Clegg Goes Soft on Tycoon Tax 
The deputy Prime Minister, Nick Clegg, ahs been forced to go back down on proposals for a tycoon tax, less than forty-eight hours after announcing his proposals.

Speaking at the Liberal Democrats Spring conference on Saturday, Nick Clegg proposed the tycoon tax on millionaires, with the aim of introducing a minimum tax rate to ensure high earners didn’t pay less than twenty percent of their incomes tax.

Clegg told the conference: “There are hundreds of people earning millions per year who are barely paying 20 per cent tax – forget 40 per cent, forget 50 per cent, forget 30 per cent.

“I think it’s time that we look at what I call a tycoon tax.”

However, no sooner had Clegg announced his proposals than the Treasury announced they were surprised by the deputy Prime Minister’s mention of a minimum tax rate, with sources close to the Chancellor saying a minimum tax rate wasn’t being considered.

One Treasury source added: “There are people out there making use of various reliefs and loopholes who don’t pay much tax at all.

“There is a commitment across government to close those loopholes.”

During his keynote speech at the conference on Sunday, Nick Clegg appeared to have softened his stance on the tycoon tax, telling the conference: “We will call time on the tycoon tax dodgers and make sure everyone pays a fair level of tax.”

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Report Makes HMRC Recommendations 
A Treasury Committee report has made a number of suggestions to the HMRC, including making sure that tax disputes with big companies are dealt with in exactly the same way as other taxpayers.

The report by the MPs, although supportive of recent moves by HMRC, such as its campaigns against specific groups of tax dodgers, believes that HMRC should introduce a number of changes, which the MPs believe will help improve public confidence in the organisation.

George Mudie MP, the chairman of the Treasury Committee, said: “Taxpayers must have confidence that HMRC is being even-handed at all times, otherwise rates of voluntary compliance with the tax code could suffer.”

Among the suggestions, the Treasury Committee have said that HMRC should spend less time and effort in trying to calculate how much tax goes uncollected each year; encourage greater voluntary tax paying by the public and offer a general disclosure "facility" for all tax payers, like the one for offshore account holders.

They have also said that HMRC should look to vigorously prosecute people who do not admit to hiding taxable money and assets offshore.

HMRC recently decided that all tax deals worth more than £100m would be handled from now on by a senior official acting as an "assurance commissioner"; and Mr Mudie said of this decision by HMRC: “It is encouraging that HMRC has recognised that its processes for settling tax disputes were flawed and is implementing changes.”

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Quantitative Easing Knocks Value of Final-Salary Pension 
The National Association of Pension Funds (NAPF) has claimed that quantitative easing has knocked £90 billion off the value of final-salary pension schemes.

The quantitative easing policy, which was started by the Bank of England three years ago in an effort to help starve off recession, has made government bonds more expensive to buy, with lower returns for investors; which has had the knock-on effect of making pensions more expensive to fund and therefore increased their deficits.

Joanne Segars, the chief executive at NAPF, said: “Businesses running final-salary pensions are being clouted by quantitative easing.

“Deficits that were already big now look even bigger because of its artificial distortions.

“Firms are legally obliged to fill the deficits, and that diverts money away from jobs and investment, and will lead to further closures of final salary pensions in the private sector.”

NAPF have calculated that the first wave of quantitative easing has increased costs of funding final-salary pension schemes by around £180 billion.

The association have also claimed that the policy’s impact on annuity rates means someone with a £26,000 pension pot retiring today would receive 22% less income than if they’d annuitised four years ago; making them £440 a year worse off.

The National Association of Pension Funds are now calling on the Bank of England and the Pension Regulator to make it clear that rising deficits were artificial.

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Tax Cuts Have To Be Paid For 
On Tuesday night, the Chancellor, George Osborne told the annual EEF Manufacturers’ Dinner that there will be no easing of austerity in this month’s Budget, as any tax cut “has to be paid for.”

With only two weeks to go until George Osborne unveils his Budget and with the Chancellor facing calls for tax reforms to stimulate growth, Mr Osborne’s warning to the EEF that “the days of unfunded giveaways are over – and they’re not coming back in this budget” will come as a disappointment to those who have called for cuts to the Chancellor’s austerity measures.

The Chancellor made it clear during the dinner that although tax changes are likely, he will claw back the lost revenue elsewhere, such as through higher taxes in other areas or via spending cuts.

Mr Osborne told the EEF: “I can tell you: we are not going to put that credibility and stability and low interest rates at risk. Our action is bringing the deficit down - but it is still far too high.

“The days of un-funded giveaways are over - and they're not coming back in this Budget. Everything has to be paid for.”

Whilst the warning that unfunded giveaways are over will have been disappointing to hear, the Chancellor also offered good news to businesses, as he pledged to have a flagship credit-easing scheme to encourage lending to small businesses up and running by March 21.

The National Loan Guarantee Scheme is set to see £20 billion of taxpayers money used to guarantee funding for UK banks, on the condition that the money is lent to small businesses. A detailed announcement is expected next week.

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Banks Failing Small Businesses 
A report published yesterday revealed that the majority of small firms who applied for an overdraft for the first time were rejected.

The SME Finance Monitor report, which was commissioned by banks, found that almost forty percent of cash-strapped businesses were turned down for a first-time loan; whilst many small firms are still struggling to survive – despite the government’s attempts, via Project Merlin, to get banks to increase their lending to small businesses last year.

Along with forty-percent of small firms being turned down for a first-time loan, the report also found that of the firms which applied for an overdraft, fifty-five percent got no facility; and less than a third of businesses received what they asked for and took it.

Labour’s shadow business secretary, Chuka Umunna, admitted that the findings of the report were “worrying” and said: “At a time when we need more people to be starting and growing businesses, it is worrying that more than half of firms applying for an overdraft for the first time last year were rejected.

“Businesses are struggling to get the finance they need and many are being discouraged from applying in the first place.
“This is something that both ministers and the banks need to address urgently.”

Overall Project Merlin’s gross lending target to small firms was £76 billion; yet banks managed to hand out only £74.9 billion – a shortfall of £1.1 billion.

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