Thursday, May 06, 2010


Lib Dem Fair Taxes: The Reverse Poll Tax

You want the most blatant difference between parties? Tax. The Liberal Democrats would raise taxes on the richest to give a £700 tax cut to low and middle earners; Labour have just raised taxes again on low and middle earners; the Tories claim they want to reverse Labour’s tax rise, but won’t say how to pay for it – while their biggest commitment is a massive handout to double millionaires. And the simplest way to explain that difference? Remember the last Tory Government’s flagship poll tax, taking proportionally most from the poor? Lib Dem fair taxes are the exact reverse.

And, yes, I know this one’s pathetically late, but come on – the Lib Dems will keep on campaigning on it, and the Tories will keep on slashing the poor to subsidise the rich.

The Tories Only Cut Taxes For the Wealthy – and Make the Rest of Us Pay

The poll tax was the Tories’ big new idea to take them into the ’90s. It was so shockingly unfair that it brought riots on the streets. Simple idea: instead of taxing people on the value of their homes, everyone would pay exactly the same. Sounds fair for a second… Until you realise people on the lowest incomes would have to pay just the same as a multi-millionaire. A tiny fraction of the ultra-rich’s income; a massive hit to someone working hard to make ends meet. No wonder that tax break for the richest brought down Mrs Thatcher as Prime Minister and forced the Tories to cobble together the mess that’s the council tax instead.

Today, exactly the same instinct that created the poll tax has risen to the privileged top of the Tory Party again. They just don’t learn. For three years, it’s been their main tax priority to cut inheritance tax for double millionaires. At a cost of £6 billion to the rest of us, only the richest 3,000 families in the country would get a tax cut of a quarter of a million quid each. Nice if you can get it!

Lib Dems Cut Taxes For Most – Wealthiest Pay More

In complete contrast to the Tories’ tax plans, the Liberal Democrat flagship policy in this election is a massive £17 billion tax switch. Everyone earning up to £100,000 a year would pay no income tax on the first £10,000 they earn. That means a tax cut of £700 for most people on low and middle incomes.

And to pay for that enormous cut? Five different tax rises at the other end of the scale: equalise capital gains tax with income tax, so people can’t dodge taxes by sticking their loot into property; giving everyone the same basic rate pension relief, instead of giving twice as much back to the wealthiest; a 1% mansion tax on any property value above £2 million; cracking down on tax avoidance, including specific measures on stamp duty and a new general law against measures designed to dodge tax; and taxing air travel per plane, not – as it is now – per passenger, so air freight pays its weight in tax and polluting planes fly full instead of half-empty.

Making Work Worth Working For

Everyone who’s ever worked on a low wage – and I know this, but I can’t imagine many Tories do – knows that one of the big problems is that benefits vanish just as your hard-earned cash starts to disappear in tax. It means you’re often hardly any better off working than not. No, if you earn under £10,000, you won’t get the full £700 – but you will get to keep what you earn, rather than see it pocketed by the tax man.

Labour prefers to make people dependent – taking money with one hand, giving tax credits back with the other… As long as you jump through the right hoops, and fill out the right forms, and wait for the money to come through, and hope it doesn’t get taken back because they made a mistake or changed their minds. They just love to control people – they just don’t understand that it’s better, simpler, and cheaper than all the bureaucracy just to have the self-respect of keeping your own money, not relying on the whim of government handouts. And to make sure they keep low and middle earners in their place, Labour have done the opposite of the Lib Dems taking people out of paying tax altogether. They’ve claimed not to increase income tax… But they doubled the tax on every single one of the lowest earners by scrapping the 10p rate. They raised taxes on income without saying the words by raising national insurance – which works in just the same way for most. And rather than lifting that threshold at which people start paying tax, Labour’s frozen it at just about £6,000, so that inflation alone means the lowest earners get clobbered for extra tax.

Tories Prefer To Hit the Poor Rather Than Rich Tax-Dodgers – Who’s Surprised?

