WEBVTT - Can the UK Fix Its Troubled Tax System? 0:00:00.280 --> 0:00:05.440 Have iem ready. Okay, here we go. Welcome to Marin 0:00:05.440 --> 0:00:07.520 Talks Money for podcast in which people who know the 0:00:07.560 --> 0:00:10.640 markets explain the markets. I'm there in Sunset Web and 0:00:10.880 --> 0:00:13.520 with us today we have a special guest, Paul Johnson, 0:00:13.760 --> 0:00:16.480 who is director of the Institute's Physical Studies and has 0:00:16.480 --> 0:00:19.000 been since twenty eleven. And I will say, for a 0:00:19.040 --> 0:00:20.720 people who aren't here, which will be most people, we 0:00:20.760 --> 0:00:23.160 are recording this in front of an audience today, which 0:00:23.280 --> 0:00:25.959 is very exciting. It's the first for us. Also with 0:00:26.000 --> 0:00:28.240 me today, of course, is John Stephick, who's going today 0:00:28.240 --> 0:00:31.160 with us for the entire conversation today asps just being 0:00:31.160 --> 0:00:33.040 shoved on at the beginning and the end like he 0:00:33.080 --> 0:00:34.880 easily is. So, John, try and provide value. 0:00:34.920 --> 0:00:37.000 Okay, do my best to our best. 0:00:38.080 --> 0:00:40.199 Now, Paul, one of the reasons we've got here on 0:00:40.240 --> 0:00:42.720 today is that you have written this fantastic book. It's 0:00:42.720 --> 0:00:46.440 called Follow the Money. How much does Britain cost? And 0:00:46.479 --> 0:00:48.720 the answer I suspect that everyone here would give if 0:00:48.720 --> 0:00:50.080 they were allowed to put their hands up and give 0:00:50.080 --> 0:00:52.920 an answer now, is kind of too much? Right, kind 0:00:52.920 --> 0:00:56.279 of too much? The tax burden is at all an 0:00:56.280 --> 0:00:58.800 all time high. Right, We're paying more is a percentage 0:00:58.840 --> 0:01:00.760 of GDP and will be over the next few years. 0:01:00.760 --> 0:01:03.520 And we've ever paid before, and we're not entirely sure 0:01:03.560 --> 0:01:06.679 that we're getting value. Is this absolutely necessary? 0:01:07.200 --> 0:01:10.480 Well, absolutely right. We're spending more than ever, we are 0:01:10.520 --> 0:01:13.240 taxing more than ever. And actually this Parliament has seen 0:01:13.280 --> 0:01:17.400 the biggest increase in tax of any parliament ever outside 0:01:17.440 --> 0:01:21.240 of Wars anyway, which is a pretty extraordinary statement. The 0:01:21.760 --> 0:01:25.280 tax burden actually is a fraction of national income, pretty stable, 0:01:25.360 --> 0:01:27.559 about thirty three to thirty four percent of national income 0:01:27.600 --> 0:01:32.720 for decades, and it's suddenly bashed up to about thirty 0:01:32.760 --> 0:01:37.840 seven percent. That's about one hundred billion pounds tax rise. Now, 0:01:38.080 --> 0:01:40.920 lots of reasons for that. I mean, we kept taxes 0:01:40.959 --> 0:01:44.640 down by essentially abolishing the defense budget over a decade decades, 0:01:45.120 --> 0:01:48.080 we've had a decade of austerity in public services, and 0:01:49.000 --> 0:01:51.200 all of that's stopped. There's no more defense to go. 0:01:51.280 --> 0:01:54.040 In fact, defense spending is going up. Austerity has almost 0:01:54.040 --> 0:01:57.279 certainly run its course, and indeed over this parliament spending 0:01:57.320 --> 0:02:01.200 has risen quite significantly, very big spending on debt interest 0:02:01.280 --> 0:02:05.360 at the moment, and of course serious demographic change, lots 0:02:05.360 --> 0:02:07.440 more spending on health, and over the next few years 0:02:07.480 --> 0:02:10.920 we have lots more spending on pensions, social care and 0:02:10.960 --> 0:02:13.720 so on. So my guess is that whilst this is 0:02:13.760 --> 0:02:16.600 the first time in my life that we've had taxes 0:02:16.600 --> 0:02:19.440 anywhere near this high, I don't think we're ever going 0:02:19.480 --> 0:02:21.440 to get down, certainly the rest of my life the 0:02:21.480 --> 0:02:24.280 taxes where they have been for the last seventy years. 