Monday 20th November
When people are asked by pollsters or in focus groups if they would agree to pay a bit more in taxes in order to have a decent NHS and improved schools and even more council houses – they usually agree, and by quite a large margin. And even when you talk to people, they almost all agree that taxes will have to go up. In 2010, when the Tories came in to power, soon after the Economic crash of 2008, they had a choice – Austerity, which they of course chose, or they could have put up taxes. At that point in time, with the air of crisis, it would have been accepted by most people that taxes would have to go up. Of course, the Tories did put up taxes – VAT, their favourite tax. And that is because VAT is an invisible tax. Unlike in many European companies and America, this sales tax is not shown separately either in the pricing or your receipt. So, although people know that they are paying taxes, they are not constantly reminded of how much, as they are on their monthly payslip.
But even so….whenever a politician even suggests that taxes should go up for ‘ordinary’ people, wherever you draw the line – there is almost an audible drawing in of collective breath. The Press, especially, are vicious in their condemnation. This is actually because they know that increases in income tax will hit the wealthy harder than ‘ordinary’ people. But, we have all been cowed into being terrified of taxation. And as a result, we face diminished lives, an NHS which struggles to even provide basic healthcare, overcrowded classrooms and dilapidated schools, social services that are barely even functioning and an old age where we will most probably have to sell our homes to pay for a private care home where the word ‘care’ should really be omitted from the title.
So why is this? Why, when we are asked if we would be prepared to pay more tax for a decent system – is it, that A) nobody is actually proposing that, and B) if they are, then they don’t get elected. Do people not realise that they will have to pay one way or another anyway?
And largely I blame Blair and Brown, who needlessly reduced income tax from 24p in the pound down to 20p, in a futile attempt to show that ‘New’ Labour were on the side of ‘ordinary’ people. Just imagine what that extra 4p in the pound could buy now? It is actually 20% of the basic rate of today.
I actually favour a far more graduated system of Income Tax, ranging from maybe 10% on low earnings and rising, say in 5% increases on each extra chunk of income. The present system of a sudden jump to 40% is stupid. Almost every company now runs Payroll through a computer programme, so the mechanics are no longer an issue. I can remember paying 35p in the pound income tax. And life still went on.
We need a complete overhaul of Income tax, not just tinkering at the edges. But I am afraid that Mr. Hammond will leave tax rates as they are next week. Our Politicians are too scared of a bad press to actually do the right thing.