Fairer Tax day of action today

fairtaxGood morning Liberal Democrats and visitors.

You don’t have time to read this right now because you are on your way to join the day of action for the campaign for fairer taxes. To find your nearest, go here and enter your postcode.

We inherited a system in 2010 where a cleaner would pay a higher marginal rate of tax on his income at 20%, than a hedge fund manager would on her income converted to capital gains at 18%. Decades of Conservative and Labour governments alike saw the progressive tax system diluted, as reliefs and loopholes multiplied, and more and more burden was placed on the most regressive taxes such as council tax and the sin taxes.

Increasing the personal allowance is the most powerful way to start to put this right. A few hundred pounds may be useful to a middle income earner, but will make all the difference to someone struggling to get by on low pay.

And with limits to reliefs, the increase in the rate of CGT and other measures, IFS figures clearly show the top 10% of earners making the biggest contribution, not just in cash terms but in percentage terms too.

This rebalancing of the tax system would be a great achievement at the best of times, but to deliver it during the austerity imposed by Labour having “spent all the money”, and in coalition with the Conservatives who are widely considered to be more sympathetic to the rich, is something to be especially proud of.

And so we campaign today to take it further.

* Joe Otten is a councillor in Sheffield, and Prospective Parliamentary Candidate for Sheffield Central

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20 Comments

  • “And so we campaign today to take it further.”

    Could we be told what further cuts in benefits this will involve?

  • “Chris, rebalancing the tax system is paid for with taxes on the better off.”

    I doubt that’s actually true. But what is indisputable is the way this government has shared out the burden of dealing with the deficit. The IFS has worked it out for us.

    Granted that the 10% on the highest incomes have suffered the largest percentage decrease in income. But as for the rest of the population, the heaviest burden has been borne by the 10% on the lowest incomes. Then the next 10%. Then the next, and so on, until those who have done best in comparative terms are the 10% with the second highest incomes.

    That’s not surprising, because about 40% of this income tax cut is going to people on above-average incomes – while benefits are being cut in real terms. If you talk about “fairness”, expect to be reminded about what’s really happening.

  • >You don’t have time to read this right now because you are on your way to …
    Spend time with my family.

    I wonder how many of those that turn up to the day of action actually pay any personal tax …

  • Joe

    “I don’t see how you can doubt it and at the same time refer to the IFS figures that prove it.”

    In what way do you think the IFS figures “prove” the claim you made? Please indicate what figures you’re referring to.

    On the IFS figures, can I suggest looking at the breakdown by expenditure deciles (as opposed to income deciles). This shows a progressive effect at all levels …

    Again, please can you back this up? The IFS figures I’m talking about are in this report on the Autumn Statement:
    http://www.ifs.org.uk/conferences/PTAB_SA.pdf

    As far as I can see that doesn’t include any analysis based on classifying households by expenditure. Some of the Treasury’s analysis does do that, but the graphs I can see for the Autumn Statement show anything but a “progressive effect at all levels”. Where are you getting this from?

    As for separating tax changes from benefit changes, that was my whole point. Both of them affect people’s income, so it’s completely misleading to look at tax in isolation.

  • Tony Dawson 9th Feb '13 - 8:10pm

    We had an excellent response to our Fairer Taxes leafleting in Southport Town Centre today, despite the mizzle and the cold.

  • “Although it is an older document there are expenditure deciles here: http://www.ifs.org.uk/bns/bn108.pdf

    That document is three years old. Is that really what you were referring to above?

  • Tony Dawson 9th Feb '13 - 9:42pm

    @Joe Otten:

    “I don’t see how it is an argument against fairer taxes.”

    It isn’t. These people are just cross because they don’t want to believe the Lib Dems want Fair Taxes and the only party they want to support, they know didn’t do anything income distribution during 13 years of government and they don’t really believe has any genuine interest in the subject today.

  • Joe

    My questions about the evidence for your claims weren’t rhetorical, by the way.

    There’s very little point in trying to discuss any of this if the discussions aren’t going to be based on accurate information.

  • Joe

    “Chris, yes that report was an older one. By all means bring better data to the table.”

    As you know, I have already linked to the IFS data I’m using, which show that the effects of this government’s tax and benefit changes are regressive, so far as the lower-earning 90% are concerned.

    You claimed that the IFS had carried out another analysis that gave a different result. Please can you clarify what you were referring to? Were you thinking of that three-year-old IFS report, or what? (Not that even that report bears out your claim, as far as I can see.)

    You also claimed that there were some IFS figures which showed that the tax cuts were being funded from additional taxes on “the better off”. Please can you explain what figures you meant?

  • Joe

    I’ll try once more.

    When you wrote “On the IFS figures, can I suggest looking at the breakdown by expenditure deciles (as opposed to income deciles). This shows a progressive effect at all levels …” what was the basis for that claim?

    And you say that the “extra take” from the top income decile pays for the tax cuts for the remainder. Where are the figures to show that? (Obviously you can’t tell just by looking at the chart.)

  • “Chris, I’m not playing this game. Clearly whatever I say you will pick on some detail and demand more.”

    Joe, I’m not playing a game. I’m trying to get at the facts that are necessary for a sensible discussion of this issue. I am simply asking you (politely!) to provide a link to the IFS breakdown by expenditure which you referred to in your comment, which you claimed “shows a progressive effect at all levels”.

    The reason I’m asking is that I don’t believe any way of analysing the data would show that, because the IFS analysis by income shows a regressive effect across all deciles except the very highest. It’s not a “game” or a debating point. The way in which the government has shared out the burden of reducing the deficit is probably the single most important political issue for me, and I know from other people’s comments that I’m not alone in that.

    So please respond. And if you say it was an honest mistake, I’m happy to let it rest there. But it’s important to get the facts right.

  • I agree with Chris that claims and figures should be substantiated and if they are not, the argument is lost, Joe.

  • Joe

    OK. From that, it seems clear that you don’t know of any evidence for the claim you made. Although you don’t seem to want to admit it was a mistake, I’ll err on the side of generosity and assume it was.

    In the circumstances I’m afraid I don’t want to waste more time on this, but I will briefly say:
    (1) I have already linked to the IFS’s up-to-date assessment. The IFS appears to have given up presenting things in terms of expenditure deciles – quite rightly in my opinion.
    (2) The ‘baseline’ the IFS is using is perfectly straightforward – the effect of tax and benefit changes announced by the present government.
    (3) The three-year-old paper you referred to was mostly presenting measures that were a combination of those already announced by the previous government and those announced by Osborne in his first budget – and obviously it doesn’t include anything announced subsequently. The chart you refer to on page 9 is showing such a combination – not just the effects of this government’s changes. And I can’t even understand why you think that chart shows a progressive effect. If you are suggesting that expenditure is the appropriate determinant, then the green line showing the effect as a percentage of expenditure is presumably the one to look at, and that shows a horribly regressive effect. Even the black line showing the effect as a percentage of income (which seems quite inconsistent with the classification according to expenditure) isn’t consistently progressive – you can see it goes up and down.

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