0:02:24.440 --> 0:02:26.440 Yeah, but there's not always a government choice, is it. 0:02:26.520 --> 0:02:29.440 I mean, we've seen in the past, we've seen taxes 0:02:29.440 --> 0:02:32.280 as percented GDP. The burden has a percented GDP creep 0:02:32.360 --> 0:02:35.280 up over thirty five percent, but it always comes down 0:02:35.320 --> 0:02:37.760 again pretty quickly. There seems to be a level at 0:02:37.760 --> 0:02:40.200 which the Brits won't pay anymore. And if you look 0:02:40.240 --> 0:02:42.519 at the rates that other countries pay, you can see 0:02:42.520 --> 0:02:45.000 that in some Scandinavian countries it tends to be higher 0:02:45.000 --> 0:02:46.800 and it can stay higher, and perhaps in the US 0:02:46.800 --> 0:02:49.280 it's lower and it can stay lower. But each country 0:02:49.320 --> 0:02:51.440 seems to have an amount that they're prepared to pay 0:02:51.720 --> 0:02:53.720 beyond which they will not go and for us it 0:02:53.760 --> 0:02:55.239 looks like it's about thirty five percent. 0:02:55.840 --> 0:02:57.680 Well that was certainly. I used to work in the 0:02:57.720 --> 0:03:00.400 treasury and that was absolutely the kind of counts of 0:03:00.480 --> 0:03:03.000 you in the treasury, certainly at the sort of most 0:03:03.000 --> 0:03:07.679 senior levels, that there was a limit to what was feasible. 0:03:08.080 --> 0:03:12.440 Now we're testing that limit, and at the moment we're 0:03:12.440 --> 0:03:14.639 going through if you count it as a single tax 0:03:14.720 --> 0:03:17.400 riseer the single biggest tax risee ever, which is the 0:03:17.440 --> 0:03:21.359 holding of the income tax, personal allowance and thresholds at 0:03:21.400 --> 0:03:24.560 the same level in cash terms for six years, that's 0:03:24.600 --> 0:03:28.400 the policy. That is a fifty billion pound tax rising 0:03:28.520 --> 0:03:30.839 one go much of the biggest tax rise in history, 0:03:30.880 --> 0:03:32.600 if you count that as a single one and I 0:03:32.600 --> 0:03:36.800 think that will be the test. Is that something which 0:03:36.920 --> 0:03:41.800 drags hugely more people into higher rate tax. I think 0:03:41.920 --> 0:03:44.920 something like one in six adults will be paying higher 0:03:45.000 --> 0:03:47.160 rate tax by the end of that period compared with 0:03:47.240 --> 0:03:50.760 something like one in twenty not very long ago. So 0:03:50.880 --> 0:03:54.320 that's a huge change, and I think that is where 0:03:54.440 --> 0:03:58.720 we'll test your proposition that actually this isn't sustainable. But 0:04:00.080 --> 0:04:02.640 my guess is that one way or another we will 0:04:02.760 --> 0:04:05.119 keep at this kind of level of taxation because it's 0:04:05.160 --> 0:04:09.040 so hard to see what is the government going to slash, 0:04:09.080 --> 0:04:11.960 Is it going to cut health spending, pension spending, welfare spending, 0:04:12.080 --> 0:04:16.280 education spending. We've done so much to get defense spending. 0:04:16.279 --> 0:04:18.279 Now we've had a decade of austerial we've got this 0:04:18.360 --> 0:04:21.279 demographic change. I think we might not like it, but 0:04:21.320 --> 0:04:22.880 I rather feel we're going to have a lump it 0:04:22.960 --> 0:04:24.640 in terms of the tax spurn. 0:04:24.880 --> 0:04:27.440 Yeah, let's just stick with this fiscal drag for a moment. 0:04:27.440 --> 0:04:29.440 I mean, in fact, it's an even bigger tax right 0:04:29.600 --> 0:04:31.880 rise than the government might have thought initially, because inflation 0:04:32.000 --> 0:04:34.600 is so much much than they expected initially. So that 0:04:34.720 --> 0:04:36.800 means that even more people are going to be pulled 0:04:36.839 --> 0:04:39.640 into these higher rates than the government might have expected 0:04:39.640 --> 0:04:41.960 when they first introduced this policy. Right. And one of 0:04:41.960 --> 0:04:44.080 the things that John and I talk about a lot 0:04:44.320 --> 0:04:46.680 is the extent to which the forty percent tax rate 0:04:46.960 --> 0:04:50.640 affects so many more people than anyone really thinks about. 