Taxing the poor

Yesterday was meant to be a big day in the Commons. We were all primed for the possibility that the government might offer some concessions to those on lower incomes, following its decision to snatch away the 10p income tax band and leave those on lower incomes worse off. We even heard rumours there were enough Labour rebels to defeat the government.

There were just 31 of us in the chamber (17 Labour) when Frank Field rose to make his speech to introduce his amendment. A few more came in during his remarks, only to leave shortly afterwards. It did not feel like a great occasion.

He spoke well. He dealt with the argument that apparently the government was putting round. If his amendment were passed the government would be unable to collect its income tax, and there could be a run on the pound. Bizarre! As he rightly said, if the government lost on his amendment, all they had to do was to table a motion to ensure the collection of all the rest of the income tax, and that surely would have been passed by the Labour majority. Last year when there was a big fall in the pound the government seemed keen to allow it to continue.

Being the House of Commons, this important issue had been “grouped” with other amendments which fell to be debated at the same time. As the House restled with that problem, whatever atmosphere there was on the issue of the 10p tax band was diluted. A few Labour rebels struggled to keep up the pressure, but when Sally Keeble rose to announce that as a signatory to Frank’s amendment she would no longer be voting for it, there was confirmation that the rebels had lost.

Outside the thunder and lightening struck in a biblical moment. Inside it was damp squib, as we looked upwards to see if the roof would hold out against the leaks and the rebellion fizzled out. Taxing the many to pay for the follies of the few who intend to spend and spend right up to the end of the Parliament was not how it was meant to be. Yesterday this Parliament could do no other. They may not like the whips, and they may not agree with the government, but most Labour MPs decided loyalty was the better course. They did not want to be in the chamber to hear the arguments. That might have stretched their loyalty too far.

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25 Comments

  1. Michael Hargrave
    Posted July 8, 2009 at 5:45 am | Permalink

    What a sorry lot our parliamentarians are.
    When a decent chap like Frank Field gets up to put forward an ethical and honorable stand against penalising the less well off in our community, the best the rest can do is clamber on to the tribal raft for their survival.
    Gordon Browns mantra of “for the many, not the few” seems to be apt in this case does it not?

  2. Posted July 8, 2009 at 5:53 am | Permalink

    When Brown got to his feet to deliver the 2007 budget he knew that it would be his last as the door to no.10 was already opening for him. He also knew that an election that Autumn would enable him to secure the prize of the Premiership he had pursued for so long for at least another five years. To head off the growing threat from a resurgent Conservative party he came up with a plan to deliver a tax cut to those on average earnings or more, who represented the majority of the votes he would need to achieve this.

    His problem was that this needed to be financed in some way. Any adjustment to public expenditure to do so was out of the question for him so in an act which deserves to go down in history as one of the most cynical budget measures of modern times he inflicted the burden of this onto those least able to pay by scrapping the 10P tax band.

    Such people are top of the list when it comes to those who have always looked to Labour to extend a helping hand. Instead however and at a time when the economy still seemed to be on its upward path with no prospect of bank crises in sight, Brown kicked them in the teeth. To its eternal shame, with the honourable exception of Frank Field and a handful of others the rest of the Labour party sat silent at the time and remain so today. As yesterday showed this included all of the competing (people-ed) who currently seek the leadership of their party for themselves.

  3. RobertD
    Posted July 8, 2009 at 6:00 am | Permalink

    I watched most of the debate and was embarassed for the state that our democracy has fallen into. The procedures make it imposssible for proper challenge to the government to be mounted. The government ministers responsible for the situation, Brown and Darling, could not even be bothered to show up for the debate much less get to their feet to defend their position. If thats the best the House of Commons can do then its hard to justify its existence.

    • jean baker
      Posted July 8, 2009 at 8:29 pm | Permalink

      Would you prefer direct rule under some form of dictatorship – state or Brussels ?

