Posts Tagged ‘tax’

Certainties and uncertainties.

November 9, 2009

Tom Harris MP has written a post today about tax and inequality. Judging by all the question marks scattered throughout the piece, he seems to be uncertain about many things, especially the principal dilemma under consideration:

“How should a modern, left-of-centre political party which has been in power for more than 12 years respond to the growing gap between rich and poor?”

As well as this he asks questions such as:

“We know how to bring the richest down, but once we’ve done that, how do we use that money raised to benefit the poorest?”

“So why has incomes equality increased? And is it the inevitable consequence of a booming economy, as the UK’s was until the global recession started to bite?”

“More to the point, does anyone seriously believe that if the Tories instead of Labour had been in power since 1997, incomes equality would have been narrower than they are today?”

Some fellow Labourites may be concerned that a Labour MP and former government minister does not appear to have a very clear idea of why inequality in Britain has increased or of how it can be addressed. 

However, rest assured that Tom isn’t completely clueless! After all, he is very certain of some things:

“Tony Blair and – let’s not forget – Gordon Brown put a great deal of effort into reinventing Labour as a low tax party. As a result, we won three general elections in a row…”

There’s an element of truth here, of course, but if Tom’s above statement formed the basic argument of an A-Level politics essay on ‘Why Labour Won Three Elections In a Row’ I think it would be generous to give it higher than a B – grade.

One other very plausible explanation for New Labour’s electoral success during that period is that the opposition party were exhausted, divided, and correspondingly unpopular, making it relatively straightforward for Labour to retain power even as voters deserted it over the years. In a similar way, the polls today suggest a lack of widespread enthusiasm for the Conservatives but a collapse in Labour support makes a Tory victory seem sadly likely.

It could also be pointed out that Labour’s healthiest victories in 1997 and 2001 were won whilst promising some increased taxes – the Windfall Tax and the rise in National Insurance. At the heart of the party’s manifestos were commitments to increase spending on education and on the NHS.

So maybe Tom shouldn’t be so certain that ‘it woz low taxes wot won it’. Such a simple explanation, as convenient as it is for Tom’s view that taxing the rich is a bad idea, is not compelling.

I’m also far from convinced insisting that things would have been worse under the Tories or that growing inequality was probably an inevitable consequence of a booming economy is going to satisfy the concerns of those who care about economic inequality – many of whom are Labour activists and supporters and whose campaigning efforts will be needed to keep Labour MPs in office. 

Let’s give Tom credit. At least he is thinking about inequality and facing the difficult questions, even if it is depressing to see that he doesn’t have many answers about what to do and that there is apparently a lack of a ‘party line’ over inequality. 

Tom’s final demonstration of certainty is:

The Tories, of course, will be rubbing their hands in glee at the prospect of this debate within the party, and praying that we come down unequivocally on the “soak the rich” side of the argument. Personally, I’d rather we stay in government.”

But from the perspective of anyone who cares about inequality, what’s the point in keeping ‘us’ in government if ‘we’ have achieved such unsatisfactory results over 12 years, are not sure why this has happened, and have no idea how to rectify the situation in the future?

Personally, I’d rather Labour MPs like Tom started looking at how redistributing money from the rich to the poor can be done efficiently and effectively and then used all the influence they have to make sure the government is carrying out appropriate policies. He could look at providing free childcare, free school meals, raising tax credits and thresholds.

I’d rather they were doing this than demonstrating a total lack of direction over the issue of inequality (exasperating for Labour activists, I suspect), giving succour to right-wing arguments over taxing the rich (very pleasing for the Tories, I’d guess), and seeming to blindly prioritise re-election and the retention of power for its own sake (nauseating for voters in general).

Of that I’m certain.

Fancy that.

August 24, 2009

The TaxPayers’ Alliance claim to represent the interests of “ordinary taxpayers”.

They are in-fact ideologically predisposed to whinging about all forms of public spending. They therefore spend much of their time acting as rentaquotes for lazy journalists of a similar political bent.