0:04:50.720 --> 0:04:52.320 So when when the Treasury look at and they go 0:04:52.400 --> 0:04:54.160 it's one in four, it's one five, it's one and six, 0:04:54.279 --> 0:04:57.360 But in fact, over a lifetime, over a career, of course, 0:04:57.360 --> 0:04:59.680 it's a much larger percentage of the population. And then 0:04:59.680 --> 0:05:01.640 if you take into account the partners with people who 0:05:01.680 --> 0:05:04.320 pay forty percent, the children of people who pay forty percent, 0:05:04.320 --> 0:05:08.159 et cetera. That higher rate affects a really large part 0:05:08.200 --> 0:05:09.360 of the tax paying population. 0:05:09.839 --> 0:05:11.960 It really does mean you're right over a lifetime. I 0:05:12.120 --> 0:05:16.400 people's salaries, incomes tend to peek in their forties, say so, 0:05:16.760 --> 0:05:18.320 lots of people in their twenties at the moment not 0:05:18.360 --> 0:05:20.560 paying higher rate who will do. Lots of people in 0:05:20.600 --> 0:05:23.520 their sixties who aren't who have done so. As a 0:05:23.560 --> 0:05:26.360 fraction of the population, it does get quite big. And 0:05:26.400 --> 0:05:28.360 we're not just looking at the forty percent rate. Of course, 0:05:28.400 --> 0:05:31.159 So there's there's the sixty percent rate for people earning 0:05:31.160 --> 0:05:33.000 between one hundred, one hundred and twenty five thousand. 0:05:33.040 --> 0:05:35.279 Then they playing that quickly. Not everyone understand how you 0:05:35.279 --> 0:05:36.119 get sixty percent. 0:05:36.760 --> 0:05:39.200 There is a sixty percent rate of income tax on 0:05:39.440 --> 0:05:41.880 incomes between one hundred, one hundred and twenty five thousand pounds. 0:05:41.920 --> 0:05:44.599 Now that is described as with drawing the personal ounce. 0:05:44.640 --> 0:05:47.680 It is actually just a sixty percent marginal rate. And 0:05:47.720 --> 0:05:49.720 then of course there's a forty five percent marginal rate 0:05:49.760 --> 0:05:51.719 on incomes above that. We're now in a world actually 0:05:51.720 --> 0:05:54.080 where there are as many people paying sixty or forty 0:05:54.120 --> 0:05:57.559 five percent as thirty years ago there were people paying 0:05:57.760 --> 0:06:01.320 forty percent. So the new higher rate actually is that 0:06:01.400 --> 0:06:04.160 sort of sixty and forty five level, and the forty 0:06:04.279 --> 0:06:07.000 is becoming close to a second basic rate. 0:06:07.000 --> 0:06:08.120 And in fact, of course, for a lot of people, 0:06:08.160 --> 0:06:10.560 that's way higher because once you've added on lestal insurance 0:06:10.600 --> 0:06:12.480 and you've added on student debt, which we think of 0:06:12.520 --> 0:06:14.480 as attacks. I know other people don't, but we think 0:06:14.520 --> 0:06:16.719 of it as attacks. Once you've added that on, some 0:06:16.760 --> 0:06:19.440 of the marginal rates of attacks, people are paying it insane. 0:06:19.640 --> 0:06:21.719 Well, you've got not only that, but you've got even 0:06:21.720 --> 0:06:25.159 more insane things. So if you're married and you tip 0:06:25.200 --> 0:06:27.200 over to the forty percent rate, you lose your married 0:06:27.240 --> 0:06:29.440 couples allowed. So you've got a tax rate of hundreds 0:06:29.440 --> 0:06:33.279 of percent. And if you're actually, if you've got kids, 0:06:34.240 --> 0:06:37.120 and you move over that hundred thousand point, you lose 0:06:37.160 --> 0:06:41.320 all your childcare support to Actually, you can be earning 0:06:41.400 --> 0:06:44.600 ninety nine thousand and you need a thirty five thousand 0:06:44.680 --> 0:06:47.640 pounds increase in your pay to make it worthwhile. Anything 0:06:47.680 --> 0:06:49.920 less than that and you're worse off than you were 0:06:49.960 --> 0:06:52.159 on ninety nine thousand. Now, you know that's a small 0:06:52.320 --> 0:06:54.880 fractional population, but that is an absurd situation. 