One of the oddest things about British and American politics is that it remains acceptable to politicians and right-wing commentators to call for cuts in overall taxation without specifying what cuts in spending programmes should accompany them. After successive Republican Administrations in the USA that have cut taxes and then found it difficult to make comparable reductions in spending programmes, the Trump Administration is at least being ‘honest’ in publicly slashing major federal programmes – through dishonest in suggesting that tariffs will provide a generous new stream of revenue. In the UK the Mail and the Telegraph, and the Conservative leadership, still attack every suggestion of higher taxation, as well as many proposals to squeeze current spending.
The Labour Government boxed itself in before the election by promising not to increase the three largest sources of government revenue. It over-emphasised the potential for returning to faster growth as a means of increasing revenue; and is therefore stuck with multiple crises in public services, while loading extra demands on Council tax in the hope that local Councils will share the blame. The impact of Trump on the global economy increases the obstacles to growth which we (and other countries) face. Rachel Reeves is hinting at cuts, not only in welfare benefits but also in key public services and public investment. So what should Liberal Democrats be saying if the government does delay infrastructure investment and squeeze key services?
Across the board, both the public investment needed to revive the UK economy and the public services which support our society are in acute crisis. The Financial Times last week published a horrifying account of the physical state of some of the hospitals included in Boris Johnson’s unfunded rebuilding programme. The UK spends much less on government support for research and development than many of its competitors. The promised AI supercomputer (underfunded in Conservative treasury calculations) has been put on hold; financial support for Ph.D students in STEM subjects, crucial for future innovation, has been shrunk. The state of Britain’s prisons, after years of under-investment and overcrowding, is appalling. We have been promised an additional 6500 teachers for schools, but school budgets have not been increased enough to pay for the much-need pay increase for existing teachers, let alone to recruit more. Similarly we have been promised more neighbourhood police and Community Support Officers, without yet the funding to keep them in place. We all know that local governments are in desperate financial straits; that social care is a neglected area that is dragging the NHS down with it; and we need to increase our defence budget substantially.
The UK, like the USA, has drifted into this crisis of public services and investment through decades of under-investment. Margaret Thatcher, in spite of all her rhetoric, did not reduce the overall level of public spending during her time in office. But she did keep levels of taxation lower than they would otherwise have been by selling off government assets and by using the revenue from North Sea oil to fund current spending rather than using this major windfall to build a sovereign wealth fund for the long-term, as Norway has. There have been obvious long-term developments which demand higher state spending: most importantly the changing demography of our population, with state pensions and other benefits for rising numbers of elderly people which no party dares to cut, which also weigh on the NHS and social care. While China is investing (and subsidising) advanced manufacturing and R&D at a high level, the UK like others is faced with the choice between raising state support for innovation or stagnating.
Liberal Democrats are not entirely innocent in addressing these painful choices. I was on the Federal Policy Committee in 2008-9, when successive proposals to compromise on funding student fees were voted down by Liberal Democrats who wanted to capture the student vote. When we entered coalition, our ministers fatefully accepted the Conservatives’ preferred ratio of spending cuts to tax increases, with consequences for austerity that we now regret. We are now robustly resisting government cutbacks in public investment, but not fully explaining how higher investment should be funded – that’s not the job of an opposition party.
I’m not an economist, nor an expert on public finance. I bow to others in examining the details of spending programmes, cost-benefit analysis and potential savings. But the overall dilemma which faces not only our government but other advanced democracies with ageing populations facing the rise of China and South and East Asia is clear. Our political system seems unable to address these hard choices in the face of populist leaders who suggest that there are magical ways out (like revenues from tariffs or ‘cutting bureaucratic waste’). No-one in Westminster politics is openly addressing tax reform, which has to be part of any intelligent response. The Labour government seems timid beyond belief in explaining how acute the choices are, and how desperate the state of our public services. In current circumstances it would be electorally mad for us to spell the situation out on our own, against Reform populism, Tory denial and Labour spinelessness. Can we hope that the continuing drip of warnings from the Institute of Fiscal Studies, the Bank of England and other independent sources of expertise will filter through into the public debate?
