Policies - Taxation 2010 General Election Manifesto

“Let Pharaoh proceed to appoint overseers over the land, and take one fifth part of the produce of the land of Egypt...” Genesis 41:34

“When we pay taxes, do we get value for money?” With as much as half the average income paid out in tax, the Christian Party thinks that the answer is definitely “No.” The present Government, through lax administration and loose living, has managed to run up debt equivalent to the amount it would cost to fight the Second World War all over again.

Furthermore, the current economic crisis is not the worst that we may see. In just 13 years the Labour Government has put in place all the seeds necessary for us to reap a harvest of major national decline. However, despite the dire prospects that certainly face us, the current economic crisis also presents a golden opportunity for radical change driven by a courageous fiscal policy.

The United Kingdom economy’s annual turnover is £1,400 billion, approximately half of which (£671 billion) is spent by the government. The government will be receiving from taxes and other income sources only £496 billion, leaving a deficit of £175 billion, which is equivalent to 12.4 per cent of Gross Domestic Product (GDP). Furthermore, government debt is fast approaching 80 per cent of GDP.

In 2009/10 it is forecast that only £153.7 billion will be raised in Income Tax. Indeed, more will be spent on social security benefits than is raised in Income Tax. Economists suggest that the public sector deficit could easily rise from £175 billion to £200 billion. This includes £27.2 billion debt repayment to investors in treasury bonds.

Income Tax:

The Christian Party aims to promote self-reliance and responsibility, not slavery to a ‘nanny state’, especially one that is up to its eyes in debt. The Christian Party is committed to achieving this by tackling both sides of the fiscal equation – taxation and government expenditure – through a cohesive regime of small government and single rate taxation (coupled with no taxation or National Insurance Contributions (NIC) for those on low incomes). The Christian Party will set Income Tax at a flat rate of 20 per cent.

Unlike some who have instituted or proposed ‘flatter taxes’ the Christian Party is open about its agenda to use a single rate tax regime not only to stimulate economic growth and pull the poorest out of the poverty trap, but also to enforce smaller government. As former U. S. Presidential candidate Steve Forbes noted: “They [the government] can’t cut spending first because the whole political process does not allow them to do so… Cut away revenue and that ultimately forces cuts in spending.”

Cuts in spending do not necessarily mean cuts in services. Cuts in the amount of money that government has to spend necessitates creative thinking – Necessity being the mother of invention. New ways of delivering services will be required rather than new money to deliver services. The plethora of government regulations, compliance with which requires huge government funding, needs to be cut. We cannot continue to create expensive rods for our backs. The culture of appealing to the ever-deepening public pocket must end. Under the Christian Party cuts in spending will not mean cuts in services.

The Christian Party’s single rate tax approach is not the mythical ‘trickle down’ economics, it is ‘volcano’ economics - economic stimulus given at the very heart of society that will well up from the bottom, gaining in potency as it rises, until its spills over the top and creates a new and fertile economic landscape.

The economic growth required to pull Britain back into prosperity can only be achieved through capital formation. The existing method of so-called ‘progressive taxation’, which was originally proposed by Karl Marx, creates disincentives to economic growth, hindering investment both in and of human capital because of the way that it penalizes additional units of value-added, which in turn hampers entrepreneurship and social mobility. However, we acknowledge that, as Daniel J. Mitchell, Senior Fellow at the Cato Institute, points out, “A flat [single rate] tax does not guarantee robust economic performance, but it does mean that the tax code will be less of an impediment to productive activity.”

The Christian Party agrees with the argument that a single rate tax regime will create a greater incentive to work and invest, and thus boost the whole economy. The simplicity of the single rate tax system means that the energy that is currently expended by the wealthy in pursuit of tax avoidance and tax evasion is channelled into growing the economy.

Furthermore, by taking the lowest earners out of the tax and National Insurance Contribution system, the unemployed and those on low wages will be less likely to enter into the ‘grey economy’ and also find it easier to get out of the poverty trap, since all their earnings will be retained.

Savings and Investments:

The Christian Party is committed to promoting an economy driven by thrift and enterprise, rather than by debt and consumerism. As such, the Christian Party does not believe that savings should be taxed, nor investment punished. As Andrei Grecu of the Adam Smith Institute points out, “One of the most destructive elements of the current tax system is that it punishes saving and investing with high tax rates and double taxation.”

Our approach is a single rate tax regime that allows immediate tax allowance for new local investment and exacts no tax on interest payments on locally held savings or dividends on local shareholdings. We will allow 100 per cent tax allowance for investment in plant and equipment in the year of purchase, thus encouraging capital formation and doing away with the bureaucracy associated with tax allowances for capital depreciation.

Corporation Tax:

The Christian Party will introduce a single rate Corporation Tax of 20 per cent based on revenue minus the purchases of raw materials and inputs from other firms, wages, pension payments to workers and the purchase of plant and equipment. All other corporate tax relief will be scrapped.

Capital Gains Tax:

The Christian Party will set a single rate Capital Gains Tax of 20 per cent, the same rate as its proposed single rate Income Tax and Corporation Tax.

Inheritance Tax:

The Christian Party believes that Inheritance Tax amounts to double taxation. Again, the energy expended by the wealthy in pursuit of inheritance tax avoidance and evasion needs to be channelled into growing the economy. Having been taxed throughout one’s life, the Christian Party does not see why one’s estate should be taxed after death.

VAT (Sales Tax):

The Christian Party will use an increase in Value Added Tax (VAT) to 20 per cent in its efforts to make the societal shift from excessive consumerism to a thrift and enterprise economy. A rise in VAT will also provide some stabilising extra tax revenue during the transitional period to a single rate tax regime.

Christian Party Members of Parliament will:

Christian Party Policies

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