0:06:55.839 --> 0:06:59.240 I mean, you're obvious creating you por on that as 0:07:00.160 --> 0:07:05.000 why it this not defects it because it's clearly mad. 0:07:06.760 --> 0:07:08.839 It's I mean, I realize that when you start feeling 0:07:08.880 --> 0:07:12.480 these threads, other things start to unravel. But is there 0:07:12.480 --> 0:07:15.000 not a better system that we could I mean, the 0:07:15.000 --> 0:07:15.640 system did. 0:07:15.520 --> 0:07:18.920 Not used to be this complicated that there's so much 0:07:18.960 --> 0:07:20.840 you could do to make the system better. I mean, 0:07:20.880 --> 0:07:22.680 I think in terms of what we're talking about, I 0:07:22.720 --> 0:07:26.960 think the reason it's not change is because governments frankly 0:07:27.000 --> 0:07:28.920 get away with it. I mean, it is quite a 0:07:28.960 --> 0:07:32.680 big revenue raiser, having a forty p rate at fifty 0:07:33.560 --> 0:07:35.840 Very few people I think understand this point at one 0:07:35.880 --> 0:07:39.840 hundred thousand pounds change. And even if they did, I 0:07:39.840 --> 0:07:46.440 think electorally, we saw we saw how incredibly unpopular the 0:07:47.280 --> 0:07:49.920 proposition a year ago was to get rid of the 0:07:49.920 --> 0:07:52.960 forty five p rate. Now, in terms of that mini 0:07:52.960 --> 0:07:55.800 budget that was by far the smallest of the tax cards, 0:07:55.840 --> 0:08:00.280 would have cost very little compared with everything else within 0:08:00.360 --> 0:08:03.720 the Conservative Party, it appeared to be incredibly unpopular. So 0:08:03.760 --> 0:08:06.040 I think actually kind of getting marginal rates down for 0:08:06.200 --> 0:08:09.640 higher earners doesn't appear to as far as one can tell, 0:08:09.720 --> 0:08:12.840 have a great deal of popular demand behind it, I suppose. 0:08:12.840 --> 0:08:15.520 And then the other thing that comes from you know 0:08:15.560 --> 0:08:18.800 which tomb overall is that, Okay, so lea'ssume we're going 0:08:18.840 --> 0:08:22.120 to need higher taxes for a long period of time. 0:08:22.680 --> 0:08:24.640 What's the politics of that, because one of the big 0:08:24.680 --> 0:08:26.520 problems is that I think, and I don't know if 0:08:26.520 --> 0:08:28.840 this is a fair representation of the audience or not, 0:08:29.000 --> 0:08:31.400 but I would say that people probably feel as if 0:08:31.440 --> 0:08:34.360 they are getting charged a lot of tax, but at 0:08:34.400 --> 0:08:37.960 the same time, the public services aren't getting better. A 0:08:37.960 --> 0:08:40.040 lot of them are getting worse, and there's no prospect 0:08:40.080 --> 0:08:42.280 of them getting better because all of the money is 0:08:42.280 --> 0:08:45.520 either going towards people getting old or towards it's just 0:08:45.720 --> 0:08:48.800 it's kind of paying for more of the same, and amazingly. 0:08:48.320 --> 0:08:51.319 It's going towards paying higher interest rates on government the 0:08:51.400 --> 0:08:52.080 government debt. 0:08:52.520 --> 0:08:54.680 So I guess the picture of painting is you're going 0:08:54.760 --> 0:08:57.120 to be paying more and you're not going to be 0:08:57.160 --> 0:08:58.760 getting better public services. 0:08:58.760 --> 0:09:00.760 You make it worst. One is a horrible I mean, 0:09:00.800 --> 0:09:03.320 it really is horrible. I mean we are in this 0:09:03.360 --> 0:09:06.400 position where if you look at the last budget red book, 0:09:07.760 --> 0:09:10.359 you've got tax at a record level. As we've discussed, 0:09:11.880 --> 0:09:15.080 you've got debt at a very high level, over ninety 0:09:15.080 --> 0:09:18.360 percent of national income and stout stuck there, not going down. 0:09:19.520 --> 0:09:22.160 And yet the budget read book has penciled in what 0:09:22.200 --> 0:09:26.400 are effectively be cut in public service spending through for 0:09:26.440 --> 0:09:29.079 many public services through the next parloment. 