* William Wallace is Liberal Democrat spokesman on constitutional issues in the Lords.
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Since 1979 we have had governments committed to making the state “leaner and fitter” and what they have delivered instead is a deteriorating underfunded state.
A state that now needs substantial investment to put right and no obvious way to do it. Putting up taxes is a good idea, execpt we have a cost of living crises. Maybe just tax the rich more? By all means but it is not clear this would raise much revenue. Borrow more? But interest rates are high. Restructure the state? Often that makes things worse. Get a return in investment? But for how long do we wait?
No one seems to have the answers for the UK as far as I can tell.
We are not a high tax country compared to many others, as the OBR and IFS have been saying for the last couple of years. Conservative propaganda always plays this to people’s feelings and I was disappointed that Ed Davey did not acknowledge that last year. The problem for a long time has been the need for a fairer tax system and now under Labour we see the need for one that is better at helping economic growth.
William’s reference to China has to be qualified by their system of government where people in need have little voice, though he is right in that they are a competitor who can make life difficult for us.
As to William’s fear of us not going it alone in saying what is really needed, I am sure we can say it and say it more forcefully (especially at this point in the electoral cycle) that more and fairer tax in total is needed not only for public services but for economic growth but this should come from the wealthy, especially unearned wealth and not ordinary people, acknowledging that there are people struggling with the cost of living and that includes some of those who are not on low incomes. Tax is about investment for the future, for our young people in particular and a majority of pensioners surely would agree with that. With more young people looking like supporting the right-wing populists, this is badly needing to be said.
Thank you for an important if somewhat passive article.
Why is it not the/a job of an opposition party to explore how higher investment should be funded?
Proposals for tax cuts are usually supported by economic arguments that this will incentivise investment, economic growth and job creation. Proposals for tax increases are typically supported by the necessity for increased investment in public services and the social safety net.
Both objectives need to be achieved and that requires fundamental tax reform to deliver a more equitable system of distribution of income and wealth. Horizontal equity refers to the idea that people in the same circumstances should be treated equally, meaning individuals with the same amount of income (whether earned or passive) should pay an equal amount of tax. Verical equity is based on income, where those with higher incomes and/or accumulated wealth pay a greater share of taxes.
I think it politically unfeasible that overall taxation as a share of GDP can be substantially increased in the UK (at least in the short/medium-term). However, comprehensive tax reform can aid in delivering both hotozontal and vertical equity.
Integration of the tax and benefit system is a major undertaking but offers the promise of maintaining and delivering universal benefits without increasing levels of means testing or making controversial cuts in welfare benefits.
As a starting point to tax reform, I would begin with introducing horizontal and vertical equity to business rates and council tax with the levy being made on landowners not tenants and proportional to property values Taxing Land, Not Investment
The underfunding of public services over the last decade has resulted in some elements of the public realm making us look as if we are on the way to becoming a failed state. Squeezing funds for the justice system, for example, gives a certain hollow ring to us proclaiming our commitment to the rule of law. The Faragists repeat ad nauseum that “nothing seems to work” although they are the last people to enter into a serious conversation about public finances. Ditto the Tories. At the very least, when Lib Dems are highlighting what is going dangerously wrong, we should be linking it to questions about taxation as well as about tax reform.
There won’t be any growth. Last years less than 1% growth in GDP was exceeded by over 1% immigration, so GDP/ person is down. We should be thinking how to increase people’s wellbeing in these constrained circumstances. Not opposing every expenditure cut and tax rise, and demanding a pony on top.
“Proposals for tax cuts are usually supported by economic arguments that this will incentivise investment, economic growth and job creation. Proposals for tax increases are typically supported by the necessity for increased investment in public services and the social safety net.”
