If the Lib Dems speak of lower taxes it must be popular!

There has not been a lot of point in writing about the Lib Dems and Mr Clegg. Since the Clegg and Huhne race ended, a tired Mr Clegg, who had been slowing throughout the Leadership campaign, has had an even worse period as Leader. Occasionally, he comes up gasping for the air of publicity by stating something over the top, or self serving, only to disappear breathless.

It was typical to see that some Lib Dem source recently informed a press report that they would wish to support a Conservative government in office. I understand that Nick Clegg’s office has denied this is the position. This was said around the time the polls told him his party was in a poor third-placed position at Crewe, and around the time of the May 1st Council results, where the Conservatives had performed strongly. Someone must hope that showing sympathy for the newly popular Conservatives would lead to some of the stardust rubbing off.

It is a bizarre thing to say strategically. It would tell everyone that even the Leader of the Lib Dems does not think they have a prayer of doing well in a General Election. It would show Lib Dems have no principles, because he and his colleagues have spent much of the last few years in the Commons criticising just about everything the Conservatives say and do. It would be odd to pledge to support Conservative budgets before we are in a position to work out what those budgets might look like after 2010.

Today, we are asked to believe that, by some extraordinary metamorphosis, the Lib Dems are a party of lower taxation! They do not know how to spell it, let alone back it or implement it in local government, where they still control a few Councils.
They claim they would like to cut Income Tax to 16p in the pound, but only to accommodate a local income tax which would take it straight back to 20p in the pound, or higher. Meanwhile, many other new and higher taxes would be needed to replace the lost revenue from the fall in national income tax.

I will believe the Lib Dems support lower taxes, only if and when their Councils do what Hammersmith and Fulham, a Conservative-controlled Council, are doing – cutting Council Tax one year after another as a result of better control over spending. If I heard their spokesmen on radio and TV arguing for less public spending, I would be more inclined to think the leopard was changing its spots. I usually hear them supporting higher spending on all manner of causes, good and bad.

All the Lib Dems’ “conversions” to lower taxes tells you is that it now polls well. I am delighted to learn that all three main parties now want lower taxes. For Labour, we have seen they cannot deliver – those on lower incomes have to pay for the tax reductions for the rest through the abolition of the 10p band. Motorists, too, have to pay to allow a headline-catching income tax rate reduction. For the Lib Dems, by the admission of their own briefers who want to spell out which main party they would support, they do not expect to be able to form a government, so they can make foolish tax promises without ever being tested.

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9 Comments

  1. Posted May 20, 2008 at 11:19 am | Permalink

    We have read the latest LIB Dems Document on LIT.
    They have always been very keen to say that a property tax is unfair and that they would ‘do away with’ the present system of council tax

    Towards the end of this paper they say that a Land tax would be involved. Isn’t LAND property?

    Isitfair is a Nationwide Campaign calling for the Reform of the Council Tax System

  2. Posted May 20, 2008 at 12:48 pm | Permalink

    The party executive (admitedly the Scottish party) unanimously voted to expel me because I had suggested cutting corporation tax & government regulatory power because this was "too right wing" to even be discussed & "illiberal" (I admit the latter still rankles). Thus I have to agree that any claims by Mr Clegg to hold such views literally cannot be true & are done purely for electoral purposes. The corolary of this is that if even the LudDims believe such camouflage to be electoraly advantageous the Tories should speak out firmly.

  3. Donitz
    Posted May 20, 2008 at 9:26 pm | Permalink

    Who are the Lib Dems?

  4. Posted May 21, 2008 at 9:20 am | Permalink

    There seems to be an a priori assumption on this site that taxes are a bad thing and that everybody should strive to avoid them.

    I am no expert but a tax on cigarettes is probably a good thing on balance is it not? So this admits into the argument the notion that taxes can discourage socially harmful behaviour, the London Congestion Charge having something of this justification about it.

    It does not seem to be different in kind to propose Land Value Tax to replace other taxes (see Mark Wadsorth's Tax simplification scheme for the Bow Group) as this would prevent house price bubbles which do great economic harm (and are presently threatening the entire financial system)

    It is not as if a young household shelling out £800 a month mortgage (or rent )is not already paying a tax on the land they live on.It is just that this tax is collected by the private sector Since good houses can be built for less than £100,000 , well over half of the young's accommodation costs can be accounted for by the cost of the bare earth under their feet. A Land Tax , which is hardly an innovation of the elegantly bearded Henry George (see photo on Wikipedia) as it is this country's original tax, would simply replace the private tax on the young with a public one.

    As far as most economically vulnerable people are concerned the effects would be revenue-neutral.

