Can flat tax be made fair?

June 10, 2010 — simonashall

I’m increasingly interested in the concept of a flat tax rate for the UK economy. Under such a tax regime – which would save a great deal of time and money in the collection – the personal allowance threshold would be raised and then a single rate, regardless of income, would be paid on all earnings above that figure.

Critics of the idea call it regressive because as a proportion of income, those on lower incomes pay more – really? With a 25% flat rate and a £10,000 threshold, someone earning £25,000 pays £3,750 tax a year and someone on £100,000 pays £22,500. I have to say that that doesn’t sound hugely unfair to me – the lower earner is paying 15% of their income and the higher earner 22.5%. Is there something I’m not understanding here? I think the real reasons that critics oppose it is because it isn’t progressive and they like the idea of punishing higher earners.

There are concerns that VAT also hits the less well-off – I agree that it does but that’s nothing to do with a flat tax rate as far as I can see. In fact, if the government were to build VAT and council tax into the flat rate and tax at 37.5% while abolishing VAT and local authority charges altogether, surely that would be even fairer to those on low incomes? Whether it would bring in enough money is another matter – but that addresses the other point about flat tax.

I’ve argued before that the 50% tax rate is morally justifiable but practically pointless because of the ease of evasion. One of the primary advantages that I can see of a flat rate is to get the wealthy engaged with the tax system and paying up. Needless to say, any move to a more encouraging tax outlook for entrepreneurs and wealth-creators would need to be accompanied by a total clampdown on loopholes – something that Labour seemed to shy away from.

Anyway, I’m still looking at it.

Posted in Social Justice, Tax. Tags: , . No Comments »

Reality a-tax

May 27, 2010 — simonashall

The Daily Mail is leading the charge for the right wing of the Conservative Party and David Davis suggesting that people with second homes, shares, jewellery and other assets should not face any increase in Capital Gains Tax from 18% to 40% in order to help people on lower incomes (below £10,000) stay out of income tax altogether. There is plenty of talk of “betrayal” and “revolt” among the 1922 hopefuls and a general feeling that a Conservative government doesn’t do this sort of thing.

Firstly, let’s remember that the reason we are in government at all is because we’ve been able to come to an agreement with the Lib Dems. Sure, a Conservative government with a outright majority would probably have steered clear of CGT altogether but we were 18 seats short of where we wanted to be and the result is compromise rather than full implementation of Conservative principles. It’s a little uncomfortable in places but the PM has said that stable government was necessary in this time of national strife and compromise is part of that.

Furthermore, David Davis says that he wants to protect the ”hard-working, responsible, self-reliant middle and working classes”. I’m not sure how many “ordinary” people he feels deal in more than £10,000 of capital gains each year but I suspect the answer is “not many”. You also won’t find in any of the major papers the fact that the current 18% rate was only set by Labour in 1998 and previously had been much higher under the Conservative government during the 80s and 90s.

The fact is that people who have these kinds of assets to make money on need to pay their fair share in helping reduce the deficit – that may be fair to those whose trading helped bring the problems about and unfair on prudent savers. That’s unfortunate, it’s not entirely comfortable and it’s certainly not Conservative; but it’s necessary and hopefully temporary.

What is important is that those who are being helped by this measure by being freed of tax burdens and encouraged to work at the lower end of the pay scale are given a very firm steer in that direction. There is no justice in asking some people to pay for a £10,000 income tax threshold if those benefitting from it are then not working or contributing to society. Just as we need the wealthiest to help the country out of trouble, so we need the bottom-up economy to get working too.

Having taken a centrist view of the CGT issue then, I’m happy to take a more centre-right view on Iain Duncan Smith’s promise to mend our benefits system, which is a national joke. Of course I believe that the poorest in society should have the help they need. But I also firmly believe that thousands and thousands of people routinely abuse our over-complex and under-thought benefits system for their own gain – at the expense of the entire nation and other taxpayers.

So I hope that left-leaning thinkers will see a connection here – between controlling the right-leaning tax tendencies of the Conservative Party but also changing the liberal attitudes to the Welfare State that have cost Britain money and not a little self-respect during the past 20 years.

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Lesson from JK Rowling

April 14, 2010 — simonashall

JK Rowling with a book containing more truth than the Labour manifesto

I’m not a fan of JK Rowling – I think her books are terrible and the fact she gives money to the Labour Party is borne of an similar level of fantasy. Today she writes in The Times about DC and the party’s manifesto for single mothers and although the Times subs have done their best with it, it’s still a couple of commas short of iambic pentameter.

But depressingly, I find myself agreeing with some of what she says and I think she’s done the party a favour by spelling it out, albeit after the manifesto is published. I’ve written on it before and I’ll say it again – the Conservative Party policy to reward married couples with a (very token) tax break is a step backwards in bringing its attitudes in line with a modern Britain that isn’t interested in recapturing 1950s social norms.

