Beer

I only had one beer tonight.  Its not my fault they served it in two glases.

Scrutiny. Really

I just had the first experience of a local authority scrutiny committee.  These committees are the elected few's opportunity to ask searching questions of the officials.  Faced with both the majority party and the opposition I was expecting so cut and thrust.

Sadly, I now know why so much goes wrong in gov and local gov.  Hardly any questions at all (and there were some really obvious ones to ask) were asked and the ones that were asked were poorly thought through and cheap attempts and point scoring.

50%

Lots of coverage today about the 50% tax rate.  The headlines full of the debate about taxing the super wealthy.  I am not one to shy away from paying tax.  Fair share and all that.  Some good points were made.  The argument that if tax rates were reduced then more money would be recovered was rightly debunked.  The idea that the super rich would bring their money back on shore for a 10% reduction seems unlikely when they can continue to enjoy far lower rates overall where it is now.

But the issue for me is that the 50% tax rate is not for the super rich.  It starts at income rates of £150K.  Now I am not in any way saying that people who earn well should not pay but people who earn at that level are far far far from super rich.  They are people in upper management and senior management right across the country.  They have a good living but they are not millionaires.  They are not profiting from the misery of others and I doubt very much that they have accountants helping them to avoid the tax.

So perhaps it is time to look at how to tax wealth (real wealth) and stop categorising those who do well with the same people who are earning multi millions and even billions.

What to make of the evidence

I was intrigued by the stories in the standard today.  A story on the economy (surprise) had a quote from the PM regarding the 2.5 million unemployed.  He said they would do everything they could to get people back into work but he warned that increased spending was not the answer.  But surely that is the key issue. He is right in some ways, increased gov spending is not the answer.  But the issue is that due to uncertainty of gov income (tax take),  little or no growth, large debt to be repaid (and large interest payments) and low inflation meaning that debt is not reducing in real terms in any meaningful way means that he is right maybe to not spend money he does not have.

The trouble is, whats is good for the goose is good for the gander.  People also have the same issue. Uncertainty of income (potential unemployment), little or no growth (no wage rises and increased cost of living), debt from the credit boom and no real reduction in debt from inflation means that people have the same attitude.  They don't want to spend.  Same again for companies.  So where will growth come from.  Its more proof that it is the money flow that keeps things working.  If gov won't spend then they need to ask themselves why would anyone else?

The article also raised some interesting thoughts.  I have no idea if the mechanisms being used are going to be effective.  But one of the ideas gov has is to increase the retirement age (through pension fiddling). So what will that do?  Well, seems to me that if unemployment is high especially youth unemployment and businesses are struggling then the longer the older section of the population stays in jobs the less opportunities for the young and the higher the ongoing costs of the companies who employ them.

At the same time tax take will reduce and the benefits costs will rise.  The number in employment to pay for the unemployed seems likely to shrink increasing the burden.

Surely the idea is to make money flow.  Make people retire earlier would be more cost effective to make up pension gaps for a short period (a few years) thus reducing company wage bills and enabling them to take on younger cheaper staff who need the opportunities.

I just don't get it.  What am I missing?

Later in the paper is evidence of my speculation a about property cost reductions never reducing.  The article is about Hampstead and the fact that a number of independent retailers are going to close because revenues have dropped but rents have not.  They quote the rent for £70k and the business rates on the property were £38K.  Come on guys.  Go with the trend.

The only way it seems to sort this mess out is surely to make everything relative and not somethings relative and others absolute.  Tax must be made relative.  Property costs to.  If the economy drops business rates must adjust downwards.