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
Show Hide image

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

YouTube screengrab
Show Hide image

“Trembling, shaking / Oh, my heart is aching”: the EU out campaign song will give you chills

But not in a good way.

You know the story. Some old guys with vague dreams of empire want Britain to leave the European Union. They’ve been kicking up such a big fuss over the past few years that the government is letting the public decide.

And what is it that sways a largely politically indifferent electorate? Strikes hope in their hearts for a mildly less bureaucratic yet dangerously human rights-free future? An anthem, of course!

Originally by Carly You’re so Vain Simon, this is the song the Leave.EU campaign (Nigel Farage’s chosen group) has chosen. It is performed by the singer Antonia Suñer, for whom freedom from the technofederalists couldn’t come any suñer.

Here are the lyrics, of which your mole has done a close reading. But essentially it’s just nature imagery with fascist undertones and some heartburn.

"Let the river run

"Let all the dreamers

"Wake the nation.

"Come, the new Jerusalem."

Don’t use a river metaphor in anything political, unless you actively want to evoke Enoch Powell. Also, Jerusalem? That’s a bit... strong, isn’t it? Heavy connotations of being a little bit too Englandy.

"Silver cities rise,

"The morning lights,

"The streets that meet them,

"And sirens call them on

"With a song."

Sirens and streets. Doesn’t sound like a wholly un-authoritarian view of the UK’s EU-free future to me.

"It’s asking for the taking,

"Trembling, shaking,

"Oh, my heart is aching."

A reference to the elderly nature of many of the UK’s eurosceptics, perhaps?

"We’re coming to the edge,

"Running on the water,

"Coming through the fog,

"Your sons and daughters."

I feel like this is something to do with the hosepipe ban.

"We the great and small,

"Stand on a star,

"And blaze a trail of desire,

"Through the dark’ning dawn."

Everyone will have to speak this kind of English in the new Jerusalem, m'lady, oft with shorten’d words which will leave you feeling cringéd.

"It’s asking for the taking.

"Come run with me now,

"The sky is the colour of blue,

"You’ve never even seen,

"In the eyes of your lover."

I think this means: no one has ever loved anyone with the same colour eyes as the EU flag.

I'm a mole, innit.