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Patrick O’Flynn lays out UKIP’s Economic Plan


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PatrickOflynn.jpgBy getting our foreign aid budget back under control and bringing home the money that goes to pay our EU membership subs you are immediately looking at a £20billion a year saving. By reforming the Barnett Formula that treats English taxpayers so unfairly you can save several billion more.

When we publish our manifesto for next year's general election, at the outset of the campaign, our whole programme will be finalised and rigorously costed. But this week we are setting out some of our key priorities to be financed out of the savings we have already identified.

So - yes to letting people earn a basic living for themselves before the state starts asking them to pay income tax to fund the lives of others. UKIP will support a personal allowance that is equivalent to full-time minimum wage earnings - expected to be around £13,500 by the time of the general election. Our MPs will champion this and vote for it in the House of Commons during the next parliament, hoping to find others of like mind with whom to make common cause.

Perhaps this is why Mr Osborne is making so many more people pay the 40p rate. Why he has lowered the threshold for it from the £43,875 that he inherited from Alistair Darling to £41,865 this year.

At the last Budget, UKIP said that our policy would be to raise the 40% tax threshold to at least £45,000. Well, today we are able to make a better offer.

The policy we will take into the next parliament will be to cut the 40% rate where it starts to 35%. So a 35% rate would start at earnings just above £42,000 and apply all the way up to £55,000. Only at earnings of £55,000 would the 40% rate become payable.

And in time, we would like to go further. An eventual tax structure of a personal allowance at the level of the full-time minimum wage, followed by a 20p standard rate, a 30p intermediate rate and a 40p top rate would be simpler, flatter and in my view compatible with both a dynamic economy and a fair society.

But that is a longer-term aspiration. Politics is all about priorities and our priority has to be to help those at the bottom of the earnings scale and then show we are also on the side of those who have reached the middle ranges and wish to achieve even more.

Well, let me tell you what UKIP wants to do to inheritance tax; scrap it altogether

UKIP proposes that a Treasury Commission, using the best brains of that elite Whitehall department, be set up to design a turnover tax for large businesses. Every major company would have to show it had paid a set proportion of its turnover in corporation and other taxes or would face an additional charge to bring it up to the minimum. This would work as a back stop for the tax system and ensure that every big company pays a fair share of tax.

I want it to investigate the feasibility of imposing a luxury goods rate of VAT. It makes no sense to me that VAT is levied at the same rate on budget items purchased by the hard-pressed as it is on premium ones that are the preserve of the very well heeled. And it seems to me that a luxury goods rate of 25 per cent could raise substantial extra funds from the wealthiest people. I would suggest such a rate be built around simple thresholds such as £200 for a pair of shoes, £1,000 for a bag or £50,000 for a new car.

The Treasury calls it "tax free shopping". It basically means that foreign nationals can claim back the VAT paid on purchases by filling out a form at the airport. So foreign tycoons can get 20 per cent off their purchases in London, thanks to a Treasury waiver that is in turn bankrolled by ordinary British taxpayers.

The Treasury is very coy about how much revenue is lost to VAT rebates to foreigners. But HMRC calculates that it is at least £300million a year and I have seen estimates which point to it being significantly higher. This perk should be scrapped.

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