In a speech to the Policy Exchange yesterday lunchtime, Nick Clegg set out the party’s tax policy and indicated that a Liberal Democrat government would look at reducing the overall level of taxation as a percentage of GDP.
These are two different things, as James Graham points out. The bare bones of the tax policy “announced” in the speech are essentially the same measures agreed at last September’s Brighton conference. It’s the overall direction, the idea that the level of taxation might just be too high, that is new – although prefigured in Nick’s closing speech at spring conference.
While I can quite see the logic in talking about both policy and ultimate aim as part of the same overall approach, I am concerned that we won’t serve ourselves well if we allow the two to become conflated. As I argued over at Liberal Conspiracy a couple of months ago, it is perfectly possible to cut taxes for the vast majority of the population without reducing the overall tax take, and this is exactly what our current policy does. It would be a shame to have that misunderstood, as Andrew Grice does in the Independent’s Today in Politics blog, with the result that people take the policy less seriously.
Still, if the media want to give us extra coverage for “new policy” then who are we to complain I suppose. It is gratifying to have it recognised that, unlike the Tories, we actually have a tax policy.
And coverage there is, at the BBC, the Telegraph, and an abridged version of Nick’s speech appears as a a Comment is Free piece at the Guardian, where the CiF punters are, on the whole, moderately impressed, and I run around like a form prefect with a great big pile of policy links as usual. The Spectator’s Coffee House blog, of course, hopes that Cameron will profit from Clegg’s stance (perhaps by copying his homework?)
And in neat juxtaposition to all this, there’s further bad news for Labour in several of the papers as the IFS releases a report on the likely implications of Darling’s last-minute budget change in raising the personal allowance. As many of us suspected, it ain’t pretty.
And finally, a bit of parallel universe hopping, as an Irwin Stelzer piece in the Torygraph entitled “Lower, simpler, fairer” turns out to be not analysis of Lib Dem tax policy (the name of the party’s original tax paper was Fairer, simpler, greener) but a rather gloomy thousand-word ricochet between the non-ideas of Labour and the Tories which rightly asserts that “there is a gap in the market for ideas about tax policy”. Er…
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22 Comments
We appear to be aligning ourselves to be more and more a coalition partner with the tories.
Next will we campaigning to get Britain out of Europe?
How far right are we being swung with no say so from ordinary members?
Nick Clegg is going to have to be a lot bolder if he wants to convince anyone that he is serious about pulling taxes down. Both him and Cameron are talking the talk but neither of them have committed themselves to anything solid yet.
http://lettersfromatory.wordpress.com
LFAT- did you read/listen to the speech?!
Pete,
It’s not right-wing to want to reduce taxes for the less well off and middle-income earners. Indeed, it’s decidedly better than increasing taxes on the less well off and then giving some of that back through complicated tax credits.
Pete (the Colchester one): “We appear to be aligning ourselves to be more and more a coalition partner with the tories.
Next will we campaigning to get Britain out of Europe?”
On the contrary, you could see this as a move to align Liberal Democrats with their European allies in the ELDR.
LFAT, we’ve got a 36 page costed tax policy document. It’s been approved by conference. That’s as “committed” as you can get without actually being in govt. So actually it is just “Dave” who is “talking the talk”.
for the guy who said we are alingning ourselves with ELDR (which i totally support) we have lower taxes than most of their countries do and also some of those parties are renowned Economic-liberalist, which i support but we were formed on on the idea of social liberalism and we cant forget that, i agree though we should ceratinly try and tax the poor less (maybe by just scrapping tax credits?) but we also need to remember that we have the NHS and a good education system and we need to make sure that these are properly funded so that we can have world class workers:)
“we have lower taxes than most of their countries do and also some of those parties are renowned Economic-liberalist”
Like Luxembourg, for instance? And are you sure that if those parties could deside alone, they would stop the tax cuts at the level UK is now? But that’s not the point, there’s more to the policies of those parties than taxes, and economic and social liberalism aren’t necessarily always mutually excluding.
However, my point was actually to show to Pete (the Colchester one), that the new tax policies don’t mean that Lib Dems are becoming anti-European.
“but we were formed on on the idea of social liberalism and we cant forget that”
You mean the Whigs in the 17 century, Liberal Party of Palmerstone, Russell and Gladstone in 1859 or the current incarnation in 1988?