The gap between the rich and the poor is bigger under Labour than it was under Mrs Thatcher. The lowest-earning 20% of people pay a higher share of earnings in tax than the wealthiest 20% under Labour. It’s the purpose of the Liberal Democrat tax switch to tackle that, to make taxes fairer.

I’ve written about the Tories’ very different tax-cutting agenda, instead to widen the gap between rich and poor. But the parties also have a different idea of who to chase hardest for money gone missing. I mentioned that the Liberal Democrats want to chase tax-avoiders. Well, let’s look at the figures. Tax avoidance that’s currently exploiting legal loopholes is estimated to cost the taxpayer nearly £50 billion a year: the Lib Dems’ plans assume that, by taking action to close those loopholes, at a conservative estimate about 10% of that would be scooped up – about £5 billion. That’s not counting getting harsher with not the dodgy dodgers but cracking down on definite criminals: illegal tax evasion costs taxpayers £15 billion a year.

So what’s the Tories’ priority? Not one word about wealthy tax dodgers. Instead, their right-wing dog-whistle posters shrieked “Let’s cut benefits for those who refuse work” and, after twenty years of every government cracking down harder on people who not just refuse to work but are too ill to work or who can’t find a job because the government’s stuffed the economy, how much more do you think can be squeezed by kicking the poor still harder? The Tories scream that they want to kick the poor. The Tories shout that they want to give massive handouts to idle millionaires. And while tax evasion costs taxpayers £15 billion a year… Benefit fraud costs just over £1 billion.

You might be more generous or more imaginative than I am, but I can’t think of a single possible explanation for the Tories attacking people who cost £1 billion and giving extra to people who cost £15 billion that doesn’t boil down to them getting all their funding from rich tax dodgers on the one hand, and wanting to grind down the poor and sick who can’t hit back on the other.

The Reverse Poll Tax – The Tax Cut Tories Will Never Agree With

In the election TV debates, David Cameron described the Liberal Democrat tax cut as “a beautiful policy,” but said that it couldn’t be afforded. That was a lie. You can pay for a £17 billion tax cut – by raising £17 billion more from the wealthiest, who currently pay a smaller share of their income than the poorest.

Well, we know why that’s almost literally unthinkable for David Cameron, don’t we?

The difference between Liberal Democrat and Tory tax cuts could not possibly be any clearer. And to return to the comparison with the poll tax…

Remember how the poll tax gave a massive tax cut to people living in huge mansions, while hammering people on tiny wages in tiny homes? The Tories today want to give a much, much bigger tax cut to people inheriting huge mansions – not even to people who’ve earned them. The Liberal Democrats today want to pay for a tax cut for ordinary people, in part, by taxing huge mansions.

Remember how the poll tax took the same amount of cash from everybody, so the rich gave up the tiniest fraction of their wealth and the poor were robbed of a huge slice of what they earned?

The Liberal Democrat tax cuts are the precise reverse of that.
By giving back the same amount of cash to everyone earning between £10,000 and £100,000, it’s fair – because everyone gets the same – but helps you more the less you earn, which starts narrowing that gap between rich and poor where lower earners pay a bigger share.

The Liberal Democrats have said they want to give a tax cut of £700 to low and middle earners – which means that the lower down the scale you earn towards £10,000, the bigger the percentage gain to your wages.

The Liberal Democrats have said they want to cap all public sector pay awards, with the economy doing so badly, at £400. Again, a solid cash figure – again, that means that the lowest earners would get the biggest percentage increase, but better-off public servants (like MPs) couldn’t get a larger share.

Not all tax cuts are the same. The Conservatives’ instincts are still exactly the same as those that created the poll tax to help the rich. The Liberal Democrats’ instincts for fairness are exactly the opposite – helping the lowest and lower middle earners most. And, of course – unlike the Tories – the Lib Dem manifesto printed the figures to say how it would all be paid for.

There is all the difference in the world.

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