I don’t know why anyone needs to overcomplicate the explanation. Both tax cuts and increased government spending have the potential to create economic growth. Tax rises and reduced government spending will suppress it.
It’s about inflation in the end. We’d all like more govt spending and lower taxes but if inflation needs to be curbed then we also have to curb our ambitions.
The responsibility for hitting an inflation target needs to be taken away from the BoE. Unless they take over responsibility for fiscal policy they don’t have all the necessary tools.
If Rachel Reeves thinks Govt should be cutting back on their spending and raising taxes because, otherwise, inflation would get out of control then this is what she should be saying.
No party can persuade a significant number of voters to support higher taxes without developing a strong narrative to justify it, based on the need for both long-term economic investment and decent public services. It will need to appeal to patriotism (for the wealthy who will threaten to leave for Dubai or Monaco) and to social solidarity. And it will have to be sustained in the face of embittered attacks from the right-wing and its media. Yes, I think we have to consider attempting this, but none of us should underestimate the obstacles we will face – though Trump’s example may possibly make the task a bit easier.
Why do we need very wealthy people who value personal wealth more than loyalty to our nation?
Yes we need a strong narrative to justify a fairer tax system which also raises more for investment as well as public services. I suggest part of that narrative is to identify how the corresponding investment and growth will benefit specifically the people who need it most. All too often growth is seen as helping people through trickle down methods only, including the emphasis on the South East of the country.
The speech by David Chadwick our Welsh LD MP (in the Oped) gives one example (the former coalfield areas) of places where investment should be given priority thus helping those people and places that need it most. Many of these and similar areas are among those most inclined to support Reform UK because they feel neglected; they are mistaken if attracted by promise of tax cuts but may well be open to persuading that tax on the wealthy can be used to help invest for them and the future of their children. That would certainly have been supported by my former elderly relatives (including one who was well off) in the South Wales valleys.
Steve: We need wealthy people because, even if they don’t pay a very high proportion of their income in tax, it nevertheless adds up to a very useful amount of revenue. If too many take themselves and most of their assets abroad, public revenue would be hit significantly. These choices are NOT easy!
How can a crumbling society produce sufficient wealth to sustain itself and cope with the current financial extractions by the tax favoured wealthy?
We seem to have a reasonable idea of the money. received by/for the rich but how we know how much they put in and any correlation between the two?
That’s a very thoughtful article that gives a good account of the problems we need to solve, thanks @William.
@Steve: Two answers to your question about wealthy people. Firstly, consider how they came by their wealth. Some may have inherited it, but many more will have earned it by setting up businesses, innovating, and in the process helping our economy significantly. If we lose those kinds of people, we all end up poorer.
Secondly, ‘value personal wealth more than loyalty‘ sounds very judgemental. Remember, lots of liberals call not for general increases in tax for everyone to pay their share, but specifically for those individuals to be targeted with tax increases. How would you feel if the Government specifically targeted you to pay more tax? Personally I love the UK and love living here but I think in that situation I’d probably feel somewhat scapegoated. I don’t think you can blame people for considering moving away if they get targeted in that way.
@Simon R
” Some may have inherited it, but many more will have earned it by setting up businesses, innovating….”
Indeed – so lets look at taxing more those who have inherited it rather than doing anything positive to gain their wealth.
William’s article is, as always, cogent and apposite. Sadly, it does not seek to offer any solution, and that is hardly surprising as all the obvious remedies have been considered and found wanting. Perhaps the following points might be added – not as solution but as factors to be taken into account.
1. (and this is the major problem) People, by and large, are both greedy and want instant solutions. Since the cake is not large enough to go around, and no measure works in the very short term, a large part (probably the majority) of the electorate is always going to be dis-satisfied with government measures, no matter which party is in power to implement those measures. Whatever we suggest is therefore going to be opposed, probably by the majority of the electorate.
2. While the next General Election is more than four years away (Labour MP turkeys won’t be voting for Christmas!), it already seems likely that there will not be a Parliamentary nmajority for any single party. LibDems should be working on the probability of being expected to support or join in some way (no coalition, please!) another party or parties to form the next government, and considering beforehand how to react to that expectation.
