Gordon Brown is casting about for ideas that could unseat him. One way is to reintroduce the EU regionalisation in England by the backdoor and give them the power to vary income tax after a settlement from central government. This would destroy the county system, deploy regions without pesky obstacles like referenda, enshrine redistribution from South to North enhancing Labour control of its heartlands and prevent or postpone the emergence of an English political unity.
The proposals have been drawn up bt Gordon Brown's tax adviser, Chris Wales, whose earlier proposals led to windfall taxes and the removal of tax relief on pension funds. His role appears to identify areas of potential tax revenue where Brown could act as a shakedown artist and damn the consequences. These are then debated by the Smith Institute, the politicised charity that acts as Gordon's personal think tank and uses taxpayer resources in a questionable fashion. One for a porkbuster.
Under his proposals, local authorities would be
merged to "attract a higher quality of councillors and officers". Local
authorities would be wholly financed through basic rate income tax,
currently set at 22 per cent of income up to £39,825. The tax would
still be collected from pay packets nationally but the level of tax
would vary by local authority.
Mr Wales suggests
that the hole in Whitehall finances could be filled with a national
property tax, also linked to income to avoid pensioners living in large
properties but with little income being hit. Inheritance tax could also
be scrapped.
Central government would continue to collect and be funded by higher-rate tax, VAT, national insurance and other duties.
Chris Wales has an online article in the Telegraph where he sets out the case for radical change in taxation. Yet, his unwillingness to realise that continual changes have led to a complex tax system open to abuse undermines his philosophical nostrum of fair taxation. And the increase in taxation on lower income households, offset by a complex tax credit system, is unjust.
It is easy to get lost in the labyrinth of defining
what is meant by “fairness”. Are we more concerned about horizontal or
vertical equity? How much weight should we give to inter-generational
fairness? Is fairness more important than simplification? Does fairness
exist at all, except in distorting prism of prejudice through which, as
individuals, we see the world?
The search for
fairness may ultimately be futile. But the search for a broad consensus
is certainly not. And to achieve consensus, there has to be a vision of
the tax system that can be articulated and specified and around which
opinions can be sought.
The UK tax system has
evolved over many generations and it has been used for purposes that go
well beyond its historical function of raising revenue. It has been an
economic tool to promote efficiency, a political tool to achieve
redistribution of income and wealth and a social tool to encourage
welfare and development. Yet in all this time, real opportunities for
informed debate about taxation choices have been limited. In principle,
the people consent to a given level of taxation at the time of the
General Election. In practice, there is little constructive debate even
then about the level of taxation and even less about the way in which
it is levied. This makes it difficult for any party to claim consensus,
either for the taxation system as it stands or for a particular
re-shaping of it.
The debate on taxation should not be instrumentalist, since that distorts all levies. A fair tax is a flat tax, in a simple system that the lay person can understand, with a clear link to those who have the power to tax so that they can be held accountable. Labour has ensured that our tax system does not meet these simple outcomes.