The First Test

No, not the Bangladeshis at Lord's, where idle will repair at noon for that quarterday in a chap's social life - Friday lunch at the Lord's test.

No, the first test for Cameron. Two tests rolled into one, if you like:

Does he have the mettle to stick to his word with the Liberals and pursue his iniquitous tax-grab on CGT, despite the principled and intelligent opposition to it from his own backbenchers, formidably marshalled by Davis and Redwood?

Or does he wake up, face a blast of fresh air, and come to his senses - and realise that Conservative principles on tax are based on logic and common sense rather than envy, chippiness and venality?

As Colbert said, "the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing".

Well, the 50% income tax rate, higher National Insurance, increased VAT, IHT, ludicrously high duties on petrol, alcohol and tobacco - all this he already has. There has been much less hissing than I think he deserves, frankly.

Capital Gains Tax, remember, is levied on gains in capital THAT HAS ALREADY BEEN TAXED. It has been saved and put to a good use in most cases - providing equity to the wealth creating enterprises that depend upon it. This, I submit, is a better thing for the country than buying a giant plasma screen telly imported from Korea for your study or childrens' playroom.

Furthermore, the government can double-dip or triple-dip on CGT, as assets inevitably get turned over every few years. Taper relief used to prevent re-taxation, but taper relief went when the rate was reduced to a bearable 18%.

I could go on, but actually there is only ever one question to ask about any change to any tax: will it make money?


The answer, as your intuition told you, is that raising CGT rates results in lower revenue. We all know our Laffer Curve, do we not? The graph here relates to America, but the point is made.

Cameron is simply going to have to get a grip of this. We didn't wait 13 years for sensible Conservative fiscal policy to end up with this crap.

David Laws, who is obviously a Tory at heart and far brighter than Osborne, might be the man to break it to Cleggy and Compo-Cable: posturing as a Man of the People, when following stupid and counterproductive policies, is no way to run a railway.

The guiding light to all of this shower should be the Redwood Dictum:

"We didn't get into this mess by not taxing people highly enough, we got into this mess by spending too much".

Cut hard, cut soon; you will be doing it into a modest economic upswing. Disregard the socialists who say it will harm the economy - it won't. Impose a public sector hiring freeze and the state payroll will reduce by 300,000 each year. Impose public sector pay freezes and tell them they're bloody lucky not to be facing an Irish haircut of 15% of pay and benefits. Identify the white elephants and cut them completely, right away. Climate change guff for starters; quangos; overseas aid to nations with cash surpluses; ban civil service bonuses immediately; set up a Royal Commission for public sector employment - what do they all do, and why? Digby Jones, who worked for Brown's government and then resigned, said that he never came across a single government department or team that couldn't have done its job with half the personnel. It has the ring of truth about it.

PS Christ, the Dissolution Honours and Working Peers list makes one weep. Sir Ian Blair, for chrissakes. Paul Boatinglake. Prezza, the prize twerp. Quentin bleeding Davies. Jeesus. Dissolute Honours, more like.

Chesterton, as ever, had it right:

Prince, Bayard would have smashed his sword
To see the sort of knights you dub--
Is that the last of them--O Lord
Will someone take me to a pub?