Monday, 7 January 2013

A Word about Taxes


Cynics can  go to the declaration of interest at the end.

A Word about Taxes

So, here is a question.

Suppose, just suppose, you were the Chancellor of the Exchequer or (since for once on this blog this is a constitutionally neutral question) the Finance Minister of an Independent Scotland. And suppose, just suppose, that you proposed to collect an additional £1752 per annum taxation from someone earning £60,000 per annum.

Who would you think could most readily meet that cost? The person without dependents or he or she with two children to support?

I defy anyone, from the far right of UKIP  to the far left of the SSP not to respond that (faced with that narrow question)  those without dependants would surely be more readily able to come up with the dosh.

And, for the avoidance of any doubt that group in between encompasses the leadership of all of our major political parties.

Yet the opposite outcome is precisely what has happened with the Child Benefit changes and while my own Party has been loud in our denunciation of these we have also been conspicuously reticent in making any promise to reverse them.

This is not about the taxation of the poor, for, notwithstanding some of the protestations in the Tory press, nobody earning £60,000 per annum is "poor"; it is all about fair taxation.

And it exposes a hole in our political discourse.

What would have been "fair" if one was minded to raise taxes on those earning more than £60,000 per annum (as I certainly am) would have been to increase their marginal tax rates. But any increase in blunt percentage terms of any level of direct taxation is deemed to be political anathema. So, instead, one group of reasonably well off people have been singled out for special treatment; those with children.

And thus we end up with the events of today.

In Margaret Thatcher's first Budget the basic rate of Income Tax was cut from 33% to 30%. Now, it would be easy for me to range off at this point into an attack on how her administration then successively cut that rate until by 1997, albeit under John Major, it had fallen to 23%. To blame it all on the "evil Tories". Except that in 1997, my own Party was elected on a specific pledge that this rate would not rise, and indeed then proceeded to cut it further to the 20% the Tories re-inherited in 2010.

However, my real message is not that it is wrong taxes have fallen, for in reality, under Thatcher/Major, no more than under Blair/Brown, they have not fallen. It is rather that,  for reasons of political  opportunism, we (all of us, for all of my readers will have some affiliation) have steadily moved away from transparent and transparently fair taxation (too high or too low is a legitimate debate) to essentially random taxation based on what the politicians believe they can get away with.

Now, to some degree, I understand the Realpolitik here. I remember 1992. And I also remember, on the other side, the shameful doing my Party handed out to the SNP in 1999 over their infamous "Penny for Scotland".

But at some point, surely, somebody has to call a halt to this madness. It cannot be the case that the public discourse proceeds on the basis that direct taxation, except on the very wealthiest (the Tories might say not even then) can only move in a steadily downward direction. And that additional or replacement revenue can only be raised by disguising it as something else (this year Child Benefit Cuts; last year removing the index linking of Tax credits; the year before.............tuition fees).

Surely at some point someone has to make the argument that a contribution to the civilised society must be returned to being on the basis of each contributing "according to their abilities" rather than by reason of accidental circumstance? Whether that accidental circumstance be by virtue of participating in higher education, or by being in need of long term care or indeed while having dependent children.

I'd like to end with a rousing call to arms but I struggle to do so for politics is politics but nothing, nothing, would cheer me up more than the Eds announcing that we'd restore universal Child Benefit but that the price would be that all those higher rate taxpayers paying 40% would now be paying 42%. They might even make a profit.


*Declaration of Interest. I do pay some 40% tax and I don't have any weans.

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