    The notion that we need a country where everybody is prosperous and taxes would diminish this prosperity is naive. George wandered about during a Californian Gold rush when there was a lot of money about and could n't see why there were no signs of new found wealth.He then discovered that land prices had gone up cancelling the gold strikes out.

    If the Guv does n't sequester land value increases ,the private sector will.

  5. Posted May 21, 2008 at 12:48 pm | Permalink

    Though I have previously said alcohol & tobacco taxes should be raised long term at about 5% above GNP & inflation I would not go so far as to say that such taxes are a priori a good thing. If it were possible to pay for government without raising any form of taxes against anybody I doubt if we would raise them purely for the pleasure of discouraging our vices (puritanism of that extent is also a vice).

    Unfortunately government costing nothing seems to me to be about as improbable as repealing the Law of Gravity.

  6. Posted May 22, 2008 at 8:36 am | Permalink

    Dunno about unlikelihood of Guvmint costing nothing (Neil Craig above) but at the (considerable) risk of harping on: LVT does make a lot of Government activity self-financing e.g. Crossrail: you build the thing;property values rise round about; you tax these rises: the project is paid for by the tax revenues.Increased property prices along the Jubliee Line would have paid the construction costs many times over.(See Don Riley's book) Steve Norris has said that for Crossrail financing it by LVT is a no-brainer.
    If you don't collect some of the increases in land values near big infrastructure projects, you get the present situation: businesses and their employment,( especially start-up businesses) cannot go to advantageously placed sites near motorways/ improved commuter rail lines because the landowners ask too much money for improved site values they have n't, themselves, created.
    These people are the first to squeal about other people getting subsidies: the whole class of owner-occupiers is subsidised by unearned capital gains but sees itself as sturdily self-reliant though dependent in some ways as pod dwellers in the Matrix.

    Reply: One of the many problems with the site value tax is people who live and work in a given place and have no benefit form the transport project suddenly have to pay a lot more.

  7. Posted May 22, 2008 at 8:00 pm | Permalink

    You make a good point on LVT DBC – I once proposed this as a way of financing cutting tunnels to the Scottish isles as Norway does. http://a-place-to-stand.blogspot.com/2006/12/scot
    The practical problem is that government is very poor at choosing transport infrastructure on economic rather than political grounds (ie its commitment to rail over road) & given the power would be apt to abuse it. I would support putting all road, bridge, tunnel, rail etc building under an independent publicly owned company funded out of road tax, LVT (& theoretically a levy on rail profits) with a remit to maximise income by building roads etc where they made sense.

  8. Posted May 23, 2008 at 8:08 am | Permalink

    I don't know whether its the done thing to reply to "a reply"on this site , but ,in the situation described above, its the landowners under a scheme of Land Value or Site ValueTax that have to repay an annual percentage of the land value uplift that has been gifted to them by the local improvement. The benefits they get are over and above , and quite independent of, any immediate benefits they may get in reduced, travel times, more comfortable travel etc.These benefits are clearly identifiable objectively in increased land values
    .It is not as if they are hard to quantify.
    If you don't tax the steady windfall effect of increased land values, you cash strap local authorities making them beholden to central government and allow an influential class of freeloaders to benefit from public and private effort, in a way that burdens business particularly with higher rents and property purchases.
    What is more the businesses and workers, for want of another term, are burdened with direct taxes like Income tax, to replace the rightful tax forgone.
    This situation is present reality and no less ridiculous (and expensive) for being the accepted norm .
    N.B It is no wonder that 19th century Land Taxers were Liberals representing the Manufacturing Interest who saw the gradual decline of the original land tax as counter to their interests as producers and employers.

    Reply: Exactly – so someone seeking to enjoy their business or residential premise who gets no gain themselves has to sell up.

  9. Posted May 23, 2008 at 10:25 am | Permalink

    Please tell me if I am wrong, as I understand it from the above, only the owners of properties would have to pay this tax. People living in rented accomodation would not have to pay.
    How fair is that? It is people, not properties that pay tax and all the people using the services of local councils should pay their share. Because I live in a very small property in one part of the country my home falls into a band E. Elsewhere it could fall into a band A or B. The part of the country in which I live does not necessarily reflect my wealth, so, why should I pay a vastly different amount of council tax or land tax. Why should I be further penalised for being frugal in my youth and buying my home rather than renting? Not on.

    It seems to me that all three main parties are in favour of some sort of property tax. If it is to remain as such then it has to be made fairer. More affordable and payable from income.
    Personally, I would like to see the core services (education, social care, land fill etc.) funded by central Government. Would you feel so bad if your council tax was about 25% of its present cost? I don't think so.

One Trackback

  1. By   Cutting Tax by The ThunderDragon on May 21, 2008 at 4:05 pm

    […] and “principles” and jump on the tax-cutting bandwagon. Whoops, your poll-chasing is showing , […]

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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