2.
@Simon R – “Some may have inherited it, but many more will have earned it by setting up businesses, innovating, and in the process helping our economy significantly”
Sadly not. Per the Joseph Rowntree Foundation, 60% of private wealth in the UK is inherited, and over half of the people on the Sunday Times Rich List inherited their position there. I have huge respect for genuine innovators and ‘self-made millionaires’, but they are actually fairly rare. But vested interests hate inheritance tax, and boost their campaign against it by convincing many more ordinary people they will be affected by it than actually are.
There are also studies that clearly show that reasonable (rather than punitive) levels of tax on the wealthy don’t actually drive any significant exodus of millionaires out of a country like the UK. There is always somewhere else with lower income/capital gains/inheritance tax if that is all you care about. The wealthy in the UK are here because despite everything, it’s a good place to live and operate a business.
There are two sayings that are very relevant.
1. You can’t get something for nothing
2. If something looks too good to be true, it probably is
Yet, all political parties, including our own have been complicit in trying to tell voters that when it comes to tax and spend you can cut tax and provide excellent public services.
Perhaps that is where we should start the narrative that William suggests.
If we ever gain power, it will be useless if we have not been honest about tax -‘the entry fee to a civilised society’ as JK Galbraith put it.
If some very wealthy people choose to emigrate, perhaps they should pay a large exit fee and hand back their passports on the way out.
By the way trickle down economics is a myth, put about by the wealthy to get tax cuts. There is no evidence that cutting tax stimulates investment or enterprise. All it does is give more money to the already rich and reduce the money available for public services.
The simple fact is that we have had decades of government ‘on the cheap’ – never willing to accept responsibility to raise enough revenue to pay for all the things necessary to maintain a modern society, and instead looking for the next cheap trick to paper over the cracks.
So far a few Hence we have had
1) Privatisation (Thatcher) – Selling off state assets at the long term cost of increased cost and poorer service by the new owners
2) Demutualisation (Thatcher) – as above, but no revenue to government
3) Hiding local government pension costs (Thatcher) – Allowing local councils to underfund their pension pots by up to 20%
4) PFI/outsourcing (mainly Blair/Brown) – very long term contracts to avoid funding new schools etc For the long term impact see https://www.bbc.co.uk/news/articles/czdllq5z6jeo
5) Selling off assets (All) e.g. closing more than half the magistrates courts and selling them
6) Hiding local government SEND Spending (Johnson onwards)
7) Skipping essential maintenance – Roads, Rail, Buildings, etc.
Under Paddy we had 1p on income tax for Education which showed we were prepared to be the adults in the room, but this was subsequently dropped.
People likely to vote for us know things are a mess and we have to pay for them. We need to have the long term courage to stick to these things. It will do so much more to rebuild our core vote to what it was than entering a race to the bottom on tax.
One slight clarification. Penultimate sentence should have said “We need to have the long term courage to stick to these policies.”
Apologies.
Peter Martin”Both tax cuts and increased government spending have the potential to create economic growth”
Liz Truss did both, and crashed the economy. So – as you say later – it depends on inflation as well.
Seems to me that these things can only work if there is unused capacity in the economy. But here we are, with no growth (GDP/capita) inflation over the target, and plenty of people looking for work but can’t find it, many living hand to mouth from food banks etc. Stagflation?
Last time the economy was like this was in the 70s, when we hit peak oil in the USA and Opec cut supply to push prices up, not realising that the world economy would not support higher oil prices. Eventually a combination of North Sea and Alaskan new supply brought things back into balance, and very gentle growth resumed. After 2008, though, we have had no deus ex machina new supplies of oil, and so the world economy is more or less stuck on a gently declining path, whichever monetary/fiscal lever gets pulled. The main effect of the recent zero interest rates/ qe has been a boom in asset prices, dearer houses , therefore dearer rent, therefore those that don’t own their house (the under 40s, mostly) are suffering from a severe discretionary income squeeze.
