Sam on Radio 4 PM Show on austerity & Italy

Summary

Sam Bowman appears on Radio 4's PM show talking on the Italian economy and the election results. He argues that Ireland has implemented much greater austerity measures than Italy, but because it has combined the measures with a liberalising of it's business environment, it has experienced much greater growth than Italy and many other Eurozone countries. 

You can listen to Sam here (from 9mins in) 

Osborne's Capital Gains increase cut his 'tax take'

The report was featured in the following outlets:

Daily Mail: Osborne's Capital Gains increase cut his 'tax take'

Daily Mail: Is a tax cut for buy-to-let landlords on the cards? Calls for Capital Gains Tax to be slashed after hike lowers revenues

The Sun: George's flagship levy hike is a loser

ConservativeHome: The Chancellor should cut CGT in his budget. Higher rates have been counterproductive. 

Spectator Coffee House: The government must cut or even scrap capital gains tax

Daily Telegraph

Summary

Our press release revealing that Capital Gains Tax revenues fell after the increase in the tax rate received both print and online coverage. 

Capital Gains Tax hike led to falling revenues

• Think tank tells Chancellor to slash CGT rates in Budget

The Adam Smith Institute is calling on the government today (TUESDAY) to slash CGT rates in next month’s Budget in order to boost revenue and economic growth. 2010-11 figures now released by HM Revenue & Customs (HMRC)[1] show that the rise in Capital Gains Tax (CGT) was a failure. It meant to raise more revenue, in fact it raised less.

CGT was raised from 18% to 28% for most taxpayers (entrepreneurs’ relief stayed at 10%) in June 2010, nearly three months deep into the tax year. This unusual timing allows economists to see the impact of the rate changes during the year.

Comparing the 78 days from 6th April 2010 to 22nd June 2010, and the 287 days from 23rd June 2010 to 5th April 2011, shows a marked fall in revenues. The annual equivalent CGT revenues under each system are[2]:

There was a 76% drop in normal disposals (taking 18% and 28% together for post-23rd June figures, because figures are not available for the equivalent split for pre-June). Clearly, many people sought to realise gains before the rate increased, knowing that the Coalition Agreement committed the Government to a sharp increase in CGT rate.[3] There was also a 34% drop in 10% ER disposals, probably because entrepreneurs feared further tightening.

However, this highlights the fact that CGT is effectively a voluntary tax, paid only when people choose to dispose of assets. If they perceive rates to be too high, they choose to keep assets rather than dispose of them. Only a few people are forced to sell assets – many of them elderly people who build up assets throughout their lives and then cash them in to live on.

High CGT rates depress economic activity and prevent the flow of capital to where it can be most productively used. This lowers both economic growth and government revenue.  This is why the Adam Smith Institute is urging the government to slash CGT rates to their pre-2010 levels, which would raise more revenue for the Treasury and also stimulate growth. 

For example, if someone owns a buy-to-let flat and is thinking about selling it to raise seed money for a new business, the fact that a large chunk of the proceeds has to be paid in tax will deter them.  They may well decide to keep the flat and not start the business, thus depriving the state not only of the CGT revenue, but also the taxes that would be paid by the new business and its employees.

People’s reluctance to pay a large cheque to the state is increased by the knowledge that much of their capital gain is actually due to inflation. Indeed, roughly half of taxable gains are attributable to inflation[4].

Dr Eamonn Butler, Director of the Adam Smith Institute says: “The coalition policy of a sharp increase in CGT rates has failed.  Not only has it raised less revenue, it has also reduced the available capital in the economy. That is the last thing businesses need at a time when bank loans are so difficult to get.”

Lib-Dems to let 1.3m low earners avoid paying tax

You can read the full article, including Dr Eamonn Butler's views on the policy, here. 

Summary

Following on from the Adam Smith Institute's call to raise the personal allowance to minimum wage level, Danny Alexander MP tells the Evening Standard he wants this policy to be a Lib Dem pledge for the next election. 

Tax avoidance

 He argues that we shouldn't name and claim tax avoiders - the blame lies with politicians. Tax rates are too high, meaning that people will seek ways of avoiding paying their tax and the tax system is too complex, offering so many tax loopholes.

You can listen to his interview here (from 4.50mins in)

Summary

Dr Eamonn Butler talks about tax avoidance on BBC Radio WM.

Madsen on BBC Daily Politics discussing Capitalism and Marxism

Summary

Dr Madsen Pirie, the ASI's President,  appears on Daily Politics to defend capitalism and argue that it has lifted more people out of poverty than any other force in human history. He argues that Karl Marx got it wrong and that when a country experiences economic growth, through capitalism, then everyone benefits, from the richest to the poorest. 

Social care reforms

He argues that the if people choose to save through their homes they should be prepared to expiate it into cash to pay for care in a residential care home rather than expect taxpayers' to foot the bill. 

 

You can listen to him on Radio Five here (from 42mins in). 

Summary

Dr Eamonn Butler talks on BBC Radio Five's Tony Livesey show on the government's policy of introducing a £75,000 cap on social care spending for the elderly.

 

Gay or straight, marriage should be out of the hands of the state

You can read his full article on Guardian.co.uk here. 

Summary

Sam Bowman argues in The Guardian that marriage should be taken out of the hands of the state and privatised.

Too much cash for wind farms

The report argued that the government is over-investing in wind farms and that wind power is unreliable, costly and does not have the environmental benefits generally assumed.

The report was covered in the Daily Express, Daily Telegraph, ConservativeHome, Scotsman and Yorkshire Evening Post, along with dozens of regional newspapers and 126 regional news websites. 

Summary

The ASI's report on 'The Limits of Windpower' received widespread print and online coverage. 

Wind energy benefits overblown, says think tank

·     Wind power unreliability means there is little environmental benefit

·     Need for reserve power generation or energy storage facilities to provide for users needs makes wind power a costly energy source

·     UK government should stop overinvestment in onshore and offshore wind turbines

The report ‘The Limits of Wind Power”, released today by the Adam Smith Institute and US’s Reason Foundation, reveals that the heavy investment in wind power in the UK and US is misguided. Wind energy will never be suited as the lone or primary source of grid electricity due to its variable nature and will not deliver the environmental benefits expected. 
 
The study looks at the limitations of wind power and argues that wind energy needs either expensive energy storage facilities or reserve power generation facilities to provide for users needs. Wind energy is intermittent and therefore these back ups are needed to avoid blackouts or brownouts.
 
Reserve power would have to come from facilities that use fossil fuels, which must operate even when not being used to ensure the reliability of the electrical grid.  This undermines the supposed environmental benefits of wind power. 
 
In light of this, the UK government is overinvesting in onshore and offshore wind farms. Not only is investment in wind power expensive, but it will also fail to provide a reliable source of energy for grid users. The Adam Smith Institute paper argues that the practical upper limit for wind power’s contribution to an electricity grid is 10% of the total energy mix. At the moment the government is hoping that between 8% - 15% will be generated by offshore wind alone by 2020, an unachievable target.
 
“Very high wind penetrations are not achievable,” said William Korchinski, author of the report. “As wind’s share increases, system reliability will be adversely affected disproportionately – unless adequate reserve power is available. That power reserve is expensive and lowers any possible environmental benefits.”