   Despite the scale of the economic crisis, the politicians really want a deal and some governments, particularly our own, will commit significant resources to secure one.

Disappointment in Durban

Wednesday

30 Nov 2011

Friday

25 Nov 2011
Matthew Sinclair

How much are we paying towards next week’s strike?

Next week, millions of public sector workers will go on strike over proposed changes to their pensions. And yet, even after the reforms, those pensions will still be far more generous than most taxpayers working in the private sector — who will pick up the bill — can expect. It's going to be hard to convince people of the ‘fairness’ of paying more into public sector pensions than they do into their own. The unions will do their best though. And the real irony is in how their campaigns are funded. Guess who is paying for unions to organise strikes that will disrupt the public services that taxpayers pay for? Yep — taxpayers. The unions enjoy £32.9 million in funding under programmes like the Union Learning Fund, which they use to provide training courses for their members.

How much are we paying towards next week’s strike?

Friday

18 Nov 2011
Matthew Sinclair

What does the ‘carbon floor price’ mean? More emissions and fewer jobs

After the Conservative Party Conference, Fraser described this statement in George Osborne’s speech as the Osborne Doctrine: ‘Let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.’ The Government’s current climate policy clearly fails that test, as I set out for this site at the time, and there is no more egregious violation than the carbon floor price. It is one of those policies that can sound reasonable in theory: the EU Emissions Trading System creates a carbon market. That market produces a carbon price that is supposed to encourage business to invest in cutting emissions by doing things like building nuclear plants.

What does the ‘carbon floor price’ mean? More emissions and fewer jobs

Friday

4 Nov 2011
Matthew Sinclair

Tax busting

Back in June 2008, when Gordon Brown's government was young but already so weak it looked like it might not last, James Foryth wrote about one positive legacy it might leave. The Union Flag all around Whitehall on the top of public buildings. Whether you saw that cynically as an attempt by a Scotsman to win over sceptical English voters, or as a genuine attempt to support a sense of British identity, James was right and those flags are still flying. We can all debate over what the great legacy of this Government should be or will be, and only time will tell which of its most important initiatives will prove most enduring: free schools, welfare reform, the fiscal adjustment or something else. But there is one achievement that I think has already achieved the almost irreversible status that James saw the raising of the flag attaining.

Tax busting

Saturday

29 Oct 2011
Matthew Sinclair

Executive pay: don’t believe the headlines

Open yesterday's or this morning's papers, and you'll find plenty of reports about the snouts of FTSE100 chief execs being in the trough again, while the rest of us suffer. Their pay is up 49 per cent, we read. Most people’s first and only response to these accounts of the Incomes Data Services' (IDS) latest findings will be anger — and understandably so. But much of this anger and reportage is based on a mis-reading of the actual report. The BBC's influence is huge. Its original report compared the rise in base salaries (which wasn’t 49 per cent, but a much less impressive 3.2 per cent) with a median rise for private sector workers of 2.6 per cent, but nowhere in the IDS press release does it say whether the rise in remuneration or salary among the FTSE100 directors is a median or a mean.

Executive pay: don’t believe the headlines

Friday

21 Oct 2011
Matthew Sinclair

How to untie the tax knot

Yet another HMRC scandal this week, as a new HMRC computer discovered millions who have paid too much or too little in tax. A letter from the tax man will land on their doorstep in the next few months. Some will enjoy the dubious pleasure of getting money back that should never have been taken in the first place. Others face the painful task of finding the money to catch-up on tax they didn’t pay before.   As Pete said in his post on Wednesday, this isn't the first time. When the House of Commons Public Accounts Committee looked at similar problems last year, they said that the Department had 'failed' in its duty to process people’s taxes 'accurately and on time'. The bureaucrats need to be held accountable for these repeated failures, but are they really the ones responsible for a tax system that isn’t fit for purpose?   The world’s fastest speaker, Steve Woodmore, can read aloud more rapidly than most of us can think.

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