Opinion: we must become the fair tax party

Nick Clegg has been all over the airwaves this week, promoting one of the Liberal Democrats’ flagship policies: raising the income tax threshold to £10,000. This is something that everyone interested in social justice should naturally be inclined to support. If implemented in the forthcoming budget, it would reduce the burden on low- and middle-income earners, putting money back in their pockets at a time when many are finding the cupboard bare.

The policy also leads naturally to what some are already calling ‘Phase 2’ – tying the threshold directly to the current minimum wage. This would, again, be a perfectly sensible policy that would lend the word ‘minimum’ some credibility.

However, Clegg and other Lib Dem Parliamentarians advocating this policy, whether wholly or in part, must take care with their rhetoric. The dangerous libertarian view that tax is somehow a form of theft must not be given room to breathe and grow. Yet politicians of all parties have allowed precisely this to happen, partly by feeding the contradictory desire espoused by many voters – for lower taxes and improved public services to be achieved simultaneously.

The Liberal Democrats should be the party making the case for a progressive and redistributive tax system that sustainably funds public services. Previously popular Lib Dem policies, such as the famous ‘penny on income tax for education’, have shown that there is an appetite among voters for parties who are honest about where public money will be spent. Perhaps a liberal party should also be considering ways to enable individuals to determine, to some extent, where their tax should be spent.

A criticism of our manifesto that I heard at the last election, from voters who value social justice highly, was that Liberal Democrat rhetoric was too focused on the individual. If we are to convince voters that we are a party capable of representing individuals, communities and the country as a whole, we need to find policies that encourage citizenship. A renewed focus on a clearer tax system is just one part of a stronger and more tangible social contract. Now is the time for the Liberal Democrats to become the fair tax party.

* Tom King is a Liberal Democrat member and activist. He has worked for Liberal Democrat MPs and served on three policy working groups. He is the author of The Generous Society.

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  • Daniel Henry 27th Jan '12 - 3:47pm

    I thought we already were, although I think our plans can go even further. If our Land Value Tax supporters get their way then that will fund further tax cuts on income and reduce the tax burden on the poorest.

    I also like the idea of using business tax incentives to encourage good behaviour, e.g. awarding a living wage to those that pay all their employees a living wage.

  • Andrew Duffield 27th Jan '12 - 7:36pm

    What Daniel said – first paragraph anyway.

    Fair taxation does not involve penalising productivity, but reclaiming community created value (aka rent).

  • The very poor that the likes of Evan Harris were concerned about should be catered for through an improving benefits system. Their plight, albeit very real, should be no reason for altering an excellent principle of helping low paid workers by raising the tax threshold. At the consultation session at Birmingham I raised the point of setting a new target prior to the next election, which should include a link to the minimum wage, which in turn should be related to the average income and cost of living.
    The Ed Milly postion, as usual, is laughable.

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