A previous article made a general case for policies to attract the traditional Labour vote, because that is the best chance we have to succeed. Among the foremost of those policy areas is taxation.
This will not be easy reading for those of a Thatcherite disposition, but you ought to take note because it is you economic liberals who hold the future of UKIP in your hand. Unless you are prepared to support a greater measure of fairness among the British people then we will just not get enough of that vote, and it will be game over. It is as simple as that.
Long before we had markets the survival of the human race depended on co-operation. Long after someone made the first ever sale for profit, co-operation for mutual benefit continued. We would not be here were it not so. After the last great test of our survival instincts, the Second World War, we elected the greatest reforming and beneficial government we have ever known. The people who had won the war decided the spirit of co-operation was to be continued, that activity in the name of the nation was a good and worthy thing. Eighty years later we still have prominent people in the Party who have probably lost us votes by their ambivalence on the NHS. They, and you, need to accept that taxation is a common good, and that higher taxation results in a happier and more civilised country with less of a wealth gap and social divide.
Shock horror! What about the low-tax mantra most of us have espoused at one time or another? How all tax is theft and how it curbs our liberties? Try asking yourself that when you are about to undergo surgery that none but an NHS hospital will do. It does not have to mean we should forget about efficiencies, or correcting some of the absurdly skewed priorities successive governments have landed us with, but it does mean we should face the realities. We are like too many folks – always wanting something for nothing.
Happily there is a solution – progressive taxation, and it applies to most major taxes. ‘Progressive’ simply refers to that great principle brought in by Pitt the Younger on the introduction of income tax during the Napoleonic Wars, namely the ability to pay: you pay a higher rate the more you earn. It would also satisfy one of the grievances of those at the bottom – they want to see the rich paying their fair share.
So instead of our periodic indecision about inheritance tax, all we have to do is set different rates to reflect the value of an estate, and ensure the starting thresholds and rates are generous enough for the great majority of people to avoid it anyway. We should not forgo valuable income to the Exchequer, or go hand-wringing about the iniquity of it all, or worry about the rich, who will get by as they always have. Similarly we should set corporation or profits tax rates to distinguish between large and small.
Take the cliff-faces out of all direct taxes and replace them with many smaller incremental steps. For example with income tax, after a generous personal allowance and a rate of say 25% up to £30K, put an additional 2p per pound on every £10K earned thereafter. (These figures are purely illustrative and would need to reflect budgetary requirements.) There would need to be a decision on where the very top rate would end, but we should not be afraid of going back towards where they were before the current orthodoxy took hold. Mrs Thatcher inherited a top rate of 83% and when she left office it was still 60%.
It is not the case that high tax rates inhibit growth. The best growth we had in living memory came in the 1950s and 1960s when top rates were over 90%, though of course many other economic factors were involved too. Conversely flat tax, where rich and poor all pay the same rate, might have helped some East European countries after liberation from communism, but we can hardly draw any relevant conclusions from that. Flat tax almost got into the UKIP programme in 2013, courtesy of Godfrey; once ordinary people realised what it meant, it would have been a disaster. It showed poor judgment of both political and economic reality.
It is no good thinking rich people are going to give away their money voluntarily. America may have a strong tradition of philanthropy, but their wealth gap is even worse. Throughout history the rich everywhere have fought to hold on to their wealth. Like every other form of social progress, it has to be prised out of them. There are many Tories still in Parliament who resisted as patently fair and modest an advance as the minimum wage: the world has not ended since that battle, and now no-one opposes it. We must not let the tenets of Toryism deter us in our policy-making to attract those Labour voters. The vital thing in all this is to set tax rates so that middle earners / businesses / inheritors do not pay more than they do now, because that way we will interest many of them too.
And of course we have to get serious about tax simplification and avoidance, and come down like a ton of bricks on all evasion: the ‘Laffer Curve’ merely reflects weak government. And stop all so-called family trusts, which only serve to perpetuate disparities of personal wealth. If the super-rich threaten to emigrate, let them: if they are not prepared to support their country then we will do without them.
A more generous distribution of wealth Scandinavian-style is on the horizon, at least in Europe. We might even see a basic grant for all citizens before long. Fairness and enterprise can go hand-in-hand, and UKIP should be at the forefront, and, as always, on the people’s side.
Do we want to win – or not?
[Ed: This is the third article (second article here) in a series of eleven articles which will be published in the coming days.]