Friday, October 20, 2006

Two-faced? Us?

At the rate the Tory party is going it may be a contender for election sometime around mid century. I suspect David ‘Web’ Cameron will need a zimmer frame to access No 10. On the bright side it is always possible that Gordon ‘Scrooge McDuck’ Brown’s famed money bin conversion will be completed in the gutted shell of No 11 ‘Downy’ Street by then. This will be a mixed blessing for shadow Chancellor George ‘Spider’ Osborne if the Tories bring in the tax cuts proposed by Lord Forsyth because there will be no money to pour into the purpose-built money bin and he will have to find something else to put in it. Perhaps he could fill it with thank you notes from grateful CEOs like Philip ‘The Hulk’ Green who doesn’t pay tax anyway but if he did, he would be most glad to pay even less. Maybe he’d even be entitled to a refund.

Retrospectively ‘welcomed’ yesterday after having been accidentally and prematurely posted on the Conservative Party website, the 179 page document of proposed tax cuts offers a ‘menu of options’, according to ‘Spider’. Sounds like a bigger menu than my local Vietnamese takeaway and that’s tough enough to navigate. I am yet to discover how you ‘welcome’ a report. What do you say, ‘Report! hail and well met?’ Why send a lord of the realm off to beaver in a basement for months and then describe the fruits of their toil as ‘a menu of options?’ A mystery. In the absence of any willingness to own or even explain these proposals. I have decided to dig a bit myself and offer the benefit of my analysis.

Firstly, let me say that in a country where even people who don’t pay tax think they pay too much, the very idea of a tax cut is going to sound attractive so if you are vague enough about it, the chances are high that any mention of cutting tax will make you popular. ‘Spider’ and ‘Web’ are in a champions’ league all their own when it comes to vagueness so that puts them in popularity pole position. Secondly, no one in this country understands the relationship between collecting taxes and providing public services. Most people equate tax collection with the Sheriff of Nottingham. As long as that penny doesn’t drop, they are quids in.

I have done my own brief comparison and confirmed that Britain is one of the lowest taxed nations in the world. Our income tax, corporation tax, goods and services tax (VAT) and employer-related social security taxes are all much lower than almost anywhere else in Europe. Taxes on alcohol and cigarettes are higher but that doesn’t ever seem to put anyone off. I don’t know a single person (including myself) who has considered giving up wine because of the high rate of tax applied to it. There is always a justification for paying the asking price for whatever takes your fancy, yet a total reluctance to fund the education of children or the care of the sick. Why is that?

Among the Tory ‘menu of options’ which includes entrepreneurial delicacies to titillate the purses of ‘The Hulk’ and his non tax paying fellow Monte Carlo Marina residents are the suggestion to abolish stamp duty on share trading, reduce corporation tax from 25% to 20% and more gleefully still, cut its higher rate. There are some titbits for the poor and just managing, to be fair. A proposal to scrap the 10% rate and allow married couples with young children to transfer personal allowances will save fourteen people three pence halfpenny per annum but they will then have to spend £20,000 a year sending their children to a boarding school in France because there are no schools in their country. The French pay a whopping 59% higher rate of income tax against our 40%, have a higher GST and employers pay the highest contributory rate to social security in Europe. Yet we envy the French their joie de vive do we not? We all think the French have a much better lifestyle than we do.

There is one item that is extremely worrying – the proposal to abolish inheritance tax on the family home and replace it with a short-term capital gains tax. Maybe it’s my warped mind but I just have visions of elderly people being bullied by their cash obsessed children into sinking all their money into a large, valuable property and not being allowed to go on the cruise they’ve always wanted to take or be able to afford to put on the heating.

It is true that the more you have, the more you want. Look no further than ‘Scrooge McDuck’ if cautionary proof is needed. Does the PM in waiting look like a duck with unruffled feathers? He does not. We have one of the highest rates of personal debt in the world but it’s not because people aren’t earning enough, it’s because our satisfaction is measured by what we want rather than what we have. Contentment doesn’t contribute to economic growth as visibly as consumption. Recycling doesn’t contribute to the economy either so it’s grudgingly and half-heartedly promoted.

As ‘Spider’ and ‘Web’ retire to a corner of their parlour to try to weave ways of getting us to believe them, we could all do ourselves a big favour and stop obsessing about having even more money to fritter on stuff we don’t need and didn’t want until ‘The Hulk’ and friends tried to sell it to us…

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