Under previous governments, excessive rates of taxation have killed incentives for people to create wealth and make the most of their talents.
Our approach to the economy revolves around restoring incentives for workers by cutting taxes and ending the current ‘open door’ arrangement for European labour that has driven down wages in recent years.
By the end of the next parliament, UKIP will:
- Raise the personal allowance to at least £13,000 so people can earn enough money to cover their basic living costs before the state starts to take income tax out of their pay packets. This will take those on minimum wage out of tax altogether
- Abolish inheritance tax. Assets bought out of taxed income should not be taxed again when their owners die. We will strike out the hated ‘death tax.’ It hits the middle classes hardest, those who have worked to provide for their dependents, because the wealthiest almost always manage to avoid paying it
- Raise the threshold for paying 40 per cent income tax to £55,000 and introduce a new intermediate tax rate of 30 per cent on incomes ranging between £43,500 and £55,000. A tax originally designed for high earners should not be levied on middle- income earners such as school teachers and senior nurses
- Increase the transferable tax allowance for married couples and civil partners to £1,500.
Outside the EU, we will have control over VAT. Significantly, we will be able to deal with distortion imposed by EU legislation and zero-rate certain goods and services that have previously had VAT charged on them. This means we can – and will - remove VAT completely from repairs to listed buildings and sanitary products, for example.
CORPORATION TAX DODGING
It is grossly unfair that a few multi-national corporations have been able to access all the benefits of our thriving British consumer market without making a proper contribution to the costs of British society. The public has every right to be angry about this.
UKIP will not allow large companies to continue getting away with paying zero or negligible corporation tax in Britain. We will bring this unfairness to an end.
By restoring British tax sovereignty, which we lost when we signed up to the EU, we will end the practice of businesses paying tax in whichever EU or associated country they choose. Our membership of the EU enables companies to avoid paying some UK taxes with impunity and we will close this loophole.
We will also set up a Treasury Commission to monitor the effectiveness of the new Diverted Profits Tax and bring in any further measures necessary to prevent large multinational corporations using aggressive tax avoidance schemes.
REDUCING THE DEFICIT, PAYING OFF OUR DEBTS
Years of mismanagement by Labour and Conservative governments have left our public finances in a mess.The public sector deficit in 2014/15 is expected to be around £90 billion and our national debt close to £1.5 trillion, £500 billion more than it was when David Cameron took over in 2010.
This is a terrible legacy to leave our children and grandchildren.
Interest payments on our national debt alone cost £46 billion every year: more than £700 for every man, woman and child in the country. It is more than we are spending on defence.
The Chancellor has failed to stick to his 2010 promise to wipe out the deficit by the end of the current parliament, despite damaging cuts to public services. In the March 2015 Budget, a new deficit reduction schedule was unveiled, envisaging the elimination of the deficit by the third year of the next parliament, with a surplus being recorded after that.
While this current Treasury plan is a reasonable target, there is little public faith it will be achieved, coming as is does in the wake of previous failure. UKIP MPs in the next parliament will make sure the Treasury sticks to this latest plan, with no backsliding.
We will hold the next Chancellor’s feet to the fire when it comes to improving public finances. UKIP will make a difference by being a powerful, much-needed voice in favour of sound financial management.
FINANCING UKIP SPENDING PLANS
UKIP will finance a fairer tax system and fund our public spending proposals by sharp reductions in spending on specified public sector programmes. By the end of the next parliament we will:
- Save £9 billion a year in direct net contributions to the European Union budget by leaving the EU
- Reduce the overseas aid budget from 0.7 per cent to 0.2 per cent of GNI, matching the percentage contribution made by the USA. This change will be phased in so projects in progress can be completed and contractual obligations met. Annual savings will increase to £11 billion by 2019/20 and money for bi- lateral aid projects will not be languishing in EU bank accounts
- Save £4 billion a year in capital expenditure by scrapping the HS2 vanity project, which will benefit the few at the expense of many
- Reduce spending by £5.5 billion by replacing the Barnett Formula
REPLACING THE BARNETT FORMULA
The Barnett Formula is the method by which HM Treasury allocates funds to Scotland, Wales and Northern Ireland. Despite being in existence for thirty-seven years, since when we have seen devolution and significant changes in the respective countries’ fortunes, this formula has never been reviewed or updated. Now discredited, it was disowned by Lord Barnett himself.
UKIP believes the Barnett Formula has passed its sell-by date. Spending has become increasingly unfair, with Scotland receiving a considerably higher per capita spend, despite moving towards further tax-raising and spending powers of its own.
Scotland receives almost £1,400 more per person in public spending than the UK average and nearly £450 more than Wales. This is why Scotland is able to spend in a manner not possible elsewhere in the UK.
We agree with the House of Lords Select Committee on the Barnett Formula which in 2009 concluded that:
- The Barnett Formula results in ‘per capita allocations that are arbitrary and unfair’
- Scotland has ‘markedly lower overall need than Wales’
- ‘The Barnett Formula should no longer be used to determine annual increases in the block grant for the devolved administration’
- ‘A new system which allocates resources to the devolved administrations based on an explicit assessment of their relative needs should be introduced’
- ‘A formula based on relative need is a practical possibility.’
These conclusions echoed a House of Commons Justice Committee report in the same year, which stated: ‘The Barnett Formula is overdue for reform and lacks any basis in equity or logic.’ The government of the day was urged to devise a new, needs-based formula.
Government has focused on the wrong spending priorities for far too long. It is time to stop wasting money on trying to be popular on the world stage, andstart tackling urgent, pressing needs here in the UK.
By changing our spending priorities British taxpayers can get much better value for money. UKIP will take Britain out of the red and back into the black.
CUTTING THE COST OF WESTMINSTER
The cost to the taxpayer of the Houses of Parliament, Ministerial Departments, the Home Civil Service and Whitehall-funded quangos is huge, running into hundreds of millions of pounds every year.
UKIP believes we can make considerable savings at the same time as improving democratic accountability. These savings include:
- Reducing the size of the House of Commons and ensuring parliamentary constituencies across the country are of equal size
- Abolishing government departments when their essential powers and functions can be merged into other departments. Such departments will include the Department for Energy and Climate Change, the Department for International Development, and the Department for Culture, Media and Sport
- Reducing the number of secretaries of state, ministers and parliamentary under- secretaries-of-state and, accordingly, the size of government
- Cutting departmental running costs where they do not deliver value for money
- Reducing the £7.2 million cost of paid advisers and bring more transparency to their appointment
- Abolishing unnecessary quangos such as the Cabinet Office’s ‘Big Society’ programme (£49 million), the National Citizen Service (£62 million), DfID’s International Citizen Service Volunteers (£110 million) and Defra’s Waste Resource Action Programme (£15.5 million)
- Clamping down on so-called ‘fake charities,’ or state-funded political activism
- Ending tax-payer funded overseas junketing and non-essential ‘fact-finding’ missions
- Ceasing all subsidies for bars and dining rooms in the Palace of Westminster
- Preventing MPs claiming expenses that are not incurred wholly, exclusively and necessarily in the performance of their duties, like every other member of society.
We anticipate investing savings made from cutting the cost of Westminster into a dedicated fund to contribute to the repair and maintenance of the beautiful and historic Palace of Westminster. The fabric of this building has been neglected and the estimated cost of essential repairs is currently £3 billion.