Firstly, the fact is that society will no longer be told by government what it should find acceptable and unacceptable – the role of government in this area is now defunct and no amount of bleating by the right of the party will bring it back. Yes, the family unit is still the single most important building block of society but the family unit can no longer be described as one man married to one woman and their resulting offspring. A government that tries to impose this doctrine through the tax system will not succeed and the party it is formed from will ultimately lose credibility.

Secondly, JK Rowling points out that “it’s not the money, it’s the message” is a deeply misguided view of what single parents go through. For those who have decent independent incomes and families to fall back on when they part, it may just be about the message – although not a very welcome one, I should imagine. But for others who don’t have partners at any time in their parenthood or families able to support them financially following separation, it is very much about the money. And if anything, we should be spending the money otherwise used in this tax break supporting those who need it ie the single-parent families, not married couples.

I believe that DC takes social responsibility and justice seriously but this policy doesn’t back that up. Having said that, much else in the manifesto does. I joined the Conservative Party because I want to see a society where people can get opportunity, work and make a prosperous future for themselves and their families. But if they manage that, they don’t need state subsidy as well. In an ideal world, no-one would.

But this isn’t an ideal world and until it becomes so, that help from the state which exists needs to be focussed on those who need it; married, divorced, single or otherwise.

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Glad not to be Grayling

April 4, 2010 — simonashall

Close your mouth, Chris. No, close it. Before you say anything else.

Personally, I blame David Davis. When he went off on his strange flight of fancy over the 42 days detention extension, he prompted a flurry of activity to try and fill his place as Shadow Home Secretary. Davis is on the opposite side of the party to me but he’s an able, likeable man and possesses support from sections of the party that DC could do with right now. But his visible rejection of DC’s leadership and the shocking manner in which he chose to express it was a selfish act that debarred him from high office for the forseeable future.

While the shadow ministers in the treasury are a strong team and William Hague great in foreign affairs, we’ve struggled through Dominic Grieve and Chris Grayling to find someone of Davis’s stature to fill the role at the home office/justice department. My feeling is that Grayling has always been on the edge of his envelope as Shadow Home Secretary and his ill-judged and utterly stupid comments about the rights of Bed and Breakfast owners to turn away gay couples are indicative of this. It’s not the first time he’s opened his mouth without thinking and caused problems for the leadership.

I’m not going to argue about the moral rights and wrongs of the B&B issue because they are not the point. We have laws in place that mark the boundaries society has laid down. Occasionally they change and occasionally people get left behind but we all have to obey them. Chris Grayling knows this and suggesting that B&B owners ought to be able to turn anyone away is almost giving them carte blanche to break the law, which says quite rightly that businesses must offer services without prejudice to anyone.

I don’t believe faith groups - or anyone else - ought to be able to “opt out” of the law on grounds of “conviction”. The “I don’t need anyone to tell me what to think, I’ll do what I want” attitude is one of the root causes of so many problems in society – from the young people who won’t respect authority to the uber-wealthy who think that money will exempt them from accountability. Conservatives don’t support the anarchists at G10 meetings who want to opt out the legal framework capitalism lays down because of what they believe - nor should we support individuals who want to opt out of the European Convention of Human Rights because of their beliefs. The ECHR has a lot of nonsense in it – but not in this area.

Grayling was attempting to curry favour with the Daily Mail view that Christianity is being persecuted in Britain and offer succour to those people of faith who feel that they are being led along into a secular society that no longer recognises their values or gives them leaway to put their faith first. I have some sympathy with that view – but not where it impedes on the rights of others acting within the law. That Grayling doesn’t see a distinction here makes me believe that his intervention was ad hoc and not properly thought out.

To sack him now would be an over-reaction and would be interpreted by the right of the party as an attack by the leadership on free speech. But I sincerely hope that if we have a majority on May 7, DC will look elsewhere for his Home Secretary. I believe Iain Duncan Smith would be superb choice for the role if he feels able to. If not, Nick Herbert has impressed me greatly as Defra shadow and such a promotion would be entirely appropriate in my view.

Either way, gaffe-prone Grayling has got to go.

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Direction of Travel

February 20, 2010 — admin

Come on David, it's not rocket science!

Last night was Woking Constituency Conservative Association’s annual general meeting at which Humfrey Malins gave his farewell speech and Jonathan Lord the first of what we hope will be many. During his speech, Jonathan talked about many interesting things, including references to helping the poorest in society that I think it does well for the grass roots to hear.

One of the subjects he touched on was this idea that the Conservative Party has no policies. I firmly believe that this is a message that Labour spinners, aided by the BBC, Grauniad and others are determined to repeat over and over for our consumption – that DC is a salesman with nothing to sell except the art of selling itself. A Blair mark two. Jonathan argued, quite rightly, that there are many examples of Conservative policy out there and that in-depth policy details are not the norm before a general election; Margaret Thatcher didn’t have them in 1979, nor Tony Blair in 1997. What the country understood about these two Leaders of the Opposition, Jonathan said, was their direction of travel.

