Out on the doorsteps the voices of voters can be heard complaining of just how much money government takes from them in differing ways. There are many complaints about public sector car park charges, the Congestion Charge in London, the Council Tax, taxi licence charges, planning fees, Stamp duties, Child Benefit withdrawal, tax credit changes, higher National Insurance, rising postage stamp prices, the failure to increase the Age Allowance for pensioners, the charity tax allowance changes: I have even had a strong complaint about ice cream vendor licence charges. From public sector workers come worries about their pension contribution increases and the worsening of the terms of their pension plans.
The doorsteps are reflecting the growing feeling I have that we have reached tax saturation point. Councils are looking for all sorts of fees and charges to raise, as a way to maintain spending levels without large Council Tax increases. Central government is looking for ways to tax individuals more, including their own public sector employees, through increased taxes, charges and deductions. Some on the doorsteps demand more cuts in spending, and give examples of less desirable or wasteful expenditure they could do without. Many others are more reticent than in previous years about demanding more spending, as they appreciate that money is tight and that maybe we are up against the limit.
There is a growing frustration with all political parties. People do not feel the parties are listening to them about how squeezed they feel. In one nearby Council area I was told that a single person ice cream vendor in a van has to pay £3000 for an annual licence, on top of his fuel duty and VAT on inputs, National Insurance and Income Tax. At the petrol pumps the best part of £1 a litre is now paid as tax on every litre of diesel. If you travel 20,000 miles a year on busienss in a 40mpg diesel your fuel tax bill would be around £2000. Someone trying to buy a modest one bedroom flat in Central London would pay £20,000 or more in Stamp Duty for the privilege. A typical Council Tax bill is now well into four figures.
For small businesses the level of compliance costs with regulations, licence fees, initial banking charges, and the continuing round of public sector fees and charges can be enough to put people off starting, or to drive the business under in the early years. Tax saturation is a serious condition which undermines enterprise, reduces demand, and makes many individuals and families feel bad about their own personal circumstances. That is why government and local government need to ensure every pound they spend is well spent, on a cause supported by many voters. The country is down about the extent to which people on modest incomes are having to pay the government’s bills.