Social democracy, far from being dead, suddenly looks to be alive and kicking. The collapse of eastern European communism may prove, in the end, to have had on the western left an effect similar to the expiry of a demented elderly relative on a family. There is no longer a need to apologise for embarrassing behaviour, or to explain patiently that the illness is not genetically determined, or to insist that the relative is, in any case, a distant one. It could be argued that Margaret Thatcher had an even more liberating effect on the left because she decisively took extensions of state ownership off the political agenda, booted the trade unions out of the corridors of power, and ended any cause for friction (over such issues as industrial action and closed shops) between unions and working people. Thus, she removed two great millstones from Labour's neck: the belief that it would nationalise everything, and the belief that it would allow the unions to dictate. The party of statism and trade unionism could then become a party that stood for fair shares, redistribution of wealth and income, and well-funded public services, without carrying other baggage.

New Labour, however, wanted to remove what it saw as a third millstone: tax and spend. It thus raised questions about the extent to which it could be called a party of the left at all. It was one thing to promise that it would not tax punitively, by levying top rates of 90 per cent or more, or that it would not spend recklessly, so jeopardising the economy; it was quite another to present itself as a tax-cutting party. Now, instead, Tony Blair has dared to present Labour as the party firmly committed to taxation as a means of funding public services and welfare. On this platform, unthinkable in 1997, Labour will enter the next general election.

But if Mr Blair wishes convincingly to reinvent himself as a social democrat (and we must acknowledge that he possibly wishes to do no such thing), he must go further and ask: who should pay tax and how? The failure to confront these questions may explain the apparent public confusion on taxation. The British Social Attitudes report, published last Tuesday, found that fewer than 5 per cent of the electorate agree that the government should "reduce taxation and spend less on health, education and social benefits", while nearly 60 per cent want increased taxation for these purposes. Likewise, the Fabian Society's Commission on Taxation and Citizenship, which published the following day, reported that 40 per cent favoured a 1p income tax rise even for unspecified public spending and as many as 80 per cent for NHS spending. Yet the Fabians also found that, asked if taxes are too high, 58 per cent think they are, while only 7 per cent think they are too low.

The cynical answer is that people are stupid. But there are more sophisticated answers. One, favoured by the Fabian commission, is that people want their taxes to go directly to public services they value, somehow bypassing untrustworthy politicians. The commission therefore suggests an annual report to every household on how taxes are spent, and consideration of hypothecated (earmarked) taxes for services such as health and education. A second answer is that people feel the tax system is unfair: as the commission points out, though public spending redistributes from rich to poor, the present tax system is itself regressive, because the less well-off pay a higher proportion of income in tax than the more affluent. Surveys provide support for this view, because VAT and excise duty (often assumed by politicians to be invisible) are more complained about than income tax, even among the middle classes.

In other words, if Labour leaders were bold enough to tap it, there could be a natural majority for a social democratic "tax and spend" regime that would be far more redistributive than anything so far hinted at. For all the talk of scroungers and dependency (which now comes almost as much from Labour as from the Tories), British Social Attitudes found that more than 40 per cent agree that we should "spend more on welfare benefits for the poor even if it leads to higher taxes", while fewer than a third disagree. Equally important, the survey found no significant class differences on this point.

Yes, the voters are muddled and their capacity to say one thing to pollsters and to do something quite different in the polling booth should never be underestimated. But politicians should articulate public aspirations, creating coherence out of confusion, while also convincing the voters that they are accountable. If ever there was a moment for social democracy - this is it.

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