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Ahead of the UK’s 2013/14 financial budget we ask legendary trader John Piper for his thoughts on what Chancellor George Osborne should be announcing on Wednesday.
The UK is in a bit of a mess right and here is a quote from a recent report of my BIG CALL service:
“Great News! It seems the UK is winning the currency wars. But it does have a powerful armoury to do so including “its debt, deficits, unfunded liabilities, reliance on the financial sector, lack of exports, weak government, low growth, stagnant housing market and increasing social unease”
Impressive stuff – how can we lose? Of course some faint hearts may argue we would be better off without all this stuff in our armoury and perhaps a bit of financial muscle may be more useful in the long run. But in today’s upside down world weakness is good and strength is bad, a weak currency sorts out the current bogey man, too much debt secured on over-valued assets even if the cure is potentially far, far worse than the problem in the longer term.”
(Btw BIG CALL went short of £/$ mid January and so far the market is down around 1000 points since then – one of our better trades!)
So Osborne may be said to hold all the aces but I differ from that particular view. Here is my radical eight-step plan to cure all our ills:
1. Back in the 1980s I was a tax specialist and even then the tax legislation was too complex. It has only got worse and in many areas has lost the key feature of good law – certainty! Even high priced lawyers often cannot give you a clear statement of how current legislation affects us and, much too often, the final arbiter is how the Tax Authorities decide to interpret a particular point themselves (and it is just the same with the FSA and compliance legislation). The only beneficiaries of this mess are the self same high priced lawyers and business can often find itself in a quagmire as it tries to generate more revenue, and this more tax – ultimately it is business and its employees which fund the whole economy and, as such, this is intolerable. So the first step is simplicity – all this uncertain and complex legislation must be swept away.
2. In particular certain taxes are uneconomic to collect as they yield less than the costs involved in collection, for example Capital Gains Tax. These should be abolished entirely but I would go further and abolish all indirect personal taxation. So no more Income tax, no more National Insurance, no more Inheritance Tax, no more CGT but I would leave Corporation tax in place. People would then be free to spend their money how they want.
3. This would leave a large hole in the Budget which would need to be filled by an increase in direct taxation, meaning VAT, Duties on Alcohol and Tobacco, etc. etc. It would be a fairly large increase but step 4 will help and Step 2 will put more money in people’s pockets.
4. All illegal drugs would be legalised and a lot of new duty/VAT/etc would then be collected. Why let irresponsible drug cartels get all the cash when irresponsible (but hopefully less so) Government can do so instead. Richard Branson can be asked to make sure this works, albeit it can hardly fail, and Virgin Drugs is born.
5. Rather than taxing the rich they should be paid to come here but I am not talking about the idle rich. I am talking about those individuals who work to build businesses and we want them in the UK and we want to pay them to build businesses in the UK.
6. However we do not want those who are a burden on the welfare state and they should be encouraged to leave the country. A sum, say £10,000, should be available of such people who wish to hand in their passport, permanently, and leave the country – the sum should be chosen to give the Government a significant saving over coming years but also so these people can start a new life with a useful sum of cash.
7. The stigma of failure must be eliminated. Failure is very valuable as it how we learn. The successful among us got that way by failing far more often than those who are unsuccessful. The education system need a complete revision so children understand this along with the fact that they are responsible for their own lives. The “victim” mentality whereby people mistakenly believe their lives are governed by external factors and reliance on the welfare state also needs to be taught in schools. The Government will launch the “We Pay You to Fail” program!
8. Finally it is difficult to change a mature society because of all the vested interests, bureaucracy and insiders who are doing very nicely, thank you, out of the status quo and therefore seek to block change. Given the essential nature of the suggested chnages this cannot be tolerated and all these people need to be deported immediately and kept incommunicado and out of harm’s way.
Ladies and Gentlemen, I recommend this Budget to you!
JOHN PIPER has been a full time trader since the 1980s and is a well known author. You can sign up for free reports and information by emailing jptt@aweber.com or visit his web site at www.johnpiper.info