Isn’t Colonel Gordon and Darling running a large budget deficit? Have they not borrowed too much already? Would it not make sense to run a surplus for a few years and pay some of this down?
P.S: “but we also need to remember that we have the NHS and a good education system and we need to make sure that these are properly funded so that we can have world class workers:)”
I think the Netherlands has both better health care and education system, even if they might become more expensive, because the allow more choice.
The thing which really needs to be grasped is that we can reduce overall tax takings and improve public services.
Unfortunately, that goes against ‘conventional wisdom’ and will be seen as a ‘swing to the right’ despite it being founded in the ideals of liberalism.
Reducing taxation on the poorest is a good first step though – that is the most urgent thing and is acceptable to most (except seemingly the Labour Party)
“The thing which really needs to be grasped is that we can reduce overall tax takings and improve public services.”
How is that?
Chris Phillips
Reform.
Well, if you look at what Clegg says, even he isn’t claiming we can do that. He’s only committing us to looking into whether we can.
Indeed, Clegg says:
“David Cameron cannot credibly argue that he wants to cuts taxes and improve public services unless he says how – he has asked us to trust him but why on earth should we?”
That suggests to me that if he were reading this discussion, he’d have asked the same question I did.
But the party does seem to have a new all-consuming priority now:
“the Liberal Democrats will focus all our attention on cutting taxes – from the bottom.”
Perhaps he “mis-spoke” again? Does anyone else really think we should be solely fixated on tax-cutting?
Chris Phillips
Not_solely_.
The core of the liberal approach to public services is to devolve more decision making to the local services themselves so that you get diversity, experimentation, ergo, improvement. It’s market economics without the economics bit. The same amount of money – or potentially less because you do away with a lot of centralist bureaucracy – is spent.
It seems like something of a no-brainer, particularly for a Liberal party, that we should be seeking:
A – To collect taxes (particularly those on earnings) only to the extent that we need the money to pay for things. If we can cut taxes, we should.
B – To make the tax system more progressive by reducing the demands on the currently overtaxed poor. If we want a government that aims to reduce the number of people who are poor and the seriousness of their poverty, one of the most obvious ways would seem to be to stop taking away so much of their money.
It’s not a right-wing “dismantle to government and the welfare state” arguement, it’s a liberal attempt to make people more free and self-supporting.
“To collect taxes (particularly those on earnings) only to the extent that we need the money to pay for things. If we can cut taxes, we should.”
Yes, it all sounds entirely unexceptionable, whichever party one belongs to.
But what does it actually mean in practice?
Chris Phillips
I’m not sure I agree, Chris.
I don’t believe that, even when it had principles, the Labour Party necessarily believed in A and the Conservatives have entirely flipped it by providing only those services they can still afford after cutting taxes (of the rich).
Meanwhile the Conservatives have always had a rough time with B – prefering to raise taxes that disproportionately hit the poor (VAT, Poll tax, Council tax) and cut them on businesses and the rich and Labour no longer seem to follow it as a principle either – see the 10p tax farago.
Tax is a huge issue and it is one that both the other two parties have got lost in.
Current levels of GDP take are at historic highs, while it is abundantly clear there is great capacity for more efficient targeting of resources, making the tax system fairer, as well as making more use of partially hypothecated systems to explain and educate how much needs to be spent on what, where and why.
Both Labour and Conservatives have created confusion through their proposals by abandoning any efforts to explain the links between taxation and spending in order to concentrate purely on justifying the figures for purely electoral reasons.
We have to start being honest with ourselves. New Labour will come to be seen as the last gasp of the traditional welfare state.
For years we told ourselves that there was nothing wrong with the welfare state that a decent amount of investment couldn’t cure. Wrong; we now spend more or less to the European average on the NHS and it’s still crap.
For years we told ourselves that there was nothing wrong with our schools that a decent amount of investment couldn’t cure. Wrong; we now spend more than ever on Education and it’s still crap.
The list goes on.
As Liberals we need to have the courage to be radical reformers. We need to have the courage to advocate the deconstruction of a centralised Health Service, using elements of the French system as our model. We need to have the courage to seperate Teaching from Administration and Finance in the schools system. We need to have the courage to re-introduce a more progreessive element in to the Tax system.
We need to support Clegg and Cable!
I agree with Alix at 2:51. The bureaucracy should be localised, and also humanised. The mistakes made by out of touch admin staff in central offices are legion. Not to mention all the inefficiencies that are connived at because they keep people in jobs.