Comments: Business grabs a bigger slice

So Brian Reading thinks his 40 year-old idea still has merit. Perhaps his idea should be read out loud in the style of the 60’s Bob Newhart sketch, Introducing Tobacco to Civilisation:

“So let me get this straight, Walt… you’re gonna replace inheritance tax … right, Walt?… that few people need pay when they die… and capital gains tax that not many people pay… and stamp duty that people only notice when they buy themselves a bigger house (with an eye to a tax-free capital gain) … right, Walt?.. and you’re gonna replace them all, right?.. with a 1% wealth tax that everyone has to pay?… Well, this may come as kind of a surprise to you, Walt, but the voters are gonna tell you to shove your idea up your nose and set fire to it.”

The only tax changes voters will accept today, IMHO, are tax cuts based on cuts in government spending. Ken Clarke, please take the stage.

Posted by David Sandiford at October 11, 2005 12:34 PM

Mervyn King seemed to be getting his jab at the media in first before the November MPC meeting, with his Gateshead speech:
http://www.bankofengland.co.uk/publications/speeches/2005/speech256.pdf

“The lower prices for many consumer goods and the higher cost of oil are both the result of globalisation. Having benefited from the former we are now experiencing the latter. As a result, our import prices are no longer falling as rapidly as they were, and, indeed, over the past year even the prices of non-oil imports have risen.

And more and more spending is on services. The proportion of expenditure in the basket used to calculate the CPI accounted for by services – especially health, education and financial services – has risen from 36% in 1997 to over 46% this year. Since inflation of services is higher than that of goods it is not surprising that CPI inflation has risen as the share of spending on services has itself risen. Interestingly, the increase in the share of services is much less evident in the basket for the RPIX measure of inflation – from 38% to 41% over the same period.

For the UK economy, monetary policy cannot ensure that output will grow at a constant rate. But in the medium term it can deliver low and stable inflation.”

The last bit looks like a swipe at media articles that argue interest rates should fall because GDP growth is low.

Well, his case for holding rates should be helped by a surprisingly large jump in Sept. inflation when the numbers are released next week.

Posted by David Sandiford at October 12, 2005 06:44 AM