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The truths they don't want you to read....

Monday, May 05, 2008

How taxation works

The UK is supposedly a good example of how progressive taxation works, so let's have a little primer for those who don't understand just how it all works.

Individuals pay tax at 20% or 40%. It used to be 10%, 22% and 40%, but the 10% band which benefited the poorest was abolished to make things fairer. The cost of this was negligible to the Treasury in actual £, but this was offset with 331 Councillors unseated.

Small limited companies pay tax at 20%, up from 19%, as small companies are so important to the economy that they must be encouraged and fostered.

The biggest companies pay tax at a nominal rate of 30%, but by the judicious use of off-shore companies the actual rate they pay tax at is greatly reduced, often to only negligible sums.

Now the big listed plc's are threatening to relocate to foreign jurisdictions in a seemingly endless macho contest between countries to show how attractive they are to multi-nationals.

The end result of this will be a comparatively small hole in the budget.

But, I forecast that Chancellor and the Prime Minister are so in awe of the multi-nationals that they will bend over backwards to give them more attractive terms to persuade them to 'stay' in the UK, when in actual fact they are just using the issue as a stick to beat the Government with.

And who will pay for these sweetners? Why, you and I of course.

It is perhaps the 'greatest' legacy of Margaret Thatcher that she has bequeathed a Labour Party who will bend at the knee in front of the rich, as they fail to understand who they work and think. Socialism and redistributionist policies need to reappear on the agenda, but I don't believe that NuLab have it even on the radar.

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