Taxing bads
"What's the Big Idea?" people often ask politicians. Well, today sees the launch of one very Big Idea - we can have income tax cuts if we pay more in green taxes on driving and flying.
This morning the Lib Dems published plans which they claim can take the basic rate of income tax to its lowest level since 1916. They are not alone in this thinking though. The Tories promised tax break for marriage would, they say, be paid for by higher green taxes. Oddly, you might think, Gordon Brown as chancellor allowed the amount green taxes raise to go down as a share of tax income although he did hike Air Passenger Duty recently to pay for his other plans.
In one sense there is nothing new in this. Ever since the "window tax" and, no doubt, even before then politicians have searched for "painless" ways to tax us or at least ways we won't notice or may not squeal about. Taxing the bads to pay for tax cuts on the good is a snappy slogan for the opposition parties. The test will come when people consider how much more they'll be paying to get to work and go on their hols.
Comments
The big idea is the small idea, that is small Government.
If you accept the twin premises that Government screws up a lot of what it touches and that the people themselves usually know best how to spend their own money, then it is clear that that is the 'big idea'.
Quite straightforward really, Government has become a cancer that riddles our lives.
Who is going to apply the chemotheraphy?
Using so-called 'green taxes' to raise revenue is a huge con. Either people stop driving and flying, in which case little revenue is raised, or else they carry on as before in which case the tax has no benefit on the environemnt whatsoever. In fact, putting taxes on environmentally damaging behaviour gives the the Treasury a perverse incentive to make sure that people continue with those behaviours.
Whatever else it seems utterly indicative of current dogma that the only way to change society is to dangle money in front of everyone's noses.
Andrew Marr was right in his recent series: Thatcher won the ideological war utterly because it seems that this shallow, rather atavistic level of thinking is now the only one under which political discourse can take place. And, right now there seems no way back from the abyss.
Lib Dem's can say the sky is blue though I would still need to check. There is no way on earth Mr Campbell can really address problems by fiddling the economy, a stagnant solution from a stagnant party.
I am amused by the idea that there are 'bad' taxes, thus implying that there are also 'good' taxes. I can't think of a 'good' tax, can anybody else?
Nick, you say "The test will come when people consider how much more they'll be paying to get to work and go on their hols."...
I don't think it will, in order for that to actually be a test someone would actually have to oppose it, to provide a "cheaper" alternative. By targetting easy environmental targets like car and air travel (again ::groan::) the parties get to try and take the moral high ground; anyone who tried to oppose such a policy would be portrayed as being of dubious morals and only interested in "cheap" votes.
As long as there are both carrots and sticks it will be a vote winner, or at least vote neutral... it'll only be if there's only a stick that there'll be problems.
Hi Nick,
Many times I wondered why Political Journalists end their correspondence or analyses by firing a last question. In this so called (Grab the media before your opponents) latest attitude by opposition parties in the UK, I am asking more and more questions then actually getting any decent answers to whatever these parties suggest.
The Conservatives are suggesting anything under the sun, that may give them even the slightest leverage to say that they are on their way to convincing people to trust them. One minute they used to accuse the Blair Govt. that the nanny state is now too big and the next they give blank cheques to couples to get married, (NOT STAY TOGETHER, BUT MARRIED)! No matter what the Conservatives say, marriage IS a moral issue.
The Lib. Dems. (God help them), not only are they trying to come up with something new, but from a party that advocated MORE, and MORE TAX to pay for the nanny state services, they are now being hit by a magic wand and become a party of less tax! Now, I have my doubts as to whether Menzies has turned into a HOODINI at the late years of his life, but their sums (as always) do not add up at all.
One of Men's natural misfortunes (or fortunes) on this earth is, greed. Is it not the case that if one has more money in one's pocket one would spend that amount on higher green taxes like holidays, cars, heating in the homes, entertainment, etc, etc. Aaaah, but as always the Lib. Dems. never say HOW MUCH MORE one would have to pay for energy, whether it is gas, petrol, diesel, fuel oil, coal the lot!
So my question to Menzies (who will be booted out by this time next year) is this! What happened to all your plans about INCREASE IN PUBLIC SPENDING, while at the same time you would loose something like 12 billion a year because of lower basic rate of tax? Have you got the figures?
No, of course you don't. Is it not the case Nick, that the Lib.Dems. last proposals are their hope of coming second in the next election, instead of third?
Unless of course they go back to saying that they will put tax up by 1p just before the election. Ha ha ha! THEY HAVE NOTHING TO LOOSE Nick!
Now that is just biased cobblers Nick.
