Tax and Spend

The Fabian Society has warned Ed Miliband that the majority of the public are against tax rises, and that Labour must abandon any spending rises in order to avoid a second term of opposition.

Now this sounds like a pretty bleak warning, but then it emerges that most think that levels of tax and spend are about right. If by some miracle, this Coalition Government manages to produce very strong economic growth, it is clear that the £122 billion budget deficit would take decades to eliminate with no tax rises or spending cuts. The Fabian Society’s warning could, therefore, be regarded is flawed, as it is based on the respondents to their survey asking for what they cannot have. They shall be disappointed whatever any party does.

What would damage Labour is its going into the 2015 election endorsing the Coalition’s entire programme of harsh spending cuts, whilst saying that they will make the same level of cuts with a one or two year delay. There would be nothing left to separate the three parties. The public are unlikely to vote in a near-identical opposition to the government. That said, it is obvious that massive rises in personal taxation are likely to be unpopular, and any rises have to be well-justified.

However, Corporation Tax and higher rates of Income Tax are easy areas to increase. If the top 0.8% of earners are asked to pay a few pence extra income tax to reduce tuition fees, maintain child benefit, or subsidise new housing, few would lose much sleep. A Mansion Tax would be sufficient to pay for a 15-20% cut in public transport fares, fund a youth ‘jobs guarantee’, or fund social care along the lines of the Dilnot Commission. It is thinking like this that will win votes, not a promise of more of the same. The fairest, and most popular, means of deficit reduction would be to ask the well-off to shoulder an increased tax burden, as opposed to cutting services that most of us depend on.

Ed Miliband’s wider problem is that he is too cautious about adopting progressive policies. He is being lampooned by the right-wing press as a ‘loony leftie’ and the Blairites as being a liability. If no-one argues with them, what will stop him from giving in? In these times, we need a man of principle. A coward will offer no reason to get out to the polling booth and oust the Tories.

“H G”

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