0:09:30.640 --> 0:09:33.520 Is extraordinary the function of a raging It's a. 0:09:33.480 --> 0:09:37.679 Function of very high spending on debt, interest, poor growth, 0:09:38.280 --> 0:09:42.959 and lots of spending on things like health particularly and pensions. 0:09:43.000 --> 0:09:46.880 So people aren't going to get pretty fed up, I think, 0:09:46.880 --> 0:09:50.480 and see tax rec taxes at record levels and this 0:09:50.840 --> 0:09:52.680 very very tight spending situation. 0:09:53.320 --> 0:09:55.480 Let's talk about is there a way to make the 0:09:55.520 --> 0:09:58.640 tax system more efficient? Among things that journalists do, and 0:09:58.800 --> 0:10:02.040 I'm guilty of this, constantly talk about how the UK 0:10:02.120 --> 0:10:04.040 tax code is now as long as the complete works 0:10:04.080 --> 0:10:06.600 of Shakespeare or the longest novel ever written, or whatever 0:10:06.640 --> 0:10:08.439 it is. We can always come up with these comparisons, 0:10:08.520 --> 0:10:10.760 and it gets longer and longer and longer and more 0:10:10.800 --> 0:10:15.040 and more complicated. Is there a way to simplify it, 0:10:15.200 --> 0:10:17.440 make it fairer? Are there any taxes that you think 0:10:17.480 --> 0:10:19.920 should go or any new taxes that should come in. 0:10:20.720 --> 0:10:22.480 I mean, I mean so many ways that you could 0:10:22.480 --> 0:10:24.960 make it better than it is. I mean, we have 0:10:25.000 --> 0:10:29.120 this absurd situation where we've got National insurance contributions which 0:10:29.120 --> 0:10:32.960 are just a tax there's no relation to anything that 0:10:33.000 --> 0:10:36.520 people are entitled to, which you pay on earned income. 0:10:36.559 --> 0:10:38.800 So if you're a wage slave like me, you pay 0:10:38.840 --> 0:10:41.480 lots of that. If you're a partner at a professional 0:10:41.480 --> 0:10:45.280 services company, you don't. If you're self employed, you pay 0:10:45.280 --> 0:10:47.439 a lot less. And if your income is coming from 0:10:47.720 --> 0:10:49.720 rents on a property happened to earn or shares what 0:10:49.800 --> 0:10:53.440 you don't pay anything. You don't pay any national insurance 0:10:53.440 --> 0:10:56.960 on pension payment in payment, actually don't pay on pension 0:10:56.960 --> 0:11:01.040 contributions either. So number one, just admit that this is 0:11:01.080 --> 0:11:04.160 just a tax on income and you get rid of 0:11:04.280 --> 0:11:06.120 a lot of the complexity. 0:11:06.720 --> 0:11:09.400 Repension are in the land absolutely furious because they will 0:11:09.440 --> 0:11:11.640 say I paid my own I already but let. 0:11:11.920 --> 0:11:15.520 Which probably they haven't. But let's haven't. But let's look 0:11:15.520 --> 0:11:17.000 at this difference between you know, if I get my 0:11:17.040 --> 0:11:19.120 income as a self employed person, I pay a lot 0:11:19.200 --> 0:11:21.960 less nationally insurance if I do it as an employee, 0:11:22.240 --> 0:11:25.120 and if I incorporate I pay less. Still, so that 0:11:25.160 --> 0:11:28.319 creates an enormous amount of complexity because you treat almost 0:11:28.360 --> 0:11:32.760 identical things completely differently. And that's true throughout the tax system. 0:11:32.800 --> 0:11:36.920 That's also true in terms of how we treat you know, vat. 0:11:37.160 --> 0:11:39.280 I mean in the book, there's lots of laughs in 0:11:39.280 --> 0:11:47.520 the book actually there, you know, we we have we 0:11:47.600 --> 0:11:51.400 have this situation where you you have to define exactly 0:11:52.320 --> 0:11:55.319 how much chocolate gingerbread man has on it to determine 0:11:55.320 --> 0:11:57.360 whether it's got v AT on it or not. If 0:11:57.360 --> 0:11:59.680 you want a pet to get a rabbit, there's no 0:11:59.800 --> 0:12:01.440 va on rabbits because they're edible. 0:12:03.880 --> 0:12:04.840 Don't tell your children. 