Monday, 27 January 2014

David Cameron hates tax but the public are getting the fairness message.

David Cameron used a speech to the Federation of Small Businesses today to say that he doesn’t like taxes, I mean he really doesn’t like them; hates them in fact.

What he said was ‘I’m a tax cutting Tory. Frankly I don’t really like any taxes.’ Who’d have thought it eh? People who will get the most awful shock if they ever find out what bears get up to in the woods I’d imagine.

Here’s the kicker though, as Citizen Dave puts it ‘You can only keep taxes down if you’re prepared to take difficult decisions about spending,’ so there you have it, if you don’t want to be squeezed until the pips squeak a lot of poor people who don’t vote Tory will have to have the services they depend on cut to the bone, and they say politicians are professional cynics who play to the electorate’s most base instincts.

He also promised that his would be ‘the first government in modern history that at the end of its term has less regulations in place than at the beginning.’ This, he assured his audience would let small businesses get on with ‘what you do best enterprising, innovating and most importantly creating jobs.’

Personally I doubt Mr. Cameron cares a fig for small businesses, if he did he’d do a lot more to stop a handful of large companies hovering up government contracts and take a tougher line with corporate tax avoiders. The purpose of the speech was to respond to the announcement made by shadow Chancellor Ed Balls that were Labour to win the next election they would reinstate the 50p tax rate for high earners.

Earlier he had described the policy as an ‘anti-business, anti-enterprise, anti-growth measure, politically convenient but very, very bad for the economy.’ He didn’t go so far as to call Ed Balls the anti-chancellor, but the message is if given control of the economy it would only be a matter of time before the sun fell from the sky and life as we know it came to an end.

Defending the proposal on the BBC’s Andrew Marr show yesterday Ed Balls said reinstating the 50p tax rate for high earners was ‘a fair way to get the deficit down. The phrase is we’re all in it together that is part of the policy.’ He denied the policy marked a return to 1980’s style old Labour and was instead a response to the ‘failure’ of George Osborne’s austerity policies.

Criticism of raising taxes for the highest earners came from a number of other business figures, Digby the Lord (gawd almighty) Jones, briefly a trade minister in Gordon Brown’s government described is was ‘lousy economics’ based on a desire to ‘kick’ anything that creates wealth. Xavier Rolet, Chief Executive of the London Stock Exchange said it would discourage businesses from investing in the UK.

The public though seem more supportive, back in 2012 when the Chancellor announced the top rate of tax would be cut from 50 to 45 pence 55% of voters wanted to keep the higher rate; a snap poll by Survation for the BBC showed 60% would like it brought back.

On one level the argument over the 50 p tax rate for high earners is a storm in a teacup, the sum raised is paltry in public finance terms, anyway any plutocrat deserving of the name will in all probability have a good enough tax lawyer on hand to sidestep the whole thing.

Anyway it probably won’t return because Labour still don’t look capable of winning the next election outright. If, as looks ever more likely, 2015 produces another coalition there is a good chance of David Cameron managing to string one together from a mixture of UKIP newbies dazed by their good fortune and the battered remains of the Liberal Democrats.

On another level though it is hugely informative since it suggests a new and possibly more positive direction for our political culture.

For a start it shows that David Cameron is more than a little rattled, not so much by anything the none dynamic duo of Milliband and Balls have done so much as his inability to convince the public that his government really do share their pain. Despite loud protestations from George Osborne that the recession is coming to an end and blue skies are around the corner most people feel no better off than they were a year ago.

More importantly public support for taxing high earners more marks a significant sea change in attitudes towards fairness. Suddenly working out a fairer way to share wealth is no longer a lefty project, it’s the common currency of conversations in pubs and at bus stops across the land.

In response all David Cameron can do is fall back on tired lines about keeping taxes low and cutting red tape that even a tame audience must have heard ring hollow dozens of times before. He looks and sounds like the leader of a government that has run out of ideas before the end of its first term in office.

Promising to tax high earners more isn’t a magic bullet and there is a strong possibility Labour might even do some nifty footwork and move away from the whole idea when it comes to writing their manifesto. However, now the fairness genie is out of its bottle it will be impossible to put it back in again.

If the Labour Party want to be relevant again and to stand a real chance of winning power outright in 2020 they need to find a way to make a vaguely well intentioned aspiration into a workable policy; then hunker down behind it and get ready to take flak from vested interests with everything to lose. Change is always possible; but bringing it about is never easy.

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