Adopting my alter ego of Nostrafatbigot it is incumbent on me to make a prediction. I predict that the next general election will be dominated by the issue of taxation of the poor.
The country's economy has never experienced the bizarre situation we see today. Mr Brown's tax credit scheme requires the poor to be taxed so that he can then hand back some of the money he has taken to some of the people from whom he has taken it. It is completely bananas. The administrative costs of the scheme are vast and errors enormous.
A statutory minimum wage was introduced in 1999 (they have had one across the USA since 1938, first introduced in Massachusetts more than 20 years earlier). Employers who do not pay the minimum wage can be prosecuted and fined up £5,000 for each incident. Yet the government can, and do, reduce the minimum wage by taxation yet are at no risk of prosecution.
Increases in rates of pay for many of those on low levels of income are determined by the Consumer Price Index, a statistical basis for measuring inflation which examines the change in prices of a range of items deemed to be representative of an average household budget. As a measure based on spending patterns of from average household income, of necessity it includes items beyond the expected spending power of those on low incomes. Currently the CPI measures annual inflation at around 3%. For those on low incomes this is far from reality when faced with almost weekly increases in the cost of basic foods and soaring energy bills.
To pay for the government's ceaseless increases in expenditure taxes have to rise. Raising income tax is political suicide so indirect taxes are the preferred option. Those on low incomes are the hardest hit.
Retired people who have paid national insurance contributions fully for 44 years (men) or 39 years (women) are paid a state pension of £90.70 per week for a single person and £145.05 for a married couple, other state benefits increase these figures to an average of around £140 for a single person and £155 for a married couple. Private pension arrangements assist many but those who relied on assurances from governments of both parties that the state pension would provide for their needs did not take out private provision and now have incomes far lower than they were led to believe.
The double-whammy of tax increases and inflation hit the most vulnerable the hardest. These people have long been viewed as natural Labour Party voters. The more the Labour government squeezes this part of its natural constituency the greater the chance that the victims will change allegiance.
Two events in very recent political history tell us a lot about the attitude of the country to taxation.
Last autumn the Shadow Chancellor of the Exchequer, George Osborne, announced a proposal to raise the threshold for inheritance tax to £1million. The government said it was unaffordable and, somewhat contradictorily, that it would only apply to 6% of estates. The people said those who had built up a nest-egg for their children and grandchildren should not have it raided by The State; the opinion polls changed overnight and have stayed consistently strong for the Conservatives ever since. Never before has a single policy proposal caused such an enormous change to declared voting intentions.
The government was forced to make a second budget in 2008 by public outrage that the poorest would lose the 10p tax rate and have to pay their first band of income tax at the rate of 20p in the pound. I am not aware of a single person who favoured increasing the bottom marginal rate of tax by 100%, it was an obscene proposal and was viewed as such by those at all levels of income. Gordon Brown's stock plummeted as he claimed over and again that no one would lose money as a result of the change, perhaps the most absurd fib ever told by a British Prime Minister. We might never know whether he opposed his Chancellor climb-down on this issue (the change in tax rates was, of course, contained in Mr Brown's last budget when he was Chancellor in 2007), but the credibility of both was destroyed forever by this shockingly bad policy.
We wait to see whether Mr Cameron will follow the position taken by such senior members of his party as John Redwood and concentrate much of tax policy on ensuring that those with least to spend spend least on the government. Such an approach would, I believe, have wide support for many reasons but, perhaps, most compellingly because it is the fair thing to do.
The country's economy has never experienced the bizarre situation we see today. Mr Brown's tax credit scheme requires the poor to be taxed so that he can then hand back some of the money he has taken to some of the people from whom he has taken it. It is completely bananas. The administrative costs of the scheme are vast and errors enormous.
A statutory minimum wage was introduced in 1999 (they have had one across the USA since 1938, first introduced in Massachusetts more than 20 years earlier). Employers who do not pay the minimum wage can be prosecuted and fined up £5,000 for each incident. Yet the government can, and do, reduce the minimum wage by taxation yet are at no risk of prosecution.
Increases in rates of pay for many of those on low levels of income are determined by the Consumer Price Index, a statistical basis for measuring inflation which examines the change in prices of a range of items deemed to be representative of an average household budget. As a measure based on spending patterns of from average household income, of necessity it includes items beyond the expected spending power of those on low incomes. Currently the CPI measures annual inflation at around 3%. For those on low incomes this is far from reality when faced with almost weekly increases in the cost of basic foods and soaring energy bills.
To pay for the government's ceaseless increases in expenditure taxes have to rise. Raising income tax is political suicide so indirect taxes are the preferred option. Those on low incomes are the hardest hit.
Retired people who have paid national insurance contributions fully for 44 years (men) or 39 years (women) are paid a state pension of £90.70 per week for a single person and £145.05 for a married couple, other state benefits increase these figures to an average of around £140 for a single person and £155 for a married couple. Private pension arrangements assist many but those who relied on assurances from governments of both parties that the state pension would provide for their needs did not take out private provision and now have incomes far lower than they were led to believe.
The double-whammy of tax increases and inflation hit the most vulnerable the hardest. These people have long been viewed as natural Labour Party voters. The more the Labour government squeezes this part of its natural constituency the greater the chance that the victims will change allegiance.
Two events in very recent political history tell us a lot about the attitude of the country to taxation.
Last autumn the Shadow Chancellor of the Exchequer, George Osborne, announced a proposal to raise the threshold for inheritance tax to £1million. The government said it was unaffordable and, somewhat contradictorily, that it would only apply to 6% of estates. The people said those who had built up a nest-egg for their children and grandchildren should not have it raided by The State; the opinion polls changed overnight and have stayed consistently strong for the Conservatives ever since. Never before has a single policy proposal caused such an enormous change to declared voting intentions.
The government was forced to make a second budget in 2008 by public outrage that the poorest would lose the 10p tax rate and have to pay their first band of income tax at the rate of 20p in the pound. I am not aware of a single person who favoured increasing the bottom marginal rate of tax by 100%, it was an obscene proposal and was viewed as such by those at all levels of income. Gordon Brown's stock plummeted as he claimed over and again that no one would lose money as a result of the change, perhaps the most absurd fib ever told by a British Prime Minister. We might never know whether he opposed his Chancellor climb-down on this issue (the change in tax rates was, of course, contained in Mr Brown's last budget when he was Chancellor in 2007), but the credibility of both was destroyed forever by this shockingly bad policy.
We wait to see whether Mr Cameron will follow the position taken by such senior members of his party as John Redwood and concentrate much of tax policy on ensuring that those with least to spend spend least on the government. Such an approach would, I believe, have wide support for many reasons but, perhaps, most compellingly because it is the fair thing to do.
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