“Let’s talk about tax, baby
Let’s talk about you and me
Let’s talk about all the good things
And the bad things that may be …”
– Salt-N-Pepa
OKAY, busted. Salt-N-Pepa, the hip hop band from New York, did not in fact want to talk about tax in their 1990 hit. It was sex the trio fancied discussing – presuming, correctly, that fiscal affairs were about as alluring to their fans as navel fluff.
For youthful audiences then, read almost every audience now. Whatever else the Chancellor, Philip Hammond, has in store for his last Spring Budget today, one can almost guarantee that major moves on tax will not be among them. When did we become so coy about tax, and what does this squeamishness cost us?
We already know the rough shape of Mr Hammond’s Budget as he was kind enough to write about it in a Sunday newspaper. Focusing on the Brexit negotiations ahead, Mr Hammond set out his desk in the manner of a pupil showing how prepared he was, stationery-wise, for a tough couple of exam years to come. Check out those productivity markers all in a row. Look at that box file, stuffed with tens of billions, to be opened if Brexit looks like it might upend the economy the way the Remainers predicted. See that Post-it note on the wall saying “Bring public finances back into balance in the next parliament (no, not this one, as had been promised).”
Reports elsewhere suggest he will go for measures including a 3p rise in National Insurance rates, but only for self-employed workers; the usual hike in the cost of cigarettes (with suggestions of a minimum price); and a reform of business rates in England. He might even tackle the increasingly troublesome matter of how to pay for elderly care in England.
But the kind of wham-bam-thank-you-ma’am move of Gordon Brown’s 2002 penny hike in National Insurance to boost the NHS? Will not happen. In the UK, raising tax rates has become the kind of third rail topic that healthcare reform used to be in the US. No politician or administration, from lower leagues to high, wants to touch it lest their prospects with the electorate are fried.
Nor is cutting tax an option. It is hard to see any Chancellor standing up in the manner of Nigel Lawson in the late Eighties and taking a meat cleaver to income tax rates. How the Conservative benches cheered in the Commons chamber that day. How millions of others, once inflation duly shot through the roof and interest rates followed, worried themselves sick wondering how they were going to pay the mortgage that month. It would take a hot-headed, utterly reckless Chancellor to repeat that play. Spreadsheet Phil is not that Chancellor.
Not everyone is coy about tax. Jeremy Corbyn has shown himself to be a “let it all hang out” kind of guy in fiscal matters, publishing his tax return in the hope of forcing Mr Hammond into doing likewise. It is known that the Chancellor, like several others around the Cabinet table, is not short of a bob or two. The Daily Mirror estimated his net worth in 2014 at £8.2 million. The Labour leader and his Shadow Chancellor, who first came up with the wizard wheeze of publishing tax returns, must have hoped Mr Hammond detailing his wealth would lessen Theresa May’s appeal to the “just about managing” classes. But neither Labour man had reckoned with Mr Corbyn’s ability to snatch disaster from the jaws of a half-baked idea. The media accused him of not declaring all his income; his office denied this; cue yet more stories questioning his competence. Mr Hammond, meanwhile, seized the political high ground and simply refused to publish his tax return, calling such a move “demonstration politics”.
Elsewhere, Jimmy Carr, the comedian, made his debut as a born-again taxpayer on Desert Island Discs. Carr confessed to thinking his career was over after it emerged five years ago that he had used a tax avoidance scheme. “In the end,” he told Kirsty Young, “you make good and say: ‘Right I’ll pay every penny of tax I ever owed’.”
Carr and Mr Corbyn aside, few others in or on the edges of political life want to talk about taxes, and in particular raising them. Remember Benjamin Franklin’s adage about death and taxes? Well, your average mainstream politician today reckons he or she has seen off one of those, and it is not death. And yes, the ranks of the non-believers and the non-combatants in the great tax war includes the Scottish Government. The First Minister, it is true, refused to follow the rest of the UK in raising the threshold for the 40p tax rate, thus ensuring that high earners in Scotland pay more. But in common with every other Holyrood administration, Nicola Sturgeon’s Government has not used the Scottish Parliament’s power to vary income tax by 3p in the pound. Now that would be a truly radical, once in a generation move. Moreover, the Scottish Government’s holding fast to a policy of freezing the council tax might have made the voters more SNP-friendly, but as The Herald reported yesterday, the number of complaints about council services is increasing at the same time as demand is set to soar.
Why are politicians so reluctant to raise taxes? They would argue it is because the public does not want to pay more. The public, in turn, looks at what it is already getting for its money and declines to throw good money after bad. They simply do not trust governments to use the money wisely. Where, they ask, did all those Brown billions for the NHS go? As for those Scottish councils complaining of having to raid cash reserves to keep services going, how did they manage to rack up surpluses of £450 million in the past year?
While it is hard to blame taxpayers for not wanting to pay more, it is easy to see where we are heading if this impasse, between politicians reluctant to ask and the public unwilling to give, is not broken. We can already see the effects in public services that grow shoddier by the year. So far, it has been the weakest and poorest who have had to bear the brunt but it comes to all of us in time. Paying more for good-quality public services seems like a luxury until the day you and your family need them. By then, it could be too late for governments to start an open, honest debate about tax. The machinery of state will be rusted, perhaps beyond repair; no more radical plans to transform lives, just a tinkering at the edges for evermore.
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