Thursday, October 19, 2006

Kaletsky bats for Brown again

Another great article from Anatole Kaletsky in the Times defending Gordon Brown's record. Here's a quote:

The after-tax incomes for the top 1 per cent of the British population, which consists largely of financial professionals, have grown faster than ever before in modern history. They have grown far richer under Labour than they did under Margaret Thatcher and their gains have been even more spectacular in comparison with the modest progress of Labour’s traditional supporters in the industrial working class.

..............Why then does the City so distrust and, in my experience, even hate Mr Brown? The usual reasons I hear in the City are either dishonest or useless. Dishonest are the standard accusations heard from the financial media and Tory spokesmen — Mr Brown’s “£5 billion tax raid” has destroyed pensions; intrusive regulation by the Financial Services Authority is making it more difficult for the City to compete; Britain’s 30 per cent corporation tax is driving business to Dublin where corporation tax is just 12.5 per cent. The useless reasons are the ones that are so general as to have little meaning — that he has not done enough to cut taxes, reduce regulation and defend Britain from the encroachment of EU rules.

Financiers just keep repeating the dishonest reasons, even though they know them to be false. Anybody with a thorough understanding of pensions knows that Mr Brown’s “tax raid” was not the root cause of the industry’s demise. Occupational pensions and life assurance were destroyed by foolish court judgments and well-meaning but misconceived regulations under the Thatcher and Major governments. The “tax raid” was actually supported by most business leaders and tax experts, since it paid for a three-percentage-point reduction in corporation taxes and simplified the corporate tax system in exactly the way the Tory tax panel is expected to recommend in its report to David Cameron today.

The FSA is now widely recognised as the most rational and least intrusive financial regulator in the world. As for tax competition with Ireland, this could well drive some institutions to relocate their legal domiciles to Dublin; but that need make no more difference to the City’s prosperity and international status than every hedge fund in London being incorporated in CuraƧao, Nassau or Cayman


You tell them Kaletsky!

1 comment:

Crossland said...

Snowlake, could you do an article on the whole pensions "tax raid" thing ?
Its an oft repeated mantra and I'd like to know more about the arguments.