Friday, July 20, 2007

Fair taxation of the wealthy

It's Friday so it must be time for my House Points column from Liberal Democrat News.

Loopy tax

When Vince Cable persuaded last year’s Conference to accept his new tax package - scrap the 50p rate, more green taxes, close loopholes for the rich - I had two reactions. The first was that he was probably right. The second was that it would be hard to sell it to the voters.

So I was pleasantly surprised by the press coverage when the policy was launched last week - there was even talk of “the lowest tax rate since 1916 when Britain’s last Liberal Prime Minister was in 10 Downing Street."

Part of the launch was a Commons debate the Liberal Democrats called on Monday under the title “Fair taxation of the wealthy“. (We had wanted “Taxation of the super-rich“, but the authorities would not wear it.)

Vince Cable, Steve Webb and Julia Goldsworthy set out our case. In Britain today the poorest 20 per cent pay a higher proportion of their incomes in tax than the richest 20 per cent. Private equity companies pay tax at 10p in the pound and their cleaners pay at 20p in the pound. Non-domiciliary status allows billionaires to live in the country and not pay tax at all.

In fact, when it comes to the City this government has been pursuing policies not so far from those adopted in Far Eastern tax havens. And London is getting the skyline to prove it.

Labour’s reply was in the hands of Andy Burnham who, as the new Financial Secretary to the Treasury, leaves you wishing there were a grown up in charge. He deployed Gordon Brown’s tactic of steamrollering all opposition with statistics.

And any statistic would do. Economic growth rates. Child and pensioner poverty. Gross Domestic Product. Michael Vaughan’s career average. Annual rainfall figures in Cropwell Bishop… They were all there.

Yet the unfairness of the current taxation system should worry Labour every bit as much as it worries us. If people think the way the state raises money is unfair, they are unlikely to vote for high public spending.

And the Tory line? Well, they disagreed when we attacked the present situation and disagreed when the government defended it. As ever, it is hard to say what the Tory line is.

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