Richard Baum

Bury South MP and Health Minister Ivan Lewis writes in the Sunday Times today , suggesting that the way to alleviate financial pressures for middle-income earners is to raise taxes for the rich. He is wrong, ignoring the glaring policy errors of his own government, and amply demonstrating the nannying, we-know-best mentality that is at the heart of the failing Labour administration.

Mr Lewis claims that now is the time to put the national interest first, and to move away from sound-bite policy initiatives to grab the headlines today or this week. A noble thing to say, but sadly his call for increased taxes on the rich is just the type of cynical vote-grabbing manoeuvre he claims to want to avoid. He says himself that he won’t talk about specifics, which is probably just as well because scratching below the surface of this hollow pronouncement will shows flawed his ideas are.

Mr Lewis claims to be in touch with the deisres of ordinary people, but he is mistaken if he thinks those desires include any sort of income-tax raise at all, even for the very rich. Until Mr Lewis and the government stop mis-spending the money we all already pay, they will never win any argument to the contrary.

And this is the main problem with Mr Lewis’ headline-grabbing suggestion - It’s simplicity ignores dealing with the problems that Labour themselves have created or ignored in the nearly a dozen years they’ve had to sort this out. Sorting them first would end the need for tax hikes for anyone:

There is staggering waste in public services. This most overly bureaucratic and centralised government machine in Europe is stifling local innovation and forcing public service away from local accountability and towards compliance with an expensive, inefficient and all-powerful government machine. Local Authorities pay hundreds of thousands of pounds for inspections; NHS Trusts spend similar sums becoming Foundation Trusts and satisfying government watchdogs of their fitness to operate; and God alone knows how much money is wasted on consultations which get us all precisely nowhere at a cost of millions. I don’t begrudge public sector workers their pensions, nor do I think any one of them does a bad job, but centralised drives towards efficiency, and an ever-growing list of demands fro Whitehall means that any form of local innovation is nigh-on impossible. And this needs to change.

The government should sort this out before imposing any more tax on anyone. And it should get its spending priorities right as well, so that it provides services the public wants, not services that it wants. The government ID Card scheme will cost £7.5bn, enough for 50 of the best schools in the world, or 10 of the best hospitals in the world, or world-class public transport in 5 of our cities. Why don’t government scrap the scheme, like the Lib Dems would? Don’t raise taxes Mr Lewis, spend them properly.     

Mr Lewis seems determined to tax the rich more, but where is the government zeal to collect the tax already owed by the super-rich? Climb-downs over non-dom taxes and a refusal to deal with accountancy tricks means that many of the richest already escape their obligations. Without dealing with these problems, the government could put up the top rate to whatever it wants, and they’d still not have grasped the nettle. 

The government has missed opportunity after opportunity to introduce fair, radical ways to introduce tax changes that will help poor people and middle income earners, alter behaviour to make the country greener, and serve to end massive injustices. Why were recent car tax plans so comprehensively botched? Why punish the poor by imposing retrospective taxes on Ford Focuses, when money would’ve been raised, and good would’ve been done (and votes would’ve been won!) by massively increasing taxes on far dirtier and far more expensive cars? People on the average wage drive average cars like Focuses. Millionaires don’t. Millionaires drive Porsche Cayenne Turbos. So tax the Porsche, which belches out fumes like a Victorian mill, back to the stone age, and leave the Focus alone. That’s a better way to help middle earners, it’ll get the dirty cars off the road, and it won’t give green taxes a bad name.

The same is true on the Council Tax. The formula is so skewed towards punishing the average earners it’s almost untrue. People strive their whole lives to afford a three bed semi, and are taxed to the hilt with raises every year even if their income barely moves. Yet the difference between the bill for the office worker in that semi and the Premier League footballer in the £5m mansion down the road is tiny in real terms. If it insists on non-income related taxation in the first place, why doesn’t the government grasp the nettle and re-band Council Tax to impose much bigger bills on the much bigger houses, and much smaller bills lower down?

Mr Lewis could also do well to consider not taxing the poor, rather than taxing the rich to help the poor. Why not raise the threshold at which income tax is paid? Allow those who earn the least to keep more of their money, rather than pay to fund a government machine designed solely to give it them back? What is the point of rhetoric talking about escaping poverty when this government more than any has slung millions into a culture of handouts with its tax credits and means-tested benefits?

And therein lies the fundamental contradiction in Mr Lewis’ argument. He talks of helping middle Britain and wanting to reconnect to the “aspirational” classes. And yet the method he proposes to help that aspiration is to impose ever greater reliance on the state.  The reward he proposes for those who achieve their goals of financial independence is higher taxes once they get there, and the solution to the financial problems of those he seeks to help is to dole out more cash from government coffers. His approach is as doomed to failure as it is woefully out-dated. It is like suggesting that the way to make a car go faster is by ripping out the seats and chucking on them on the back of the tow-truck in front.

Raising taxes on the rich to give back to the middle classes is not the way to help those in our country who aspire to better things. It’s the bluntest of blunt instruments, suggested by a Minister showing us all how far from sharp he is. Instead of Mr Lewis’ approach, I want my government to be far more imaginative in its solutions. Yes, impose greater taxes or financial responsibilities on those with the most where they’re just and required - an obligation on energy companies to re-invest their profits in environmentally sustainable fuel, or a crack-down on tax avoidance. And yes, use benefits to help the very poor where they really are needed. But real aspiration can only be supported by giving people the freedom to make their own choices and live in a society free as much as possible from government interference and unnecessary handouts.

We should not be seeking to tax our way out of our economic problems. We should be looking to give people more freedoms to spend their own money, to take responsibility for their own behaviour, and to make choices themselves rather than have them made for them by government. Mr Lewis should spend less of his time suggesting simple-minded ways of shoring up the votes in my ward, and more time convincing his ministerial colleagues to cut taxes and red-tape, and make the types of changes to the tax system which will make a real difference to peoples lives for years to come, not just until the next Whitehall cheque arrives.

Rick