      • RobertD
        Posted July 9, 2009 at 6:51 am | Permalink

        Certainly not. I want reform of parliamentary procedure so that MP’s can have a real opportunity to change legislation and to demand that Ministers attend the House and account for their actions.

        • jean baker
          Posted July 9, 2009 at 11:15 am | Permalink

          You mean like a Court, with a presiding Judge appointed by the political majority in residence ?

          MP’s have always been accountable to their constituents and still are via ‘surgeries’, e-mail letter.

  4. Mick Anderson
    Posted July 8, 2009 at 6:35 am | Permalink

    Presumably those who lost out in the 10p tax grab only have enough cumulative votes in any given constituancy to unseat a few individual MPs, hence the low turnout.

    It feels as though most Labour MPs either didn’t want to annoy their Whips, but felt they couldn’t be seen to vote against the public interest with an election looming. Their easiest solution was to be “busy” somewhere else when the votes were cast. Shame that most of the opposition MPs couldn’t be bothered to turn up either.

    The simplest, cheapest and most logical way of resolving the unfairness would simply be to not implement the 2p cut in the middle rate of tax, putting everything that relates to this change back to the way it was. Apart from the lowest paid not losing out, it would also remove the need for complicated compensation schemes that will inevitably be expensive to administer.

    If even that’s too complicated, just return to the 10p rate and leave everything else in place, or increase the initial tax threshold by enough to make up the difference to the low paid. The reduction in income to the Treasury is small beer when compared with the amounts they’ve been chucking around recently.

    Regarding the argument about “the government would be unable to collect its income tax”; this is utter rubbish. Errors and miscalculations are made all the time, and the worst that happens is that the error is corrected as part of the next payment(s). For most people, this is a simple change to the PAYE code. For the self-employed, make any relevant adjustment in January, as part of the “balancing” payment. Put the lowest paid at the front of the queue for calculating the corrections and send their money back now. If it’s a “legal matter” regarding collecting taxes that have not been approved, just remember how many other legal issues the Government has been hauled up on and found wanting.

    But none of this wouldn’t suit our “honourable” Politicians – too much like admitting they’ve made a mistake.

    Reply Most opposition MPs did turn up to vote in favour of better treatment for low earners.. They did not attend the Chamber, as it was important that this was Labour occasion to battle out their own troubles. Lectures from more Opposition MPs would not have helped.

  5. Ian Jones
    Posted July 8, 2009 at 6:50 am | Permalink

    The Labour party is supposed to be the party of the poor! As far as I can tell they just support very rich bankers and the upper classes who feel everyone should be equal apart from themselves!

    I cannot believe the working class Labour MP’s stay in the party because they utterly do not represent the working or middle classes! I can only assume they have been bribed with some more expenses…… shame.

  6. Mark M
    Posted July 8, 2009 at 7:01 am | Permalink

    Disgraceful. Is there anywhere I can find a list of those MPs who turned up to debate the amendment (and therefore I can tell which MPs didn’t)? I would be very interested to know whether my MP (Helen Southworth, Warrington South) was there, and if not why not.

  7. Colin D.
    Posted July 8, 2009 at 7:26 am | Permalink

    The 10p income tax band was all about leaving people free to decide what to do with their own money. Labour deem there are no votes for them in this. Their instincts tell them it is better to tax highly and then make the poor APPLY for some of it back. This makes people dependent upon the ‘generosity’ of the Government and neatly locked in to vote Labour. There is probably no time to get an ‘apply’ process up and running before the election so what happened in the Commons yesterday was no surprise.

  8. Posted July 8, 2009 at 7:51 am | Permalink

    The 10p tax is a scratch on the surface of tacation on the poor.

    Benefit withdrawal rates of 85 to 100% exist all across the benefit system for anybody who can make a minimum wage job. It is no wonder they stay at home on benefits when they are punished so hard if they get work – would you work hard for a few pence an hour? In many cases it would cost them to go to work.

    This is the welfare state’s enslavement of the poor – not that they get benefits, but that they are so quickly removed on the slightest earnings being made.

