Nick Clegg’s pledge to go even further than the current Lib Dem commitment to cut the basic rate of income tax by 4p was the main topic for his interview on BBC Radio 4’s The Westminster Hour on Sunday night. You can listen to it here, and read the views of Lib Dem bloggers Linda Jack and James Graham here and here.
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15 Comments
The more wild Nick Clegg’s policies become, the less people will listen to him.
If his energy and taxation policies were grounded in reality, someone might take notice – but looking at the papers this morning, the impact has been minimal at best.
http://lettersfromatory.wordpress.com
It seems to me that Nick Clegg is trying to say 2 different things to 2 different people. To the right wing press he wants the headlines that we are going to cut taxes. To the Lib Dem party he is trying to say that public services will not be adversely affected, although any vision that public services ought to be a lot lot better than they are at present appears to be lacking.
Of course in 1 very important respect we do agree that public services will be better; there will be more local accountability and decentralisation.
However Nick Clegg has conflated centralising public services with being more expensive and decentralising with being cheaper.
But what if local communities want to spend more? How can we possibly say that decentralisation will be cheaper, unless there is some kind of central control similar to ratecapping?
I know it is assumed that decentralisation equals greater efficiency – and I would be interested to see the research this that can demonstrate that this is the case. But are we saying that we can be confident that this will help us with all the extra resources we need? Where are the figures?
If we do not specify where our tax cuts will be, you can be sure our opponents will do it for us. Nick Clegg’s ambivilence about the NHS spending is worrying. Our opponents might unfairly suggest that amounts to swingeing cuts. Do we really want the same reputation on health as the Tories in the 1990s?
What makes me cross is that this whole initiative has been taken without any prior debate in the party.
I would be happy to be corrected in my impressions if I really have misunderstood what is going on. But there is no attempt by the party establishment to bring this debate to conference first where we can have something in front of us to discuss in black and white.
Somehow instead we are meant to immediately get it, whatever it is, even if it is radically different to what we have said before.
The best time to change a political party is straight after a general election, which we did. Another good time is during a leadership election, although Nick Clegg offered no change of direction back then. And the best way to do it is to involve the membership. Both in timing and method I feel we have been let down.
I agree 100% with this. Anyway if we are wanting to cut taxes (which I am not) income tax should not be the main target.
Saying we are going to cut taxes without saying twhere teh curts are going to come from is ludicrous. It is also dishonest because when people (party members) object to specific proposals for spending cuts we will be told “but you have agreerd the tax cuts and if you don’t like these service cuts you must say where else you want them”.
If this goes on it is going to cause very real difficulties for this party.
Tony Greaves
So, apparently, we’re being asked to believe that what Nick Clegg said in his interview with the Telegraph was, like the ninth season of Dallas, “all just a dream”
Apparently, when he said –
“We are now in a process of identifying what I believe will be the most radical package of tax- cutting measures for people on middle incomes”
– what he really meant was that there may be some tax cuts if there is money left over after we have fulfilled all our spending priorities.
When he said –
“Vince Cable and I have been working over the summer identifying about £20 billion that should be reallocated and the vast bulk of it given back through tax cuts.”
– what he meant was that the vast bulk of it would not be given back through tax cuts.
And when he said –
“We have taken some difficult decisions already to provide tax relief and we are doing some ongoing work … to help the vast majority of taxpayers.”
– what he actually meant was he and Cable hadn’t yet decided on whether it would be possible to provide any tax cuts, because they haven’t yet identified what savings can be made (even though a spending review to identify these savings was supposed to have been initiated two years ago).
What on earth are we to make of this? Would it be best simply to ignore anything Clegg says when he hasn’t got a script in his hand?
Hey well done CCF! You’re famous now!
Tony Greaves – “Anyway if we are wanting to cut taxes (which I am not) income tax should not be the main target.”
Why not? Income Tax is a tax on people’s effort; surely, as Liberals, we should be rewarding people’s effort (through a progressive taxation system), and taxing things which we allow people a free choice to make, but which go against creating a more just and Liberal society.
Personally, I’d rather we were increasing the tax allowance vs cutting the basic rate. Increasing the allowance focusses the gains at the bottom of the income scale.
Indeed, we did say a while ago that our goal was to eliminate income tax (by expanding the tax allowance) for those earning up to the equivalent of the minimum wage.
“Hey well done CCF! You’re famous now!”
Hmmm. That’s one way of looking at it.
Another is that it’s an indication of how far the standards of political interviewing have sunk since the era of Robin Day …
well that’s true. You never heard Sir Robin quoting a blog.
It is nothing to do with Liberal vs Social Democrat.
It is more to do with Keynes vs Hayak, both of whom were liberals, albeit very different to each other in their views on taxation.
If income tax is reduced the first priority must be, under all circumstances, to increase tax allowances – this is the most effective way to help low paid people and pensioners on very modest incomes. Increase in tax allowances must come before reductions in the basic rate of tax.
Reducing tax on the lowest paid is socially just, will help to reduce the black economy, make it more attractive for some people on benefits to take up low paid jobs, would encourage people on low paid jobs to take up overtime or to increse their earnings through becoming more skilled and really help to tackle the attitude that it is OK for middle class and high income households to pay people in “cash” for cleaning, repairs, etc to their houses – knowing full well that income tax is not being paid by the people they are employing.
As a campaign priority I would like to see the Liberal Democrats saying that within a short period – perhaps just two or three years – no one earning the minimnum wage should be paying income tax at all on their weekly wage. That would be easy to communicate and campaign on. It would also be a costed policy and a sound policy. In particular it would really help in seats where we are fighting Labour. I would love to see as really taking Labour MPs on over the issue of tax for the low paid – especially following the Gordon Brown fiasco of the 10 pence tax rate. As for the Tories we all know that their sole key tax policy is to reduce tax on people inheriting amounts of wealth.