Whatever we propose needs to be fair and seen to be fair, but it won’t be easy in these constrained circumstances.
@ Jenny,
If there are “plenty of people looking for work but can’t find it” there is going to be spare capacity in the economy. The problem, as always, is that the people looking for work probably don’t have the right skills. So there will inevitably be an inflation problem before reaching full employment if the economy is reflated using standard demand management methods.
One partial solution to this is a Job Guarantee Program which can be tilted towards giving unemployed workers the right skills.
If we have an external supply issue such as an increasing price of fuel we inevitably will get rising prices which feels like inflation but arguably it isn’t. If it is, it is of a different sort to what we might expect if we are intent on reflating the economy and overdo it. The rising prices aren’t caused by a localised lack of spare resources.
At the same time there will inevitably be a a conflict between capital and labour about who is going to pay for the crisis which adds to supply shortage issues. This is when we have what is known as “stagflation”.
As you say “….it won’t be easy in these constrained circumstances”.
However, it would help if the mainstream would get back to Keynesian economics and ditch monetarism.
So how much more would we need to start improving our country? We need to start being real.
By my rudimentary calculations, changing the rate of income tax above the Additional tax threshold to 50% from 45% would increase revenue by £5.5 billion. cf https://www.gov.uk/government/statistics/income-tax-liabilities-by-taxpayers-marginal-rate
We need to be very clear about the improvements this would make.
@Stephen Nash. Looking at that spreadsheet, I make a 5% raise in additional rate worth 8.9 bn. Aligning CGT with income tax would raise about 14 bn and increase the value of the additional rate rise if combined.
You are right though that that is still not enough to make a massive difference.
14£bn + 9£bn = 23£bn. Enough to fill that “black hole” they go on about.
If energy prices increase… the answer to high prices is high prices. But there is no substitute for energy, and no way of increasing supply . It’s a finite resource. So the economy will flatline or shrink.
@ Stephen Nash,
“By my rudimentary calculations, changing the rate of income tax above the Additional tax threshold to 50% from 45% would increase revenue by £5.5 billion”
The political right would dispute this and they do have a point. It’s true that the highest income tax band is 45%, which applies to income of more than £125,140. However, there is effectively a 60% band between £100,000 and £125,140. This is because, once you reach £100,000, each extra pound of income results in the loss of 50p of your tax-free personal allowance, which is the first £12,570 of your income. These figures are for England, Wales and Northern Ireland; in Scotland the effective rate is not 60% but 67.5%
Even 60% for England and Wales could be an underestimate if we consider that relatively high earners also lose their child benefits.
The wealthy will look for ways to dodge the tax by paying themselves in some other way. Maybe by dividends. Possibly by steering it into capital gains. A simple way is to put more into a pension fund.
The purpose of taxation is to slow the economy, preventing it overheating and so to reduce inflation. So it follows that if we do slow the economy the tax yield will also be lower. This probably doesn’t show up in “rudimentary calculations”.
Labour sensibly held back from aligning cgt with income. The clue is in the names. It would damage the economy to do so,as well as being unfair. To make it close to fair you’d need to adjust for inflation and allow the gain to be spread over the life of the asset, which would be impracticable. The black hole (£9.5bn according to the OBR) exists only because the Conservatives reduced national insurance. The tory NI rises were partly to fund NHS/care and partly to pay for furlough/energy price cap. The (Labour) idea that working people shouldn’t pay for this is just plain wrong. Putting up employer’s NI was about the worst thing they could have done. Inefficient and distortive.
It is generally a very bad idea to assume that the effect of taxes can we worked out from their names. Capital gains are merely another way of taking investment income. Anyone can choose to channel their income through a financial instrument that gains in value instead of paying dividends. Most rich people do and it’s why they appear to be paying a far higher proportion of their income in tax than they really are.
