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Tax – on the left, on the right, on your own!

29 September 2010

The current round of party political conferences has resulted in the expected hyperbole.

First of all the Liberals pounded on about the immorality of tax avoidance and evasion whilst never seeking to distinguish that tax avoidance is legal, whereas tax evasion is not. Evasion is fraud - tax avoidance involves legally taking advantage of the Government's own laws to minimise your tax bills.

Meanwhile, the Labour parties shift back to the left has been quickly followed by calls to make the rich pay more.

Whilst this is going on the coalition government is faced with the tough problem of balancing the books. An extensive welfare state takes a lot of feeding.

There is however, mounting evidence that many of the UKs high net worth individuals and businesses are not hanging around to pay the food bill. Since the introduction of the 50% income tax rate there has been an exodus of tax payers.

Only today, Wolseley, the plumbing and heating group announced it is relocating is head offices and tax residency to Switzerland. This will save the company 23m in taxes based on last years performance.

The government must bear in mind that commercial enterprise is the engine that produces wealth for the whole country.

Tax rates that drive away the wealthy from our islands not only deprive the public purse but even more importantly, take away income from the UK housing, car, retail and leisure sectors as well. And how much of that expenditure ends up in the hands of the exchequer?

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