As a party I also hope we remember the importance of reducing certain indirect taxes – in particular the significance of reducing VAT on housing repairs. I would also go further and say that if we want to change habits over travel we should slash the VAT on bicycles. A small tax cut, but nonetheless would be of real benefit both to families and for environmental reasons. There might be some other areas where VAT should be reduced. In relation to stamp duties on houses it also seems incredibly unfair that someone on a relatively modest income is penalised if they have to move house on a regular basis. I certainly don’t advocate ending stamp duty on house purchases, but I think the tax could be made fairer for people on relatively modest incomes who are mobile. I also believe the total tax yield from this tax has probably reached its cap.
However….., when people in the party start talking about tax cuts more widely that really is a serious issue.
I am pleased we have not entered into a Dutch auction over inheritance tax. I really think that those who advocate, or even float large income tax cuts (and more significnatly an overall reducation in taxation for the majority of people) need to reflect very heavily on how public services are funded and whether they seriously believe in certain central Government budgets facing a reduction in their budgets, in particular does anyone as a Liberal Democrat believe we should as a nation be spending less on pensions,health, social care or international development? By the way don’t many Liberal Democrats campaign against certain cuts in public services, such as adult education classes?
Finally, lets not hide behind the debate over decentralisation of expenditure. I believe strongly in the decentralisation of expenditure – but it is miseadling to believe that more resources will suddenly be found at a local level. If you believe in public services being provided on a universal basis you need to accept that there is a price to be paid. The argument that European equivalent public services need to face European tax rates (as opposed to US tax rates)is as strong today as it was in 2005, 2001, 1997 or indeed for the last 50 years.
So tax cuts for the lowest paid and tax cuts on certain items of expenditure. Lets campaign on fairer taxes and a tax system that is greener.
Lets set out how we will change the direction of expenditure and address the immense waste that has arisen through the incompetence of this Labour Government. We should also restribute the burden of taxation, with some tax rises for some very earners. But ultimatley lets not kid anyone that high quality public services, however they are run, can be paid on the cheap.
Councillor Mark Morris
“Why not? Income Tax is a tax on people’s effort; surely, as Liberals, we should be rewarding people’s effort (through a progressive taxation system), and taxing things which we allow people a free choice to make, but which go against creating a more just and Liberal society.”
No, or at least not entirely (I agree with taxing undesirable things more than desirable ones). The taxation system should (inter alia) be a means of reducing inequalities between people and taxing incomes with the people on higher incomes paying more (1) in money and (2) as a percentage of what they earn, is an essential part of that.
Of course the present system does not do that (not the second anyway) and it should, not least by taking poorer people out of income tax (and NI contributions) altogether.
Actually “as a Liberal” I am not only unhappy with the present level of VAT because it is a non-progressive tax that in practice hits poor people harder than rich people (because they have a lot less to spend in the first place) but it is also at least in theory an indiscriminate tax on trade and “as a Liberal” I do have some problems with
that.
However because it is levied successively on “valued added” and that is related closely to successive labour inputs, it is arguable that it is also a tax on employment.
I am certainly also in favour of finding effective ways of taxing high levels of wealth, however it was acquired. (And without wanting to provoke a delgue of contributions from certain quarters, that also includes a land tax!)
Tony Greaves
Typical of ‘letters’ to be the first to comment (doesn’t he have anything better to do but spam us?).
If he cares to research Henry George, he’ll find that we can go “all the way” (just like those Tory councillors in the weekend papers – but you have to pay), to scrapping income tax.
See http://www.systemicfiscalreform.org for something that Tories really wont like, but is THE best option for having an economy while tacking climate change (for those that realise the earth isn’t flat).
Oh dear. We seem to be largely back to square one in the Mail today:
http://www.dailymail.co.uk/news/article-1054542/Lib-Dems-pledge-cut-taxes-slash-spending-ease-recession-pain.html
Lib Dems pledge to cut taxes and slash spending to ease recession pain
…
Liberal Democrat leader Nick Clegg today called for deep tax cuts for millions of Britons as he warned that the voters expected the Government to tighten its own belt in the ‘looming recession’.
Mr Clegg detailed plans to slash £20 billion from public spending and urged ministers to ‘give back’ a large chunk of the savings to nine out of 10 people.
To be fair, a bit later we have something closer to the agreed line:
‘As much of that money that we clawback from government, once we’ve met our spending priorities, should be given back in tax cuts – and tax cuts crucially from the bottom up.’
But the headline is tax cuts, and in the article we have “deep” tax cuts and a “large chunk” of tax cuts.
I can’t believe it’s just carelessness a second time. I think it’s a deliberate attempt to give people the impression there would be big tax cuts, when the small print says we would not be able to guarantee any tax cuts at all.
Pretty dishonest stuff.
It is nothing to do with Liberal vs Social Democrat.
It is more to do with Keynes vs Hayak, both of whom were liberals, albeit very different to each other in their views on taxation.
Keynes never actually sadi in his theories that high taxes are needed, he repeatedly said that his theories were theories, not policy papers…just because he argued that government borrowing can get a country out of a slump never meant that he called for higher taxes or that he was aginst tax cuts
just because he advocated government spending does not mean that keynesian economics is the same as having the nhs or universal education paid for through taxtion, thats a Beveridge idea, Beveridge who was very good friends with the fabian society, some might argue a not so liberal society?
i hate it when people make these generalisations of intellectuals thoughts and theories like if they were here today they no what they would be advocating. its like when people’s answers to eliminating government is Adam Smith, someone who believed in universal education among other government interventions!