I agree that they should be able to spread it over many years but the treatment of inflation is no different from that of a savings account. You can pay income tax on the interest even though the value of your savings fall.
Peter Davies is right about capital gains. One simple method to convert taxable interest income to tax free gains is to buy low-yield gilts (rather than higher interest bonds) at a discount and hold to maturity. UK gilts are exempt from capital gains, so the income earned over the term of the bond is free of tax. Zero coupon bonds are a similar financial instrument.
Economic growth since the industrial revolution has come about as a consequence of improvements in the productivity of labour and it is advances in technology and corresponding productivity that will continue to be the key driver of economic growth.
In recent decades the benefits of increased productivity have been mostly captured by the corporate/investor sectors much moreso than by the wage sector. That uneven capture of economic gains is facilitated by increasing levels of public and private debt primarily serviced by inflated house prices/mortgage debt, rents and goverment debt service costs.
Until we comprehensively address the issue of housing affordability and wealth inequality with the focus on capturing economic rents for the benefit of society, we are unlikely to be able the solve the problems of declining levels of public services.
“Economic growth since the industrial revolution has come about as a consequence of improvements in the productivity of labour”
and those improvements rely on the substitution of fossil fuel energy for human and animal energy. Firstly coal, then after about 1940 oil. One man on a modern diesel tractor can plough 10 furrows at a time faster than a team of shire horses could pull a single harrow plough – and the horses would take 25% or more of the crop to feed, plus a couple of men to wprk the team. Without the diesel, your productivity vanishes, together with 25% of the product. And don’t forget the fertiliser, created by the Haber Bosch process from gas.
Isn’t it strange that from the end of WW2 until Margaret Thatcher, when living standards were rising, the NHS did a pretty good job and unemployment was low, income tax rates were a basic of 33% with a top rate of 98%? The only people who complained were the very wealthy, but few of them left the UK. OK there was some tax evasion, but not on today’s scale and the disparities of income we see today did not exist. Many industries were in the hands of the state, most notably public utilities, so there were no huge bonuses paid to shareholders and no obscene salaries being paid to the people who ran those industries. Yet, somehow, this has been turned round to be the most dreadful evil and our modern economy with its vast differentials in income and wealth is wonderful and taxing the wealthy destroys incentive and enterprise. Oh, and paying said bonuses and huge salaries takes preference over controlling sewerage dumping.
If we don’t speak out about these things and offer an alternative, who will?
@Mick: I’d be careful of selective memories. Yes, the NHS pre-Thatcher appeared to cope but that was at a time when it was expected to do just a fraction of what we expect of it today. You went to the Doctors if you were ill and needed some medicine. People didn’t live as long and generally didn’t need that much social care, and if they did they’d probably get it from their families. State social care of the kind that we expect today scarcely existed. As for industry: Yes, many industries were in the hands of the state, but that didn’t have all good consequences. Remember the reputation of various state controlled industries for producing shoddy goods that would quickly fall apart? Or the long waits for basic things like having a phone installed? Sure, not many people left the UK despite the high taxes but that was because travel was much harder in those days, and exchange controls meant moving your money was even harder.
And you talk about sewage, but back in the 1970s and before, sewage dumping (along with all sorts of other pollution) happened as a matter of course – I would imagine to a far greater extent than today – and without much controversy because at the time the environment wasn’t a political issue, or anything that people cared about in the way we do today.
I’m not sure I’d want to go back to that time.
From someone who was a child in the immedaite post-WW2 period – one other point.
Might it have been more common for one parent (usually mum) to be at home most of the day and therefore around when the chidren were up and about? My mother walked with me to school until she decided I could manage alone (aged about 8 I think).
I do remember the post-WW2 ‘utility’ furniture. Many households didn’t have TV sets – We had one in time for the coronation in 1953 and I think some neighbours came round to watch. (I thought it was all a complete bore).
Simon R, I may be 74, but I don’t have selective memory.
