I’m taking off my cynical, iconoclastic libertarian hat and replacing it with my rather dusty and unloved, “get the Lib Dems elected” hat for a minute.
Lib Dems have one killer policy: Set the threshold for Income Tax and National Insurance contributions at £10,000 a year (or roughly minimum wage). It’s so good Labour activists want their party to steal it. I wouldn’t be surprised if similar pressure is being put on David Cameron to do the same, although he won’t (tax cuts are for ‘Same Old Tories’ not modern, Compassionate With Your Money Conservatives)
Now, I’ll be honest, I love this policy for a number of reasons. First, it’s a tax cut, which I like. I’m against anything that punishes people for working or being successful, because working and being successful are actually good things that provide jobs and wealth and in doing that improves our health, increases our free time for leisure and personal pursuits and generally improves our quality of life.
It’s also a tax cut that does something about the problems faced by people moving from benefits into work, where, thanks to tax if you’ve got 2 kids you’re actually better off on benefits than a minimum wage job. That is, unless you’re willing to risk the tax credits system. Its painfully obvious that if you don’t take tax off people in the first place, you don’t need a monolithic, incompetent bureaucracy to then give it back again, wasting money for the sheer hell of it. Redistributing wealth from one group of poor people (those without kids) to another group of poor people is a whole new level of messed up politics, and one that people seem to blindly support.
I also love this policy for the message it sends: Tax Hurts.
Admitting that tax hurts, that tax is a bad thing is a major step forward. We saw a bit of it with the campaign against Council Tax. This was a big one, for me – I realised that increases in Council Tax are a consumptive plague on those on minimum wage, on pensioners and pretty much everyone. There’s nothing a council can do with extra money that would compensate for the damage done to someone on a fixed income having to find another £100 a year.
Income tax is the same. We’re making people at the very bottom of the employment ladder pay £700 a year in income tax. £700!!! That’s not small beans. That’s the difference between being able to get a car through the MOT so staying mobile, or being able to add more fruit to your kids diet, or any of the other things that people might want to do with an extra £58 a month.
One of my little soundbites I used at the Conference was this:
The amount that Labour has increased spending by since 1997 is more than it currently takes in Income Tax. In other words, without the increase in spending, we could be Income Tax Free by this point.
For Lib Dems, this £10k threshold is our best policy. It says that public money should not be wasted, that tax should not be a punishing, economy crippling burden. Good.
The security that this tax money buys for public sector workers makes private sector workers increasingly insecure, increasingly less likely to find work in a rigid, “I’ve got my safe job for life and fat pension, so fuck you” culture. The more Lib Dems can be authentically liberal on the tax issue, the more we stand out as being against those things that keep people poor.
We need more of this. Well, a lot lot more actually… but as far as seeds go, this is a welcome one.
Obnoxio The Clown said...
28 Sep 09 at 12:05 pm
It IS a great policy and a great starting point. It’s just a pity that it’s confounded by Saint Vince’s tax the houseowner policy and many other LibDem stupidities.
I’m afraid one great policy does not make for a great reason to elect the LibDems.
Stu said...
28 Sep 09 at 12:05 pm
I thought raising the tax threshold had been Tory policy for a while, even under Cameron. I’m sure they’ve talked at some point about removing lots of people from the tax system entirely.
I could be wrong, though. Perhaps that’s Dan Hannan’s Plan, or something. :-S
Andrew Hickey said...
28 Sep 09 at 12:08 pm
And it’s one where those of us on the ‘left’ of the party can agree with you on the ‘right’, as it’s shifting the tax burden from the poor to the rich. It’s such an obviously good thing that the only reason I can imagine for *not* supporting it would be if you hated poor people and wanted them to suffer…
John said...
28 Sep 09 at 12:13 pm
but obnoxio you wouldn’t vote Lib Dem in a million years
Andrew Hickey said...
28 Sep 09 at 12:23 pm
Also, the ‘mansion tax’ thing is firstly not actually policy, and secondly not a tax on ‘homeowners’ but a tax on *people who own property worth more than a million quid*. You could buy thirty flats or fifteen two-bedroom houses in the area I live in for that. If you have to raise tax from somewhere (and most of us accept you do) then taking it from people who have a lot seems to me a more sensible idea than taking it from people with nothing…
Stu said...
28 Sep 09 at 12:26 pm
Andrew, I imagine the best way to show how much you hated the poor would be to raise the level of tax that the people on low incomes pay, rather than raising the tax threshold so they didn’t pay anything. Perhaps, for instance, you might have have them pay 20% tax in the lowest band, rather than 10%.
But, of course, only the most bloodthirsty, poor-people-hating capitalist pig would contemplate such a thing…
Tim Carpenter (LPUK) said...
