Tuesday, June 03, 2008

 

Common Sense on Taxation


Polly Toynbee is often attacked by rightwing people and I confess I too have occasionally found her a bit too much to take, but her articles must be among the best researched in the quality press. Today she addresses taxation; and manages to deflate a few myths about who pays it, about Labour relentlessly pushing it up and Labnour's recent record of handling opposition to specific aspects of it.

Firstly, the number of high earners in the UK is really not that great. 90 per cent pay only the basic rate of income tax and earn less than £22,300. The richest 10% live off the real fat of the land.

Secondly a popular notion is that Gordon Brown, through stealth taxes and other probably underhand means, has racked up taxation to record levels. Not so. As a percentage of earnings, the 'tax take' for 2007-8 is 36.8%; now that's quite a lot but is less than the Conservatives 1996-7 and less than every single year under the tax-cutting Margaret Thatcher.

Thirdly, as a percentage of GDP, tax was 50% in 1976, 49% in 1983 and 44% in 1993. Currently it is around 41-2%.

Polly also emphasises that New Labour has tried to square the impossible circle of US levels of taxation and Swedish levels of public services. She concludes by pointing out that taxes designed to change behaviour will always be unfair and resisted: for example on tobacco, which hits the poorest most keenly; or petrol which hits hauliers and cab drivers. Finally, she suggests that Labour's current practice of caving in to criticisms- 10p tax, 2p fuel tax, inheritance tax, non-doms and who knows what else- is not the way to regain respect from voters who now seem determined to think the worst of them anyway.

Comments:
Hi Skipper,

By moving benefits to tax credits Brown did two things in one go, reduced expenditure & also reduced taxation.
The benefits budget is very high and much of the taxation reduction is by this manouvre. With Brown it's all smoke and mirrors. You can't give a fair comparison of taxation over previous governments because of his duplicitous antics.
The 10p issue was not so much a tax issue as one of morality - he failed and absolutely deserves the criticism.
He can't go a day to soon.
 
The issue Bill is the complexity of Labour's tax regime and the belief that it's better for the state to take money in, assess your need and then if 'they' think you're worthy hand it back in the form of credits.

As Polly points out c.25% of the take take is then handed back out in credits & benefits - benefits are different obviously but credits are payable to people who earn up to £50k pa so in my view a wiser more prudent government would find a way to let them keep it in the first place (i.e. lower tax rates)

That's not really a right-wing rally cry, it's common sense surely?
 
Mad Pol she say:
1) selfish right-wing whingers should stop whinging about tax. Tax is lovely since it funds government; but
2) Labour have taxed us much less than the Tories, what lovely tax-cutters they are, so again stop whinging; but
3) Good public services need higher taxes so taxes should be put up.

I don't know whether to agree with her or not, it's a bit schozophrenic.
 
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