The Tories slashed tax and Greedy Gordon as a true red blooded socialist has dramatically increased tax. True, the work shy and the Socialists didn't like the Tory approach to letting people earn it themselves and spend it themselves.
But maybe you spending what you earn, after saving for a rainy day and helping some deserving people with real needs, is better than the current borrow and spend policies of both the government and my fellow citizens.
But don't be party political Nick and try to support Gordon. Tax could be cut really easily. What would be difficult would be telling the spongers (including the EU) to go and EARN their own money through hard work. That takes guts and graft, not spin and swindle.
As I understand it, the new Lib Dem proposal includes scrapping higher rate tax relief on pension contributions. Put simply this sounds fair, but in fact it means people will be taxed twice on the same money. The idea behind tax relief is that you pay tax on the way out (i.e. when you claim your pension) not on the way in (i.e. when you make the contributions). As opposed to, say, an ISA where it's the other way around.
If this proposal were enacted it would be another blow to pension provision, with money likely to flow into property and ISAs rather then pensions which are ring fenced until retirement. As if pensions needed another hit!
At least we don't need to worry about Lib Dem policy ever being enacted. The only way that could happen would be a hung parliament. Oh, erm, scrap that!
If I have understood correctly what is intended, it is not a very big idea: it is a very big "con"
Raise the same national revenue by (a) increasing road and air taxes (b) reducing income tax by the increase in (a). Most people would pay the same in total.
It would seem that the only people to see any benefit would be those, with average incomes, who never travel by motor vehicle or aeroplane.
People paying little or no income tax would probably be worse off because the increased cost of transport would be reflected in the cost of food and other goods.
Then the more we succeeded in reducing road and air travel the more we would have to increase road and air taxes to keep the national revenue constant.
In my opinion, this policy announcement is the most extraordinary mishmash of reasonable logic, faddery and one-way thinking. How can it all be emanating form the same source?
Reasonable logic
Replacing council tax with local income tax.
Returning business rates to local control.
Removing "loopholes" exploited by the very rich.
Bringing UK income/profits/capital gains within the scope of UK tax notwithstanding the residence of the recipient.
Faddery
All "Green" taxes before there is proper evidence the becoming Green is a social imperative rather than a hysterical reaction to a hyped-up unscientific scare-story.
Changing the thresholds for Stamp Duty and Inheritance Tax, both of which owe their existence more to ease of collection than to any moral or social benefit.
"Simplifying" the Tax code, unless this can be done without compromising the plugging of loopholes. Much of the complication of the present system is to do just this.
One-way thinking
Refusing to address the fact that ease of collection is NO reason to levy taxes on specific sources. For example, the level of taxes on alcohol, tobacco, road fuel, property transfer (Stamp Duty and Inheritance Tax), amonst others, are not calculated by reference to social merit, but by historically being easy areas to collect from. This is a nonsense.
Starting from the idea of how best to raise the 40+% of GDP that we, apparently, need to fund the State's activities. Instead of starting form the idea of what is the absolute minimum that we need to raise in order to fund those activities that it's unreasonable to expect to be run outside State control. Why have we got NO politicians whose philosophy is to minimise the amount of human activity determined by the State.
Another day, another tax or taxes. People are going under because they are struggling to survive. They cannot afford to pay debts, bills and the taxes we already have and the do-gooders want us to pay even more taxes. The whole idea is nonsensical. I guess this 'health' idea happens because the European Union wants to charge VAT on food, clothes and other essential items and they are using the 'health' argument to introduce VAT through the back door. All in all it is a political shambles.
Green taxes - global warming.
I just want to wake up from this nonsense & hope the politicians will too - can't they think of something else to brainwash us about and rifle our money boxes for? How about:
- Too many people in Britain is distorting the earth's axis. We need to tax everyone as a punishment.
- Window tax - No, already had that one.
- Poll Tax - Already tried that.
- Digital TV tax - nice one after we have been forced to move to digital.
Plenty more I am sure ....
When someone like myself feels they have been let down by sucessive goverments, starting with Thatcher and my education, it is difficult not to want as much of ones wages as possible. Gordon Brown has scrapped the lowest tax bracket for me so i am now paying more tax and not getting alot back. I cant afford to buy a house so live back with my parents. Giving 20 quid extra a week is not going to make me go propose straight away to the woman i love but surley it is a step in the right direction for low earners like myself who struggle to better themselves.
The Liberal Democrats idea sounds clever and appealing but it's deluded. It just creates another mess that will have to be fiddled with down the line, and does nothing to address the issue of respect for the purpose of tax and responsibility for incomes. A flat tax system, incomes policy, and better regulation seem more useful.