28 Sep 09 at 12:29 pm
It is a good start, but still the mindset of first call on earnings is there when you see the language used in taxation and the unfortunate envy politics.
Charlotte Gore said...
28 Sep 09 at 12:29 pm
Yeah I’m moderately in favour of the Mansion tax thing on the condition that it replaces tax on income/profit, etc and the overall tax burden comes down.
Of course, I’d rather we didn’t have to though.
Charlotte Gore said...
28 Sep 09 at 12:31 pm
From my point of view, bigging up the Lib Dems when they do something I approve of is sort of a necessity really. If this policy pays off, it’ll be much easier to win votes at Conference for more and better.
measured said...
28 Sep 09 at 1:40 pm
Being relatively new to politics and all, it does rather surprise me, given somw of the press that the Lib Dems receive, that on reflection (and rather surprisingly!) a number of Lib Dem policies have actually proved correct over the last twenty years. I am amazed none of you wave a banner saying “Didn’t we warn you? etc..etc..etc..”
The £10,000 minimum income threshold before tax and NI are payable again looks like sound thinking. It is not a policy I can fault assuming it is not massively expensive. I think the tax credit regime needs simplifying and this policy may do just that too.
Julian Gall said...
28 Sep 09 at 2:07 pm
Remind me again why you’re a Lib Dem and not a Tory. You like tax cuts and think tax is “a bad thing” but until very recently, the Lib Dems were in favour of tax rises.
Also, setting the threshold to £10,000 is not a policy unless you say what the cost will be and where the money is going to come from. This is why Lib Dem “policies” get a lot of support, except at elections. You can ask people if they’d like improved public services and lower taxes and they’ll always say yes please.
Charlotte Gore said...
28 Sep 09 at 2:11 pm
It’s a Lib Dem policy. I don’t give a flying toss how it’s paid for, it’s just absolutely essential that it happens irrespective.
Julian Gall said...
28 Sep 09 at 2:29 pm
“I don’t give a flying toss how it’s paid for”
Thanks for clarifying why you’re a Lib Dem and not a Tory. Now I understand.
Charlotte Gore said...
28 Sep 09 at 2:37 pm
Hmm, that’s a great line, but complete bullshit. Your critical thinking skills do not amaze, and you’re pretty much on the wrong blog if you’re looking for people who’ll fall for that sort of thing.
I don’t care because I’m not a policy wonk and am perfectly happy to leave the boring details like that to others.
You, I’m sure, are well aware that of all the 3 main political parties the Lib Dems have always had the most detailed and well-costed manifestos (tediously so, double checked by independent 3rd parties, too) and are currently offering the most detail for where spending cuts should come from.
I’m also, in case you hadn’t noticed, a libertarian – which means I disagree with most state spending, and frankly in terms of targets for cuts I’m literally spoilt for choice.
I’m not a Tory because I’m not a conservative. It’s pretty simple.
aron said...
28 Sep 09 at 3:22 pm
“then taking it from people who have a lot seems to me a more sensible idea than taking it from people with nothing…”
Is this not another way of saying “We should tax people as much as they can afford to pay”.
How is the philosophy behind taxing the rich more any different from that statement?
Or is it just envy?
Julian Gall said...
28 Sep 09 at 3:23 pm
Forgive my simplistic jibe but I think there is a serious point here. The current big debate is about “cuts”. It is very easy for a political party to promote a policy that receives widespread support. Who wouldn’t be in favour of the threshold being increased to £10,000? Certainly everyone earning less than that and a lot of libertarians earning more.
However, this could be paid for by increasing income tax on those earning more than £10k, or by introducing new taxes such as a “mansion tax”, or by eliminating waste (maybe, if there’s enough waste to fund it), or by cutting defence budgets or by any other taxes or cuts.
I don’t see how a threshold increase can be evaluated or supported unless we know how it would be funded. No doubt many on the left would be happy to support it if was just a redistribution by increasing taxes elsewhere. Many on the right would support it if the overall tax burden was reduced. If you don’t address this issue, you can just add up the total number of supporters and come up with what looks like a very popular policy. But I don’t think it’s the same policy those two opposing views are supporting.
I accept that no one’s going to come up with detailed costings this distance from an election, and I wouldn’t expect it. But any policy will be supported until people find out the cost is going to be borne by them, either in increased taxes or reduced services.
Charlotte Gore said...
28 Sep 09 at 4:07 pm
Right, you’re saying that you need to know if it’s being paid for by tax increases elsewhere or through cuts?
I agree.
Julian Gall said...
