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By Trevor Abrahmsohn, Glentree International.<\/em><\/p>\n With the spring Budget looming on March 6, there are\u00a0theatrical whispers\u00a0about the prospect\u00a0that the Chancellor will either reform or scrap Inheritance Tax altogether.\u00a0 No doubt this is an attempt to garner support from disaffected Tory voters, as they have become disillusioned with the\u00a0unprecedentedly\u00a0high tax regime\u00a0environment\u00a0imposed by government\u00a0over the last thirteen years.<\/p>\n <\/p>\n No matter what the\u00a0Tories\u00a0have thrown at the electorate to date\u00a0by way of\u00a0a charm offensive\u00a0–\u00a0some would have other interpretations.\u00a0Despite this,\u00a0the Prime Minister and his merry men have hardly managed to change the stubbornly ingrained negative poll predictions of a 16-20% deficit to the Labour Party\u00a0and\u00a0just\u00a0maybe,\u00a0this is the last hoorah before the General Election,\u00a0where the fate of the Tories will be decided.\u00a0Oh\u00a0dear! The sight of political blood makes me feel queasy.<\/p>\n Explore today<\/a><\/p>\n <\/center><\/div>\n 40% IHT is Draconian <\/strong><\/p>\n Common sense dictates that the wealth you accumulate by the time of your demise should be post tax and for the Chancellor to take a further hefty 40% slug of one\u2019s net worth, after allowances, could be far too draconian for many stomachs to bear.\u00a0 Some would argue that this is mean spirited and Scrooge-like, to say the very least.<\/p>\n The trend across America and Europe is either to reduce this liability\u00a0by very generous allowances\u00a0or,\u00a0get rid of it\u00a0altogether, which seems to sit well with the broad band of political\u00a0environment in these countries, which range\u00a0from\u00a0centre right to centre left.\u00a0Why, therefore,\u00a0should this not be aped in\u00a0the\u00a0UK?<\/p>\n The wealthy and sophisticated cognoscenti make provisions well ahead of\u00a0time to reduce this liability,\u00a0by cunningly devised methods\u00a0inspired\u00a0by\u00a0clever accountants and lawyers, therefore, any positive effect of\u00a0wealth distribution is effectively\u00a0neutralised\u00a0by these measures.<\/p>\n The problem is that Mr\/Mrs\u00a0Middle\u00a0to\u00a0Upper\u00a0Middle class, who do not have\u00a0access\u00a0to\u00a0sophisticated advisers,\u00a0will have to part with a big\u00a0chunk\u00a0of their wealth,\u00a0mainly\u00a0due to\u00a0increased\u00a0residential\u00a0property values\u00a0of their primary home,\u00a0which is usually their single largest asset\u00a0and\u00a0will\u00a0bring them,\u00a0inescapably,\u00a0into the IHT\u00a0net.<\/p>\n Meddling\u00a0Hands of the\u00a0Revenue<\/strong><\/p>\n Let us not forget,\u00a0having worked hard\u00a0throughout\u00a0one\u2019s\u00a0life, and paid all the taxes along the way,\u00a0surely your\u00a0last\u00a0wish to\u00a0try to\u00a0enrich your surviving family\u2019s lifestyles should be granted. \u00a0Some of these family members would certainly need the money\u00a0to purchase their first property\u00a0and this vital process should not be interfered with by the thieving\u00a0and meddling\u00a0hands of the\u00a0Revenue,\u00a0gorging\u00a0themselves\u00a0on the\u00a0family \u2018booty\u2019\u00a0before anyone else.<\/p>\n Bizarrely, I\u2019m not in favour of scrapping it altogether since, understandably, I feel in this economically troubled environment, exacerbated by the energy crisis, high\u00a0inflation,\u00a0and the credit crunch, reducing the IHT tax band to 20%,\u00a0(rather than the hitherto 40%),\u00a0is far more\u00a0socially palatable and therefore,\u00a0preferable.<\/p>\n Arthur Laffer\u2019s\u00a0Tax\u00a0Theory<\/strong><\/p>\n As a fervent believer in the US economist Arthur Laffer\u2019s fair tax theory, \u201cif a tax rate is interpreted by the public as fair they will pay it willingly, but not if they don\u2019t\u201d, his view, for instance, is that the prevailing income tax rate should not be more than 20%.<\/p>\n At this level,\u00a0he believes that the government would\u00a0raise far more money\u00a0for the Exchequer as a result, since the populace would declare more\u00a0of their\u00a0income\u00a0and\u00a0would not\u00a0bother to circumnavigate the liability,\u00a0which at present is up to the\u00a040-45%\u00a0level, in the UK.<\/p>\n In fact, you could find that the fiendishly clever IHT avoidance schemes,\u00a0could be\u00a0rendered un-economic, if the rate was 20%.<\/p>\n Given that only 6% of the tax paying population would be affected by this tax exchange, I am not sure it would have a profound effect on residential property values, but it would certainly improve sentiments, which may not be a bad thing amongst grass root Tory supporters.<\/p>\n What About\u00a0VAT\u00a0Reclaim?<\/strong><\/p>\n Whilst on the subject of tax reforms, maybe the Chancellor needs to look at the VAT reclaim arrangements which previously existed in the UK, by allowing international consumers to purchase goods in this country for export, in common with a great deal of other countries elsewhere in the world.<\/p>\n According to a number of retailers,\u00a0this irritating tax trap is the reason why many of them are losing business\u00a0in the UK\u00a0and are compelled to redirect consumers to other shops within their orbit, elsewhere in the world,\u00a0where they can enjoy this\u00a0tax-free\u00a0purchasing facility.<\/p>\n This would have an insignificant effect on the HMRC\u2019s VAT takings but would serve as a welcome fillip to the retailers in this country who are suffering this\u00a0unfair burden.<\/p>\n If the socialistically inspired republic of France can tolerate this arrangement, why not Britain?<\/p>\n Note to Chancellor\u00a0Hunt;<\/strong>\u00a0make Britain a convenient place to buy and invest in and\u00a0we\u00a0will soon be reaping the rewards that we\u00a0justly deserve.<\/p>\n","protected":false},"excerpt":{"rendered":" By Trevor Abrahmsohn, Glentree International. With the spring Budget looming on March 6, there are\u00a0theatrical whispers\u00a0about the prospect\u00a0that the Chancellor will either reform or scrap Inheritance Tax altogether.\u00a0 No doubt this is an attempt to garner support from disaffected Tory … Continue reading Keep up with the latest trends and listings. <\/h3>\n