0:12:06.040 --> 0:12:08.400 So these are the sorts of absurdity. So a lot 0:12:08.440 --> 0:12:11.760 of these things happen when you treat similar things differently, 0:12:11.840 --> 0:12:13.920 and when you treat similar things differently, you have to 0:12:13.960 --> 0:12:17.000 have a wall of legislation to kind of tell you 0:12:17.120 --> 0:12:22.360 exactly where that boundary comes. Just one last thing on 0:12:22.559 --> 0:12:26.240 making the tax system better might absolute number one priorty 0:12:26.360 --> 0:12:29.079 be getting rid of stamp duty. It's just and I'm 0:12:29.080 --> 0:12:32.480 particularly talking about on housing here, it's just so damaging. 0:12:33.240 --> 0:12:36.640 It massively reduces the amount of times people move. It's unfair, 0:12:36.800 --> 0:12:40.120 it's inefficient, it's inequitable. It stuffs up the labor market, 0:12:40.160 --> 0:12:43.280 it stuffs up the housing market. But what a chancellor's done. 0:12:43.280 --> 0:12:45.679 You're up to your increase it. And that really is 0:12:45.720 --> 0:12:47.520 if you can think of one. If I had to 0:12:47.600 --> 0:12:51.600 choose number one tax which is super damaging, that'll be it. 0:12:51.800 --> 0:12:54.360 But what's mad about damn duty in particular and on 0:12:55.120 --> 0:12:58.040 shares as well, is that they keep putting it up 0:12:58.080 --> 0:13:01.560 on houses, et cetera. But also talking about introducing a 0:13:01.600 --> 0:13:03.360 wealth tax, which makes you want to tear your hair 0:13:03.440 --> 0:13:05.959 up because we have so many wealth taxes in the UK. 0:13:06.160 --> 0:13:09.240 There's stamp duty, there's I h T, there's non index 0:13:09.320 --> 0:13:12.000 capital gains. These are all wealth tax The. 0:13:12.000 --> 0:13:13.679 Point the point about wealth taxes. I mean people talk 0:13:13.679 --> 0:13:16.200 about introducing wealth taxes as you say, We've got inheritance tax, 0:13:16.200 --> 0:13:19.640 council tax, stamp duty, capital gains tax and so on. 0:13:20.440 --> 0:13:22.560 The problem is they're all rubbish. I mean, they all 0:13:22.840 --> 0:13:26.520 you know, we we we need to get them right. 0:13:27.480 --> 0:13:30.040 Then maybe we can think about we get the ones 0:13:30.080 --> 0:13:33.520 we got vaguely right, rather than disaster as of them, we. 0:13:33.520 --> 0:13:35.840 Could get rid of all of them and introduce a 0:13:35.920 --> 0:13:39.679 much simpler wealth tax. I mean I don't prove wealth 0:13:39.720 --> 0:13:40.440 taxes at all. 0:13:40.800 --> 0:13:44.600 Possibly we we we we need a we need a 0:13:44.640 --> 0:13:46.679 capital gains tax. But I mean not at least because 0:13:46.720 --> 0:13:47.760 if you don't have one. 0:13:47.640 --> 0:13:50.240 Tax, if it's if it's tax on inflation. 0:13:49.920 --> 0:13:52.040 In well indeed, then it should be it should be 0:13:52.080 --> 0:13:54.880 on only real gas and possibly even only some fraction 0:13:54.960 --> 0:13:55.880 of real gains. 0:13:56.600 --> 0:13:58.760 Yeah, But I mean the problem then is I mean 0:13:59.320 --> 0:14:02.400 all of this obviously somebody would prefer lower taxes in 0:14:02.400 --> 0:14:05.240 a smaller state overall. But but if your point is 0:14:05.240 --> 0:14:07.800 that we need to raise this thirty seven percent GDP, 0:14:08.040 --> 0:14:11.880 then if you assume that that is the case, then 0:14:11.920 --> 0:14:15.240 it's kind of got to come from somewhere. So the wretch, 0:14:15.320 --> 0:14:18.000 John the rich if well, yeah, i'd always it's always 0:14:18.040 --> 0:14:23.360 going to come from the wretch. But if we've got 0:14:23.360 --> 0:14:25.840 this kind of system whereby we're going to have to 0:14:25.840 --> 0:14:28.440 be paying for you know, the NHS, we have to 0:14:28.480 --> 0:14:31.160 be paying for people getting older all the time, then 0:14:31.240 --> 0:14:32.960 anytime we talk a getting rid of the taxes, we 0:14:33.000 --> 0:14:34.680 have to talk about, well, what are you going to 0:14:34.680 --> 0:14:37.280 replace that with? At least certainly that's where you know 0:14:37.480 --> 0:14:41.600 the politicians message is, so you know, what what do 0:14:41.640 --> 0:14:44.520 you do? If you decide that we shouldn't index link capital, 0:14:44.560 --> 0:14:47.640 that we should index link capital gains for example, and 0:14:47.680 --> 0:14:48.960 where does the extra money. 