A tale of two conferences

A combination of factors has forced me to watch this conference through the eyes of the media. Last autumn, in Blackpool, I was struck by the contrast between the conference I experienced, and the one portrayed by the media. Readers will remember that I bemoaned the media obsession with trying (unsuccessfully) to uncover dissatisfaction with the leadership among the party faithful. So as I watch this one from afar, I can’t help remembering this as I read all of the negative press coverage. It frankly matters not one jot that Ming doesn’t know his Arctic Monkeys from his elbow (although not remembering how many parliamentary by elections we have won was a tad unfortunate). I think the Green Tax and 50p Tax battles do matter. The 50p amendment is being seen as a big test of Ming’s authority. In truth, it is a battle about how delegates feel our party should be understood by the public. It is about whether justice needs to be ‘seen to be done’ in terms of fairer taxation. I think the rebels are mistaken. Gordon Brown has heaped layers of complication onto the unfortunate tax payer. He has been accused of ‘stealth-taxation’ – and it is a fair criticism. We are all paying more tax than ever – but it’s hard for us to be sure of this, because the tax we pay is fragmented across a raft of different measures which most of us can barely grasp. I believe that income tax needs no more than two rates. Anything more just makes the system overly complex, unwieldy, and difficult to calculate. There is always an argument for taxing irresponsible or undesirable behaviour. That is why the Liberal Democrats are pursuing a ‘Green’ tax agenda – targetting environmentally harmful behaviour as a source of revenue. But what we do must be transparent and easily understood by the electorate.

There are pitfalls which must be avoided too. Taxing overly fuel-hungry vehicles might seem a no-brainer. But what happens if we all dump the Chelsea tractors en masse? Will there be a revenue shortfall? A bigger problem with using the tax system to modify individual behaviour is that it allows the well off to continue with their old behaviour because they can afford it. I have always been a strong supporter of congestion charging. There is no doubt that London has seen a fall in congestion – and the revenue has been used to ensure plenty of cheap buses are available. But the wealthy still drive in London (and enjoy the freer-flowing traffic) – so the charge does discriminate against the less well off.

Business is different from the individual. A business will always look at the economics. I contend that it may be more successful to persuade businesses to be environmentally responsible by modifying the tax regime than individuals. But we are right to pursue a green tax agenda. It is ludicrous, for example, that the cheapest way for me to travel to Leeds on business is to drive my car. Second cheapest is to fly and the train (which I should be using) is the most expensive. These anomalies can and should be addressed by the tax system – after all, business travel is usually payed for by the employer, and employers care about costs!

By all means have a green tax policy – I believe that we should. But make it as transparent as possible, and don’t expect it to be a cure-all for environmentally irresponsible behaviour. The rebels should allow the 50p rate to pass into history. It is no longer relevant. If we want to make the tax system fairer – we could start by repealing some of the Gordon Brown stealth taxes that we all pay (regardless of income). A great example is the Insurance Premium Tax. Taking out insurance is responsible (and in many cases compulsory) so what on earth are we trying to prove by taxing it? It was just an easy target to raise revenue – and yet we all pay that, regardless of our means.

3 thoughts on “A tale of two conferences”

  1. Taking out insurance may be responsible, or it may not. All sorts of purchases could be called responsible. I don’t see how that’s any basis for letting insurance go untaxed when most other services pay VAT.

  2. It depends whether you believe in taxing essentials (domestic heating, children’s clothes etc) or whether taxation can be used to encourage responsible behaviour (lower tax on lower polluting cars). My contention is that Insurance Premium Tax was just a way to slip a tax increase on everyone ‘under the radar’ (since to have no insurance is clearly irresponsible). If Gordon Brown had raised his extra revenue from income tax or VAT, it would have caused outcry.

  3. Who says having no insurance is irresponsible? It may be irresponsible, depending on your circumstances. But the idea that there is something like a moral obligation to have lots of insurance is just confused. And it is one that gives insurance companies an easy ride, when they could be working harder to attract us with better products and prices.

    I think we have the right policy with the Green Tax Switch, but that is a million miles away from saying we can do without all taxes but the green taxes. And insurance is rather less important than heating, clothes and food, all of which are taxed to some extent.

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