Nigel defies the Stukas
IN his spare time from these manoeuvrings with the markets, Nigel Lawson has done me a kindness. He has stood up to draw fire which would otherwise be aimed at me. It always is, when I write about pensions — arguing (last week) against their tax privileges, which account for one sixth of our income tax, and putting the case for an even-handed tax treatment of saving. Now, I thought, the pension lobby will come down on me like a formation of Stukas, escorted by a buzzing cloud of low-flying actuaries. May I redirect them to the Conservative Political Centre, which this week has published Mr Lawson's latest tract, Tax Reform. Here he is, on tax privileges: 'There is a virtuous circle to be had. Reducing or eliminating tax breaks provides increased revenue, which can be used to help bring down tax rates. Lower tax rates of themselves reduce the value of tax breaks. So it is then a little easier to reduce the tax breaks that remain. This trimming of allowances and reliefs . . . is also intended to make the tax system more neutral — that is, to reduce the extent to which the tax system biases people's choices, by making it worthwhile to spend or save in some ways rather than others. . . . It is part of our wider policy, to get the Government off people's backs and out of the market-place — leave them their own money and let them choose what to do with it.' He looks back on his wholesale trimming — axing, indeed — of allowances and reliefs, first in company taxation, then in personal taxation. Then he turns to the taxation of savings: 'Ordinary people found it less attractive in tax terms to buy shares directly than to save through the life assurance and pension funds. Institutional saving attracted tax relief which was not available for direct equity investment. To some extent we have levelled down, to some extent we have levelled up. . . . I do not pretend that these measures have brought about anything like parity of treat- ment.' Ah, well, Mr Lawson has already told us that he is working on his next budget — fortified, I hope, with anti-lobby devices and actuary-seeking missiles.
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