  9. Brian Tomkinson
    Posted July 8, 2009 at 7:53 am | Permalink

    It’s disgraceful that the unfair treatment of those with the lowest incomes should be treated with such disregard by a Labour government supported by its tame lobby fodder. It should be remembered that this iniquity was introduced by Brown in his last budget in 2007. Without going through all the history of this woeful treatment it is a scandal that no satisfactory method of rectifying this has been found after all this time. I saw some of the proceedings. As usual the argument was won but the vote was lost. The government argument seemed to be based on the fact that there are a comparatively small number affected, they have no idea how to resolve the issue, despite all the resources at their command, and finally they threatened their own MPs with the hollow threat that if passed this would prevent them from collecting income tax this year. The attendance was sparse. All in all this didn’t present a favourable impression of the proceedings of the House of Commons.

  10. Waramess
    Posted July 8, 2009 at 8:31 am | Permalink

    This reallly is a gvernment withering on the vine.

    What a mess and what a pigs ear they are making of their prospects of any support in the next GE.

    Just maybe we will get a Tory government and a Liberal opposition next time.

    But that will still leave the question of what to do about Cameron and Osbourne

  11. Acorn
    Posted July 8, 2009 at 10:02 am | Permalink

    Frankly JR I don’t know why any back-bench MP, on either side of the HoC, bothers to turn up. Knowledge is power and the lobby fodder ain’t got none; and, that includes opposition front benches.

    The simple fact that the Civil Service works exclusively for the “executive” NOT parliament was all to apparent. Dear old Frank got caught out by the, half a million households AND/OR 1.3 million persons data. He had to admit he didn’t know which, as he was quoting from the IFS. But the Treasury bench did know; the boys in the box (to the right of the speaker), had been on the phone to find out and keep their minister way ahead in the game plan.

    If that debate had occurred in the US Congress, the Congressional Budget Office would have supplied everything members wanted to know. That is why nobody f***s with a Congressional Committee. Compare them to our pathetic Select Committees.

    Until Parliament gets its own resources to investigate matters, it will continue to have no ability to hold the executive to account. Yesterday demonstrated that in spades. Get the executive out of Parliament. It is time to put an end to dictatorship government with its unelected El Presidente.

  12. A. Sedgwick
    Posted July 8, 2009 at 10:55 am | Permalink

    I have to repeat my previous view on what seems to me a blindingly obvious necessity and massive vote winner – simplify income tax system by removing allowances/credits/reliefs and take the lower paid completely out of the tax. Tax relief for pension contributions has become a bad bet for most with the death of private final salary schemes and for those in them, mainly state employees, the end pensions do not warrant the added bonus of tax relief on contributions. A tax free income of £12,500 p.a. and a flat tax of 25% + N.I. thereafter should be manageable.

    • Adrian Peirson
      Posted July 8, 2009 at 4:02 pm | Permalink

      Exactly, if they disn’t steal our money in the first place, we wouldn’t need it back as Welfare or Credits.
      and even if we did, our friends, relatives and collegues would be better placed to help us out.
      We are being deliberatley enslaved and this represents further evidence we are sliding into Communism.
      I believe we work better as a society when we are incentivised, not by the Gun, but by Reward for our efforts.

  13. Lola
    Posted July 8, 2009 at 1:48 pm | Permalink

    The hypocrisy of the New Labour in respect of pensioners incomes is one of their blackest legacies.

    We act for a lot of ladies of a certain age. These selfreliant and mostly fiercley independent stalwarts of the community usually have a modest pension (or widows pension) they’ve worked for, modest investment portfolios that they’ve made sacrifices to acccummulate and they never moan. Brown has hit their incomes in three ways. One, the removal of the dvidend tax credit reduced the income from the equity component of their portfolios or drove down its capital vale. The banding creep for the tax allowances has not kept pace with RPI and more of them now pay tax than before. And lastly there is the 10p tax rate debacle. Doubling the income tax payable by these people is a total scandal.

