This tax policy chaos does not bode well

Times

a day ago

We are two months away from another budget and yet again there's widespread worry, and entirely legitimate concern, about what might be coming down the track.
It is all very reminiscent of the panic we saw last year when the prime minister warned that the budget was going to be 'painful' and then in the run-up his government refused to rule out nearly every tax-grabbing suggestion laid before them. Whether it was stripping widows of their council tax discount or taxing landlords who sold up; it was all left out on the table.
Fretting went into overdrive when it emerged that the Treasury had consulted the pensions industry on what might happen if it stripped savers of their full tax-free lump sum. Inevitably, fearful savers rushed to get their hands on their tax-free retirement cash. The policy never saw the light of day and many were left ruing their decision to withdraw their funds.
Publicly brainstorming tax-grab tactics is no way to prepare for a budget: all it does is spook the public into making damaging decisions.
Yet as we approach the next budget, it seems that the administration has learned nothing. And this year, we have a bigger black hole to fill.
• Treasury accused of punishing homeowners with new property tax
The latest idea said to be under consideration is a capital gains tax raid on properties sold for more than £1.5 million. This would be terrible news for an already lifeless property market. Such a tax grab would grind the market to a halt, because no one would want to sell. It would break sale chains and freeze out new buyers. It shouldn't even be up for discussion.
It has also been suggested that Rachel Reeves could come after inheritances, tightening rules around gifts made to family within your lifetime. It's another unnecessary policy that would simply create more paperwork and resentment than it could ever be worth. It would also drive people to change their behaviour and find ways to shield their money from the taxman.
A shake-up of the regressive stamp duty land tax is long overdue and would be welcome in the budget, but any replacement needs to be an improvement.
These policies may seem like handy revenue raisers for a cash-strapped chancellor, but in practice they would cause people to behave differently so the tax take would reduce in response. They would simply not be worth it. Tax raids on the wealthy, businesses and private schools are already starting to backfire, and it is getting clearer by the day that what is needed instead is heavy cuts to spending.
• Stamp duty's got to go — but be careful what you wish for
But it's worrying that these ideas are still being floated when, if anything, the last 12 months should have taught this government that tax and spend policies will bankrupt the nation sooner rather than later.
Tax rises are the antithesis of growth: the less we are taxed the more money is available to slosh around the economy and the more growth we can generate.
We are all obviously responsible for what we decide to do with our money, but none of the policies that have been trailed this week are inspiring the confidence that we so badly need.
• Read more money advice and tips on investing from our experts
Perhaps the tax-raising measures eventually announced in the budget will turn out to be nowhere near as bad as feared and we can all breathe a big sigh of relief. However, the government can no longer neglect its responsibility to provide stability and keep the goalposts firmly in place when it comes to our financial planning strategies.
An economy thrives on movement, and tax is the ultimate enemy. Until this government realises that, we are all within our rights to be worried about what might be about to come.