Cllr Mike Smith asked Jonathan what it was that bound these policies together, the central message to activists and candidates to sell on the doorstep. He, along with others including myself, don’t yet get the sense of an overarching theme to Conservative policy that defines a direction of travel.

It’s desperately needed if DC is to win a convincing rather than narrow victory. And it’s not rocket science. The concept that binds our policies together is three-fold; self-empowerment, opportunity and the fulfillment of aspiration. The credibility gap that the Conservative Party has is linking its support for the wealthy and Middle England, the encouragement of entrepreneurship and businesses and the rolling back of inheritance tax with its desire to help the poorest in society achieve a better life.

Our problem is that we only ever talk about one of these at a time. The first allows our opponents to claim we are the party of the few, not the many. The second provokes a reaction among grass roots that the party is abandoning its core voters. But these two flanks of the spectrum are inextricably linked and go hand-in-hand.

We want to allow people who have been succesful the opportunity to enjoy the fruits of their success. We want the prospect of that enjoyment to be an aspiration that creates excellence in its pursuit. We believe that leaving an estate to the next generation is a self-empowerment that begets striving for success. And we will fight for the right of the well-off to enjoy their lives – as long as they pay a fair share to those less fortunate. The successful business creates employment, tax revenue and generates investment in this country – it is also key to our recovery from this dreadful recession.

Similarly, while I am not entirely comfortable with DC’s phrase Broken Britain, there are parts of Britain that don’t work. In some areas, people have poor life chances and little hope of being anything other than a criminal or lifelong welfare recipient. We have to show these people when they are young that we believe in them. We have to demonstrate through community policing, social services and educational opportunities that with hard work and self-belief, anything is possible. And we have to be serious about it, knowing that it is in society’s interests that we address this problem.

In between these extremes, there are countless other examples of people who want the government to help them achieve their aspirations through the tax system, employment regulations, adult education, public sector reforms and so on.  I’m not big on small government - the government should be there to help the people who elect it. I’m big on enabling government - a government that leaves people alone when they are doing well and picks them up when they need help.

But we need to hear more from DC and the party about the link between the two things above. We are not the party of the few,  nor are we the party of the many; we must be the party of everyone.

I believe that with the economy being how it is, voters will forgive a lack of specific, concrete promises. But they will not forgive a listlessness, a lack of direction. Now it is for DC to elucidate the various Conservative policies that are out there in these strategic terms – it is not only voters who need to hear it but his own party too.

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A grand mysterious harmony

November 26, 2009 — admin
It's all peace and tranquility in the council tonight

It's all peace and tranquility in the council tonight

The executive committee tonight was a relatively tame affair and it will be interesting to see whether any sparks fly at the full council meeting on December 10. The fees and charges are always a contentious issue and there were a few murmurs tonight but I thought the most interesting part of that debate was something that won’t catch headlines like parking or leisure centre charges.

Section 4.16 of the report talks about provision for Looked After Children. These are of course the children in Surrey County Council care - either directly or via Foster Carers – who become so for a variety of reasons including abuse, illness or disability but all whom are taken into care because their families - who so many of us take for granted will always be there for us - are unable to fulfill their normal function of nurture. For obvious reasons, their opportunities are reduced compared to others, despite the many good efforts of foster carers and social workers.

Liberal Democrat leader Ian Johnson pointed out the provision that the borough council currently makes to children in this position. Even though social care is a Surrey County Council responsibility, Woking Borough Council is a partner in the Surrey Children and Young People’s Plan and offers free swimming, Key Cards and gym inductions. But these benefits only last until young people reach 19, at which point they considered adults and no longer under the care of the local authority.

Cllr Johnson said:

“I would like to think that in areas such as housing we can extend the care in this paper. These are people who have had a pretty rotten start in life and we ought to be supporting them in other ways and not just cut them off at 19.”

I’m delighted to say that his sentiments were shared by deputy council leader David Bittleston, who said the point was important and needed to be looked at. It is vital that if we are to promote opportunity and real equality in this country that rather than simply capping the aspirations of higher-performing children or creating a huge gap between the independent and public schooling systems, we must give children from inauspicious background the opportunity early to understand they can take control of their lives in a positive way.

Too often the cycle of abuse, neglect and care home childhood is replicated in future generations. We need to break that cycle – and we also need local politicians who understand that government will give them the tools to do so but can’t actually do it for them. It’s nice to see that the Conservatives in Surrey County Council understand that with their plan and it’s nice to see the Liberal Democrats in Woking putting issues of concern before a political opportunity to grab a headline.

I hope that we can work together will the Lib Dems on this to achieve better lives for some of the least fortunate in our borough.

Posted in Community, Social Justice, Woking Borough Council. Tags: , , , , , , . No Comments »
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