    Every time I hear Brown or some other New Labour appartchik bang on about how much they have done for the elderly….well, I can’t post here what I think.

    • Adrian Peirson
      Posted July 8, 2009 at 4:07 pm | Permalink

      It’s a Disgrace the way we treat our elderly, the way I see it they work all their lives and now we have a system where once they become ill, they are asset stripped to pay for private care then abused to death in Privatised care homes.
      And I hear Lord someone or other is pushing for a Bill to introduce Euthenasia.
      Of course they argue it would be used only under the strictest of controls, rather like the abortion laws would, 7.2 Million since 1970.
      Now we have these centres in every town reasssuringly called pregnancy advice centres.

      http://www.youtube.com/watch?v=OcrfaWzREVM

      • Lola
        Posted July 8, 2009 at 9:27 pm | Permalink

        With respect I am not entirely on your side regarding ‘asset stripping’ if by that you mean the effectively forced sale of an elderly and inform persons home to pay for long term or nursing care. Assuming that the elderly person has offspring waht you are really suggesting is that their inheritance should be subsidised by the rest of us. I do not approve of that.

        The problem is too many people have relied on their home as a source of wealth and saving. If that means that it has to be sold to pay for LTC then so be it.

        I have some experience of private LTC/Nursing homes and by and large they do a good job. The state run homes I have knowledge of are generally staffed by less caring people than the private homes.

  14. Deborah
    Posted July 8, 2009 at 4:32 pm | Permalink

    It is sickening how many of our elected representatives put party loyalty (ie their own careers) before the people they are meant to represent – even when it will hurt the poorest in society and means supporting a policy which is contrary to their party’s core values.
    The expenses scandal was bad, but this is where the word “honourable” really rings hollow.

  15. Posted July 8, 2009 at 5:06 pm | Permalink

    It stinks. You are right (again!!).
    But, can you put your hand on your heart and tell us that the Conservatives, if elected, will be any different? Power and the gift of Offices to followers are very basic instincts. When they fall to the Conservatives, will they be able to resist that pressure?
    I honestly think that giving up smoking is easier than giving up the gift of Office to followers.

  16. Matthew Reynolds
    Posted July 8, 2009 at 6:44 pm | Permalink

    Well to state the obvious why take income tax & NI from those who low incomes only to give it back in complex welfare payments that either diminish the higher a persons income ( like tax credits that create a poverty trap) or are mad ( like child benefit for those who do not need it) ? This creates huge administritive costs and by retarding social mobility you fuel poverty as self-improvement is punished by means-testing.

    To state the even more obvious why not phase out tax credits & other handouts for the working poor and raise the basic personal tax allowance & NI starting threshold ? Ronald Reagan gave egalitarianism the elbow by not opting for yet more liberal-left ideology but went for lower taxes instead. The result was faster economic growth, more social mobility and falling poverty rates.

    Job Seekers Allowance & Incapacity Benefit ought to be replaced by one sort of stringent payment designed to slash economic inactivity . Private firms ought to be paid to get the jobless back into work while pointless training schemes like the New Deal need to be axed. A Citizenship Pension ought to be implemented to reduce pensioner poverty and reward saving as well as ensuring that those not on full NI such as women raising children are not punished. The Dutch & Swedes know that vouchers benefit all children and the Germans & French know that Social Insurance improves healthcare for everyone.

    There is a strong case for radical policies to help reduce poverty so that the Tories are a true one-nation reformers party again. Getting funds to charities & churches to tackle social problems will achieve more results than men behind desks in Whitehall following Soviet style targets while being remote from local people.

    The 10p tax band fiasco should be an opportunity for the Conservatives offering to recast the welfare state so that it is truly fit for purpose in the 21st Century. The Five Giants as pointed out by Beveridge need slaying with modern tools.

    The Tories need to get radical about tackling poverty because the 10p tax debacle shows that the majority of people want something done urgently about this.

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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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