If the likes of Philip Green's family desire the rights that come with UK citizenship, they should be required to make fair tax contributions. Photo: Getty
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Leader: Labour should make itself the party of tax cuts and bold tax reform

If the party was radical rather than obsessed with process and presentation, it would be setting out proposals to overhaul our tax system.

Our tax system is just about the most unfair and inefficient imaginable. The Institute for Fiscal Studies has said that the UK has “an opaque jumble of different effective rates [of tax] as a result of tapered allowances and a separate National Insurance system”. The system urgently needs reform but which politician has the stamina and originality of thought to achieve it?

However, some change might be coming. It has been reported that George Osborne is considering merging National Insurance (NI) and income tax into a single tax. Such a move would, it has been suggested, have advantages for a Conservative chancellor. It would further weaken the contributory principle that was the foundation of the welfare state but that has long since been eroded; it would also raise the headline rate of taxation, and thus increase a desire for tax cuts because people would have a clearer sense of how much of their income they were paying to the state.

Yet, in spite of these objections, we would support the merging of NI and income tax in the interests of greater transparency but also because we believe low- and middle-income earners in Britain already pay too much tax, especially when fuel duty, VAT, council tax and stagnant real wages are taken into account. Ed Miliband complains about a “cost-of-living crisis”. Perhaps, in response, he should consider cutting the average earner’s tax burden.

Our income-tax system is opaque. Governments delight in obfuscation and complication. At present, the marginal income-tax rate on a single earner on the median salary of £26,500 is officially 20 per cent; in fact, when you take NI into account, it is 32 per cent. The coalition government likes to boast that, by raising the personal tax allowance to £10,000, it has taken low earners out of income tax altogether. It has done nothing of the kind.

If the Labour Party was radical rather than obsessed with process and presentation, and if it wanted to win a popular mandate rather than merely limp over the line in coalition with whatever might be left of the Liberal Democrats at Westminster after the general election in 2015, it would be setting out proposals to overhaul our tax system.

Indeed, it would aspire to become a party of tax cuts for low- and middle-income earners and seek to switch some of the burden of taxation from income and consumption to static assets such as property and land, as well as environmental bads. It would reform inheritance tax so that the rich become less able to avoid it. It would introduce land value taxes, at least for business and agricultural land but also potentially for property. The rebanding of council tax, which is based on valuations more than 20 years old, would also be an essential part of any wide-ranging programme of reform.

Such policies would ensure that those who have benefited most from the house-price inflation of the past decade or so were making a fair contribution to the national burden: property, unlike capital, cannot be hidden in offshore accounts.

Creating the political space for such a course of action, however, would require the Labour Party to make a more persuasive case for progressive taxation. For too long, paying your fair share in taxes has been framed as an unfortunate burden, rather than part of what it means to live as a responsible citizen in a free and open society.

A first, bold step towards achieving a more equitable and transparent tax system would be to change the rules concerning those ultra-rich British citizens who reside abroad for tax reasons. If those such as the family of Philip Green – the billionaire chief executive of the Arcadia retail group (and adviser on public spending to the Conservative Party) whose wife is resident in Monaco – desire the rights and security that come with British citizenship, they should be required to make a fair contribution in taxation to the British state.

If an American wishes to retain US citizenship, he is liable for federal taxes no matter where he lives in the world. It is a convention that dates back to 1861 and the American civil war. Surely it is time for all those Britons who hide their money tax-free in overseas accounts or in tax havens to pay up, as Americans are obliged to do – or renounce the right to be British. Here is one policy that, if it were adopted by the Labour Party, would have genuine popular appeal. What’s there not to like about it? 

This article first appeared in the 02 July 2014 issue of the New Statesman, After God Again

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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