TAX NEWS - 2010

Scotland Tax

I really should stop reading Hansard. After consulting its report of yesterday's second reading of the Finance Bill I could feel another round of bile and invective welling up. True to form, this time not one Lib Dem MP voted against the manifestly unfair Budget, with its narrow and needlessly punitive focus on spending cuts. Our own Grand Old Duke of York (Andrew George) contributed a meandering speech during the debate that was teeth-gratingly tortuous even by his standards.

It's difficult to be precise. But it seems that the GODoY has reservations about VAT. It may be regressive. But on the other hand it might also be progressive if you look at it squint-eyed through rose-tinted yellow spectacles. Anyway, he's going to support the Finance Bill. Though giving the impression of agonising over it in the manner of some Oxbridge don choosing his dessert course at high dinner.

The general ConLib limp-wristed line on the budget was to ask those opposing it to suggest alternatives. As if this was a clincher. Nonetheless, Labour MPs did seem to find it difficult and in the main avoided giving an answer. Unsurprising, as they were planning a pretty similar dose of cuts-based medicine themselves. Indeed, the GODoY himself levelled this plaintive question at SNP MP Stewart Hosie. Although this time he got a reply – rely less on short-term cuts and more on medium term cuts of things such as Trident. (Wasn't that once Lib Dem policy too before they became Conservatives?)

But all this got me thinking. For once. It's all too easy to give in to a sense of angry outrage induced at the disturbing incompetence of the parliamentary class and their toadying up to the 1 or 2% who really run things. I read back over some recent blogs. Someone entered a comment on a recent one –

I am consistently irritated by this blog. So many negative thoughts.

I assume this was tongue in cheek. Yet unwittingly my friend has a point. Unremitting negativity is an obvious yet ultimately unproductive response. Mind you, I must admit it feels good to vent frustration at the indefensible antics of Lib Dems running around like headless chickens.

But let's be positive for a change. Let's answer the great ConLib challenge. Is there an alternative to unfairness? What might a properly fair budget look like, one where the weasel words 'we're all in it together' actually meant something tangible?

The obvious first question to ask is why some things appear to be beyond debate. For example, why do 80% of the savings have to come from cuts? Why not 80% from taxes and 20% from cuts? And why is the debate on cuts centred on public sector workers' pensions? Why can't it include pulling out of a pointless war in Afghanistan (saving £4bn a year)?

Or, if things are really so bad, why don't we stop spending money on the regional London Olympics regeneration scheme and hand it over to a country that can afford it? What about getting rid of Trident, as the SNP, Plaid and the Greens all suggest? Or cutting all that wasteful expense on a ceremonial royal family and all their associated hangers-on? Here's an opportunity to modernise Britain. Let's grasp it. Only a couple of centuries late.


If we turn to taxation why is no-one discussing

* abolishing the upper limit for NI contributions, ensuring high earners pay the same proportion as everyone else (£9bn)
* making capital gains tax fair by being equivalent to income tax, thus closing this tax loophole for the wealthy (£1bn)
* as banks benefit more from the reduction in corporation tax than they do from the bankers' levy, let's make the windfall tax on bankers' bonuses permanent (£1.5bn)


How about

* putting VAT and fuel duty on aviation (£7bn)
* replacing PFI with conventional public procurement (saving £3bn)
* taking the opportunity to introduce carbon taxes, gradually replacing VAT


Then of course, if things are so awful, why not consider

* doubling or maybe trebling the council tax on second homes
* reducing the 50% tax band to incomes of £100,000+ (£2.3bn)
* a temporary emergency wealth tax (£billions)

And is there now a law against increasing income tax? This is the only real fair tax and is at historically low levels. So what about sticking a penny or two on income tax (each penny raises another £3bn or so).

But none of these things seem to be discussed in the media or in Parliament. Are they off the agenda because 'the markets' (i.e. the rich with the greatest amount of spare cash to invest in 'the markets') wouldn't like them?

While we're at it it's not that difficult to imagine what real political renewal might look like either. If Clegg wasn't such an unimaginative centralist he might consider starting at the bottom rather than the top. So how about introducing PR in local government elections to bring England and Cornwall in line with Scotland? This would have the advantage of getting people used to a PR system before introducing it at a parliamentary level.

It's not that tricky to imagine a fair budget. Or real political reform if only we put our minds to it. Odd how parliamentarians and the three corporate parties find it so difficult.