Nationalised industries did not produce shoddy goods because, mostly, they were producing utilities like transport, electricity, gas, coal and steel and other necessities of life like water. Water and sewerage were the responsibilities of local government prior to 1974 when water companies (public not private) were set up and even then local government retained responsibility for sewerage, paid by the water companies for many years. Dumping sewerage in rivers was not a common practice and I well remember attending the opening of a new ‘high rate’ filter for the Todmorden sewerage works in 1973, designed to turn foul water into water fit to be put back into circulation. There was a problem with telephones, although even before privatisation this was being rapidly improved. With the notable exception of telecommunications, the privatised utilities have been inferior to the nationalised predecessors , good only for price rises, bloated salaries and high bonuses for their directors and large returns for shareholders, instead of putting money back into utilities to improve them.
I have lived through the privatisation era and it was bad news for consumers.
In the recent periods of anticyclonic gloom the gas power stations were needed to “keep the lights on” . Apparently one gas plant owner told the grid they were taking their plant offline unless they received a very high rate per megawatt hour. They got £55k. Ignoring any other charges, that equates to £55 a kilowatt hour at your house. Ofgem will be increasing the price cap shortly. This is surely telling us that despatchable power needs to be nationalise, rather than letting the public be held to ransom.
The re-nationalisation of the energy industry should be the main government priority, followed by that of water supply and rail transport. Energy is the. bedrock of an economy and in this country consumers face a chaotic supply system.
Whatever happened to Torsten Bell when he became an MP? (And now Pensions Minister). His interview on Politics Joe “Why Britain is Poor” in 2023 as summarised by ChatGPT: (TLDR – neither did Rachel Reeves)
Torsten Bell, in the video “Economist explains why Britain is poor,” outlines several ideas on how the UK government could raise funds more effectively. His proposals generally focus on tax reforms and long-term economic strategies rather than short-term fixes. Key points include:
Wealth & Property Taxation – He argues that Britain relies too heavily on taxing income and consumption rather than wealth. Reforming capital gains tax, inheritance tax, and property taxes (such as Council Tax, which is outdated) could generate significant revenue.
Higher Taxes on the Wealthy – Bell suggests that the UK’s tax system favors asset holders. Equalizing tax rates between capital gains (which are currently lower) and income tax could help ensure that those with wealth contribute more fairly.
Land & Housing Reform – He emphasizes that landowners and property investors benefit disproportionately from economic growth. Adjusting taxation on land value or introducing a more progressive property tax could be an effective revenue stream.
Broadening the Tax Base – Instead of just raising existing tax rates, Bell suggests closing loopholes and ensuring that all forms of income are taxed more equitably. For example, pension tax relief disproportionately benefits higher earners and could be adjusted.
Overall, Bell’s approach is about rebalancing taxation towards wealth rather than work and stimulating long-term growth to create a stronger tax base.
UK democracy used to work. It was basically class conflict between Tory and Labour. Unedifying, but by and large, voters did know what they were voting for. The parties were essentially making honest promises. When the Tories promised to favour the middle-class, they duly did that when elected.
UK democracy no longer works. Increasingly, elections are won by gimmicks and lies. Austerity, Brexit, and the Tory “Low Tax Party” were all cynical dishonest gimmicks designed purely to win short-term votes. Blaming everything on immigrants is, of course, the next gimmick card which the Right will play.
Taxes have been far too low for far too long. Sadly, none of the tax-raising plans put forward here will convince the voters.
Labour only won because disastrous Tory gimmickry finally ran out of road. Responsibly, Labour finally raised taxes. Cue the pillory.
As I see it there’s only one way to fund our public services without growth, borrowing or general tax increases. It is to flatten out our income and wealth distribution by reducing it for those at the top. We live in an unequal society and everyone would benefit from a redistribution. Just like electoral reform, wealth taxes are a no brainer. So why won’t Labour implement them? Partly it is because they lack the communication skills to explain to the electorate how, what and why they will do so.