The issue of tax, incomes, and regulation is a solved problem. What really, really does annoy me is the clutter and insensitivity of the present system, and the constant meddling and grandstanding by politicians who spend too much time with their head in the clouds and not paying enough attention to the broader context.
I can't take this policy or the politicians behind it seriously. It's all sunshine and glad handing but nothing of real substance. They just want your attention and votes, and are hoping the rosy glow suckers people. It's been a very rewarding strategy for them but a little patient reflection cuts through it like a knife through butter.
Heh. Gordon's going to eat them alive. Scream, baby. Scream.
These days, I think a radical new policy on taxation is a neat way of saying you've run out of ideas.
I also wonder what the difference between a 'green' tax and a 'stealth' tax is. Probably just a matter of perspective.
Personally, I think that green taxes are a good idea, but it is difficult not to make them regressive. Although I appreciate the effect it would have had on lower incomes, I still wonder if breaking the fuel tax escalator was a mistake. The few holding the many to ransom...
Can't our politicians just leave us alone and let us get on with our lives?
Let us take responsibility for our own actions, whether that is eating fatty food, drinking too much or burning up fossil fuels.
This country gets more nannyish every day and even the Tories are at it.
It was Dennis Healey I think who said he "Would tax the rich until the pips sqeak".
Gordon Brown will now have the distinction of having "Taxed the poor until the Pips squeak"
Gordon Brown should apologise for the damage he has done to the economy, resign, call an election, lose and then go to some small dark place and never come out.
My big problem with this proposal is the Lib-Dem definition of "very rich". Two experienced graduates at more than £34,000 each get clobbered under this rule. To be able to move up the housing ladder as far as a family size house in Northwest London, you have to be at least "very rich" and take out at least 5 times your combined salary as debt. Sorry, but that is not how I define being "very rich". A well intended idea, perhaps, but the system needs to let people earn enough to house themselves!
Unfortunately half a strategy is not better than none. A financial strategy to encourage change is no use to anyone if there isn't a credible alternative to change to.
Just assume for a moment that 30% of us could actually be persuaded to stop using our cars for going to work where is the doubling of the train and bus network going to come from to compensate so we can still get to work? Not only that but as we have seen this very week rail prices are being predicted to increase well above inflation for the next decade pricing us off rail too. Just how much will petrol taxes have to rise to outpace the rail increases to give the financial incentive to change?
Then of course we have a few million extra homes announced this week too. Where was the transport and infrastructure plan to show how the people in these new homes will be able to manage without cars for much of the time?
Of course there isn't one. This year marks the 40th anniversary of the first proposal for Crossrail from Shenfield to Maidenhead. In the meantime the population along its route has grown by a million or more, Heathrow traffic has quadrupled and will double again in the next 15 years and heaven knows how many millions have been spent on talking and "planning" but construction start is yet in sight.
The current policy of all parties seems to be to price us off of everything but do nothing about solving capacity issues. The contents of my dustbin are more strategically aligned than any party's green thinking but at least my garbage is worth recycling.
A tax on flying? It means that extensive travel becomes the preserve of the rich, whilst the poor or modest income bands are confined to their own country. A very Lib Dem idea.
The Lib Dems are confused on policy, but are very much a middle class party, they are social liberals but with little insight into life outside the leafy suburbs in which they all live.
Travel broadens the mind they say. However with every eastern european capital city swamped with UK lager louts on stag and hen nights that is debatable.
I think we could do with less of these booze flights, but travel should not be beyond the reach of those who are not wealth either.
The last election was the Lib/Dems last chance (the war, student fees etc)they blew it and are now en-route to the wilderness. They can propose free beer and fags but they are finished and nobody cares what they say or think.
Sad really.
Apparently this proposal by the Lib Dems is tax neutral, so it should not affect spending plans - that is to be seen however.
But it begs an interesting thought: are the political parties the best people to propose tax laws?
If the best solution is always filling a pot so high in the most efficient way possible, would it not be better to have a tax commission made up of mathematicians who have the sole mandate to crunch he numbers without political bias?
On a separate note, I have just received an email from The 2020 Vision (Charles Clarke MP and Alan Milburn MP - informing me that their site is effectively shutting up shop.
I have posted on it from time to time and it has been populated by a generally nice bunch of people. However, I think the total number of posters has never been more than about 20 of us.
After it's initial rush of hits (around 20,000 with is very small in reality) it seems as if the interest just petered off.
I am unsure whether that says more about the website design or Clarke and Milburn ...
I neither Drive or Fly, so the lib-dem idea works for me!
Less keen on the Tories idea however as
a) I am not married &
b) we should be discouraging the production of children not increasing the benefits for having them! (i.e. there are too many people in the world and in this country in particular, we don't need more!).
my 2p.