0:14:48.760 --> 0:14:51.160 Call I mean for example, there you could match the 0:14:51.160 --> 0:14:53.040 capital gains right to the income tact. Right now, I 0:14:53.080 --> 0:14:55.520 think there's a strong kind and index. You've got that 0:14:55.600 --> 0:14:59.720 indexation in there. You know that that you forgive forgive 0:14:59.760 --> 0:15:03.120 its apple and gains at death is outrageous actually and 0:15:03.280 --> 0:15:06.320 incredibly edgy damaging to the economy because people hold on 0:15:06.360 --> 0:15:09.880 to things beyond what they beyond where they should. But 0:15:09.920 --> 0:15:11.960 if you look, you know Marin said earlier, there are 0:15:12.000 --> 0:15:15.040 other countries much higher rates levels of tax than we have. 0:15:16.160 --> 0:15:18.040 If you look at them, they don't get more from 0:15:18.080 --> 0:15:20.440 the rich. We get more than most from the rich. 0:15:20.640 --> 0:15:24.240 Partly we've got some pretty rich people, but thirty percent 0:15:24.280 --> 0:15:26.600 of all income tax comes from one the top one 0:15:26.640 --> 0:15:32.240 percent of earners. They don't get it from corporates. We've 0:15:32.240 --> 0:15:34.680 got almost the biggest corporation tax system in the world 0:15:34.760 --> 0:15:36.760 now in terms of the fraction of national income that 0:15:36.840 --> 0:15:40.440 it brings in. At least that's the projection given the 0:15:40.480 --> 0:15:43.400 new rate, they get it from people. I'm sad to 0:15:43.400 --> 0:15:46.720 say on average and above average earnings and incomes. Now 0:15:46.720 --> 0:15:49.240 that's where the money comes from in other countries, and 0:15:49.280 --> 0:15:51.640 I think that's what I think. This is where the 0:15:51.680 --> 0:15:55.120 political debate is so dishonest, which is that you know, 0:15:55.160 --> 0:15:57.640 those who say they want more tax, Oh, let's tax 0:15:57.640 --> 0:15:59.960 the rich, let's tax companies. If you want to make 0:16:00.000 --> 0:16:02.960 a big difference, it's from ordinary people it comes from. 0:16:03.040 --> 0:16:05.640 And that's exactly what's happening now about fifty billion pound 0:16:05.680 --> 0:16:08.640 tax rise I mentioned earlier in terms of the non 0:16:08.680 --> 0:16:12.760 indexation of allowances and thresholds, that's largely coming from people 0:16:12.760 --> 0:16:15.440 on average and maybe twice average earnings. It's not largely 0:16:15.520 --> 0:16:17.080 coming from the rich and from companies. 0:16:17.160 --> 0:16:18.920 So it's making our system less progressive. 0:16:19.720 --> 0:16:23.400 It's broadly speaking, if you hold certainly, if you hold 0:16:23.400 --> 0:16:26.480 the personal allowance down, that is an unprogressive way of 0:16:26.560 --> 0:16:27.360 raising taxes. 0:16:28.360 --> 0:16:30.960 So always, if you have to broaden the tax space, 0:16:31.520 --> 0:16:34.880 then doing it placed the health there's one to it. 0:16:34.880 --> 0:16:37.360 It's a lot easier than announcing big increases in the race, 0:16:37.440 --> 0:16:37.840 isn't it. 0:16:37.960 --> 0:16:39.480 Yeah, inflation, isn't it wonderful? 0:16:39.960 --> 0:16:41.280 It's certainly helping the government. 0:16:41.960 --> 0:16:45.360 Okay, I'll tell you what. Let's take a different approach 0:16:45.400 --> 0:16:47.720 to this. Instead of talking about how much more tax 0:16:47.760 --> 0:16:49.800 we can get out of people, let's talk about how 0:16:49.800 --> 0:16:52.880 we can encourage growth in the UK economy. And so 0:16:52.960 --> 0:16:54.880 much talk about this at the moment. Growth growth, growth. 