28 Sep 09 at 4:30 pm
I am saying that but more. I’m saying that increasing the threshold and paying for it by cuts is one policy. Increasing the threshold and paying for it by tax increases elsewhere is a completely different policy. Support for one should not be taken as support for the other.
Andrew Hickey said...
28 Sep 09 at 4:33 pm
How about raising the threshold and paying for it partly by cuts (e.g. to the Trident replacement), partly by raises in some other taxes and partly by tightening up various tax loopholes currently in existence, with the combined effect of slightly lowering the overall ‘tax burden’ but also shifting more of that burden onto the richer, as opposed to poorer, members of society?
That’s the *actual* policy, as it exists at the moment, and it’s one that I suspect both Charlotte and I can support…
Charlotte Gore said...
28 Sep 09 at 4:34 pm
Hmm… I actually think you’re going to find it difficult to find anyone who thinks there’s a higher priority than taking people on minimum wage out of tax.
What on earth could you possibly spend the money you’re taking off them on that would compensate for being out of pocket to the tune of £700 a year?
Letters From A Tory said...
28 Sep 09 at 4:34 pm
Charlotte, not only do you need more policies like this, you also need the money to pay for them.
Raising the tax threshold to £10,000 will cost around £16 billion, which is not exactly small change.
Charlotte Gore said...
28 Sep 09 at 4:38 pm
It’s small change in a budget of well over £700 billion (and rising).
You don’t need money to pay for tax cuts. You need money to pay for Government spending.
Andrew Hickey said...
28 Sep 09 at 4:40 pm
LFAT – there seem to be various different estimates for the cost of replacing Trident floating around, but even the very lowest of those would more than cover that cut by itself…
Voter said...
28 Sep 09 at 5:15 pm
Not spending money is not a cut.
Cutting services might pay for taking certain people out of income tax
Voter said...
28 Sep 09 at 5:25 pm
In other words, you do need money to pay for tax cuts.
It might be money you have already allocated which you can divert. But it is still money.
Oranjepan said...
28 Sep 09 at 7:08 pm
I see the Conservatives here are following the media agenda being pushed by those with a Conservative bias, no surprise.
“The current big debate is about “cuts”.”
No, it isn’t. Or at least, not only.
It is also about tax levels and distributions and structural reforms. What is obvious is that four-letter words are more accessible to the wider public if it means you can say you are leading on the issues.
Raising the tax threshold can be all these things either separately or all at the same time, depending on how it is done.
It could be done by offsetting the cost against savings elsewhere, such as trident.
It could be done by reallocating, such as by reducing the tax credits system (which would also have the benefit of getting rid of a layer of complicated and wasteful bureaucracy).
It’s possible to argue that it would pay for itself by not placing an artificial barrier in the way of those eager to work – particularly while there is currently 2.5m registered unemployed.
In fact there are so many ways of doing it that it is a superfluous question to ask.
Secondly, if it is a successful policy it may well actually increase the overall proportion of GDP taken as tax by encouraging more people up the taper scale, which would thereby allow further cuts in other areas.
Therefore it is a policy which would create a momentum all of it’s own and lead directly to structural reforms by changing the balance in Treasury income.
It seems obvious to me that the only reason for resisting any of this is to protect vested political interests.
Jack Hughes said...
29 Sep 09 at 10:42 am
Just sack everyone with “outreach” in their job title. And their bosses.
Voter said...
29 Sep 09 at 1:21 pm
You say “it is possible to argue”. Lots of things seem possible to people. That is not a realistic approach.
I would want to see a Huhneian approach.
One of the things I noticed about the recent Lib Dem conference was that Chris Huhne seemed to be advocating an evidence-based approach for crime.
I hope Mr Huhne is able to persuade people to come round to this approach.
Charlotte Gore said...
29 Sep 09 at 1:36 pm
Evidence based approach to policy??? WHAT??
Whatever next?! You’ll be saying that the person who agrees with the baying mob the most isn’t the best person to make policy or something!
Outrageous.
Voter said...
29 Sep 09 at 1:46 pm
Charlotte, do you think that raising the tax threshold will pay for itself? Is there evidence to support such a view?
Charlotte Gore said...
29 Sep 09 at 1:50 pm
Are you talking about the Laffer curve? I think the evidence on that one is inconclusive. I’m not advocating a tax cut because i think it’ll generate more revenue.
Voter said...
29 Sep 09 at 1:57 pm
Not referring to the Laffer curve intentionally.
Rather I was seeing if you and Oranjepan were in agreement
Charlotte Gore said...
29 Sep 09 at 2:03 pm
Oh, yes. Hmmm well I certainly agree that there’s a lot of benefits in this sort of policy. Makes a change actually, I don’t normally agree with Oranjepan.