Yes, The Poor Should Pay Tax
Posted: 17/11/2013 | Author: The Political Idealist | Filed under: Uncategorized | Tags: Coalition Government, david cameron, income tax, Labour, Liberal Democrat, Minimum Wage, Nick Clegg, Personal Allowance, social justice, Tax, tax credits, Value Added Tax |Comments Off
The signature policy of the Liberal Democrats in the Coalition government is a failed attempt at electoral reform the raising of the Personal Allowance to £10,000. In other words, nobody is taxed on the first £10,000 of their earnings. Though this is a very progressive measure, rises in the Personal Allowance have been used by the Blair, Brown and Cameron governments as a means of artificially supporting those whose wages they have allowed to whither to the pitifully low level of the minimum wage.
As Nick Clegg has just called for a further rise in the tax free allowance to £10,500, I have been prompted to question the benefits of lifting the poor out of direct taxation altogether, as is his policy. Of course the well-off should bear the greatest burden of taxation: I support the re-introduction of a 50p tax band on incomes over £100,000 per year. I am proud that Britain can higher public spending than the US and still have lower levels of income and payroll taxes for most workers. However, I think its important that even the poor make a token contribution to the tax system so that they are true ‘stakeholders’ in the government, even if tax credits more than offset their tax bills. Elements of the right-wing press, already making dark implications about the value of the opinions of the unemployed, so how long until minimum wage workers are similarly ignored? The Conservatives are unlikely to support the policy unless there is political capital in it.
A much fairer policy would be to reduce indirect taxation, the most regressive taxes that there could possibly be. In particular, Value Added Tax (currently at 20%) is ripe for a reduction which would ease living costs, inflation and boost economic demand. It would benefit everyone, including the unemployed and very low earners who do not benefit from any rises in the Personal Allowance. Alternatively, Labour’s policy of a 10p tax band would be progressive but also give all workers the responsibility to contribute.
Moreover, I’m surprised that Mr Clegg believes that there is sufficient money available to the Government to provide what is a £100 tax cut to 24,000,000 people when we have a budget deficit to eliminate (and the Chancellor last week hinted that he realises that this proccess will in fact last until 2020, as people including Ed Balls- and me!- have said since three years ago) and shameful public spending cuts leading to an upsurge in homelessness and poverty, to name just some of the social problems that are exploding in Austerity Britain. Is giving the top three quarters of workers £1.96 a week really worth it when we could plough billions back into our beleaguered public services instead?
Don’t be fooled by the Personal Allowance changes: they merely amount to robbing Peter the broke pensioner to pay Paul the squeezed shop assistant.