0:16:54.920 --> 0:16:58.160 Everyone's into growth. We all love growth, and earth do 0:16:58.480 --> 0:16:59.840 we get growth in the UK? 0:17:00.560 --> 0:17:02.320 What's easy? I mean we know how to do it. 0:17:02.360 --> 0:17:04.880 I mean we really, really, really really do know how 0:17:04.880 --> 0:17:06.840 to do it, but we decide not to. I mean 0:17:06.960 --> 0:17:11.680 it's you know, so sorting out the planning system, sorting 0:17:11.720 --> 0:17:13.879 out the tax system. If we've just described would be 0:17:13.880 --> 0:17:17.400 good for growth, we know that investment in sensible investment 0:17:17.440 --> 0:17:22.080 in infrastructure is clearly important, and not cutting spending on 0:17:22.119 --> 0:17:25.240 further education and vocational education as has happened over the 0:17:25.320 --> 0:17:31.000 last fifteen years or so, building the roads and airports 0:17:31.040 --> 0:17:34.960 and so on. That we need, having a consistent strategy 0:17:34.960 --> 0:17:37.480 towards competition and R and D and all those sorts 0:17:37.480 --> 0:17:42.480 of things, and free at trade with the European Union, 0:17:42.520 --> 0:17:45.600 I mean, all of those things we know would be 0:17:45.640 --> 0:17:48.399 good for growth, and yet in each case we have 0:17:49.160 --> 0:17:54.280 essentially prioritized other things. We prioritize. We don't build houses 0:17:54.359 --> 0:17:59.040 because we prioritize people already have houses, and that means 0:17:59.040 --> 0:18:01.800 that people can't access the high paying jobs in London 0:18:01.840 --> 0:18:05.879 and the Southeast. We don't build the infrastructure which would 0:18:05.920 --> 0:18:10.440 link the Manchester and Sheffield and so on to surrounding 0:18:10.480 --> 0:18:14.520 areas so that people there can get into where the 0:18:14.640 --> 0:18:19.160 jobs are. We have cut spending on education, and particularly 0:18:19.240 --> 0:18:24.560 cut spending on education post post sixteen. We cut through 0:18:24.560 --> 0:18:27.800 the twenty tens. It's not quite so much now spending 0:18:27.840 --> 0:18:32.439 on infrastructure. Generally, as I say, we know what to 0:18:32.480 --> 0:18:35.560 do and we don't do it, largely for political reasons, 0:18:35.760 --> 0:18:36.280 so we don't. 0:18:36.160 --> 0:18:38.399 Want it enough, We don't really want to grow, or 0:18:38.440 --> 0:18:42.000 we have a huge part of the population that is happy, 0:18:42.280 --> 0:18:45.200 settled with what they have and don't want anything to change, 0:18:45.280 --> 0:18:46.320 and they're the ones who. 0:18:46.240 --> 0:18:51.920 Vote short the short term cost and disruption against long 0:18:52.000 --> 0:18:56.840 term Quite hard to grasp positive stuff through growth, so 0:18:57.119 --> 0:19:00.760 you know, it's always easier to say, well, know, triple 0:19:00.800 --> 0:19:05.520 lot the pension, or increase spending on wages, or or 0:19:05.560 --> 0:19:08.000 do more on health or something, all of which are 0:19:08.000 --> 0:19:13.639 good things, but you know, but also popular, whereas driving 0:19:13.640 --> 0:19:17.040 a road through someone's back garden or building building houses 0:19:17.720 --> 0:19:21.359 in the field across across the way, or or or 0:19:21.440 --> 0:19:24.960 or or increasing taxes to increase spending on education or whatever. 0:19:25.080 --> 0:19:29.920 Those those are unpopular. So it's the politicians are feeble, 0:19:30.359 --> 0:19:32.760 but actually the electorates pretty feeble as well. On something. 0:19:32.760 --> 0:19:36.920 You have to have a massive change the planning system anyway, 0:19:37.000 --> 0:19:39.960 aren't we If we're going to get anywhere near zero, 0:19:40.160 --> 0:19:42.800 for example, and we have to completely redo our national grid, 0:19:42.920 --> 0:19:44.400 we're going to have to have a pylon and pretty 0:19:44.440 --> 0:19:46.840 much every back garden and that's going to involve a 0:19:46.840 --> 0:19:47.919 massive change to planning. 0:19:48.440 --> 0:19:50.160 Well, we're going to have to. I mean, it's it's 0:19:50.240 --> 0:19:53.720 more expensive to build stuff in Britain than pretty much 0:19:53.760 --> 0:19:56.000 anywhere else in terms of building roads, in terms of 0:19:56.040 --> 0:19:58.400 building energy infrastructure, in terms of building but that's okay. 0:19:58.440 --> 0:19:59.359