They call for a “low tax economy” and an end to “big government” – i.e. massive cuts in public services.

On their website the Alliance gives some information about all their staff members; their careers thus far, what university they went to, which scary tax makes them wet the bed at night, etc.

Five of the TPA gang reveal which school they went to. Four of these were private schools. Why am I not surprised?

The honourable exception

May 12, 2009

I too will break the self-imposed blogging ban to draw attention to an excellent letter sent to the Financial Times. Hat tip to that fine organisation The Other Taxpayers’ Alliance which described this letter as the “honourable exception” to all the greedy City types wallowing in self-pity at having to contribute a bit more to the national coffers: 

From Mr Simon Hallett.

Sir, Like Tim Elster (Letters, April 28), I am in line to pay the new 50 per cent rate of tax. I read that high earners are apparently depressed, demotivated and planning to leave the country. Public spending on health and education has apparently been worthless, while public sector workers are self-evidently overpaid by comparison with your earlier correspondent.

Then I think of the exhausted, heavily pregnant hospital doctor who saved my son’s life at 3am after 19 hours on duty. I also think of the nursery teacher at our village primary school who spends Sunday evening at school, unasked, lovingly preparing activities for the children.

I have been in the investment business for some 20 years, during which time I have seen just how many lunches, clay pigeon shoots, tickets to the rugby and nights at the opera come between the average pensioner and his pension, or between a charity and its investment income. Don’t tell me the private sector hasn’t been wasting my money like it grew on trees.

Let’s get real about this: £150,000 is not a small amount of money. I would like to see the complainers explain exactly what items they will have to give up as the result of the 50 per cent tax band. Let’s put them on the table and we can all have a good laugh.

Surely it’s time for a more grown-up attitude to this. Possession of large amounts of money doesn’t allow people to cut themselves off from the rest of society. Society has a habit of paying you a call in one way or another, taxation being one of the more innocuous.

I will be interested to know where the emigrants are planning to end up, and whether they plan to remain perpetual outsiders in their host country.

Simon Hallett,
Peaslake, Surrey, UK

Simon Hallett sounds like a good bloke, though I do wonder how popular he is in the office.

Oxfam: solutions, but not (quite) the right ones

April 8, 2009

I’ve just been reading about Oxfam’s latest campaign, which seems to hit the nail on the head in terms of where the new frontier of domestic poverty relief is.

They’ve come up with “FREDs” to describe the people being hit by the credit crunch – people who are Forgotten, Ripped off, Excluded and Debt-ridden (see?)

What’s also great to see is that, after defining their problem very well, they’re advancing some very practical, nuts-and-bolts ideas about the tax and welfare systems to alleviate poverty amongst FREDs.

Still, I wouldn’t be an aspirant blogger unless I had it in me to nit-pick a set of well thought out, excellently researched proposals from an exceedingly worthy cause.

I’ve got to sound a word of warning about one of their proposals – that of raising the threshold on income tax.

This sounds like a great idea – taking poor people out of tax, or at least, giving them more breathing space before their incomes are eaten into by the revenue. However, it’s actually highly regressive: because raising the threshold on the lowest band of income tax affects everyone paying tax, the vast bulk of the benefit accrues to the wealthy majority.

A large chunk of government revenue would be surrendered, with only a small portion going to saving a section of the genuinely needy a few quid per week; the rest goes to the middle classes.

This is an extremely inefficient distribution of the benefits of a tax cut, even leaving aside what would actually happen to that revenue were the government to spend it instead (i.e. on services benefiting working class communities, or schemes to aid the unemployed in reskilling or getting back into work).

I’m not against giving the worse off a break on taxation – I wouldn’t be in the Labour Party if I was, would I? – but there’s better ways to do it. Oxfam have also called for more tax credits: leaving the lower threshold on income tax where it is, but raising higher levels as they call for, will produce extra revenue which can be pumped directly into the hands of FREDs without any of the middle classes getting their hands on the lucre.