The debates over this year’s Finance Bill have been predictable and repititious. The Labour opposition has been keen to find new ways of taxing people. Their biggest hope was to move an amendment to bring in a Mansion Tax, trying to tempt the Liberal Democrat backbenchers into voting for what was Liberal Democrat policy. They still want to tax banks more, and wish to add further anti avoidance measures to the Coalition’s tally.
The results were poor, with most Liberal Democrats staying away from the debate, and all Liberal Democrat Ministers happy to support the government line. Even if Labour had been more persuasive and found a few more backbench Lib Dem rebels they would have been well short of victory. The arithmetic of the House is simple. Labour and Lib Dem backbenchers can never win a vote. Labour and enough Conservative rebels can win and have won a vote.
The Treasury did produce some numbers to give us an insight into a Mansion Tax. Labour wish to raise £2bn from it, and wish to confine it to properties over £2m. That would mean an average tax of £36,000 each year per property, though Labour stressed they wanted to have a higher rate on dearer ones and a lower rate on the ones near the £2m threshold.
There still seem to be a good many MPs who think the UK’s problem is too little tax rather than too much spending. Though all three parties now give voice to the idea that the deficit has to be brought down and the rate of increase in cash public spending cut, underneath lies an urge to tax more. Parliament devotes too little time to exploring how parts of the public service could do more for less, or thinking about which parts of public spending are less desirable or necessary. The PAC is busy running campaigns over companies and institutions which pay too little tax in their view, rather than highlighting waste, fraud and over the top spending.
MPs often quote the figure that the Coalition has made 80% of the adjustment to the deficit by cuts in spending and only 20% by tax rises. Yet the cash figures show a very different picture. The Coalition so far has relied entirely on higher tax revenues to cut the deficit, as cash and real terms current spending is up, and they increased the capital spending figures a little from the deep cuts Labour announced whilst still in office.