Tories reveal their regressive side
Redwood and his fellow extremists have been making headlines this week, trying to push the Conservative Party back to the right-of-centre position that will guarantee more electoral disappointments. The leader may say one thing, but these guys aren't about to go green when you vote blue any time soon!
The big news today is the taxation plan, including the abolition of the progressive Inheritance Tax. It's a philosophically difficult question - the (in)justice of starting life with a massive, unearned advantage versus the (in)justice of not being able to pass on all of your financial assets to your children. But despite the Daily Mail rhetoric, which would lead you to think that every hard working Brit was handing over their life's work to the evil state, it doesn't affect that many people. By 2010 the threshold will rise to £350,000 and so only hit the wealthiest 6% of estates! But of course they are also after a whole raft of tax cuts, disengenously suggesting that UK businesses suffer from terribly high taxation rates. Nonsense, the UK is certainly not amongst the highest. Even the most extreme neo-liberals rank the UK highly in terms of "economic freedom" (ugh) and state that we have a "moderate corporate tax rate". If you really want to reform the tax system, work on closing the loopholes that ensure the super-rich pay almost nothing, which costs the Treasury far more (between £97bn and £150bn) each year than benefit fraud (less than £1bn).
George Monbiot wrote a great piece on taxation a couple of years ago. The countries in Europe with the highest quality of life, the most equitable distribution of income and good levels of economic competitiveness tend to be those that tax more highly. In the UK our public services lurch from one financial crisis to another; our government tries to cover up attemps to reduce targets on renewable energy generation because they are failing to support the industry with the most simple measure like better feed-in tariffs and more direct funding for technology trials. Higher taxation isn't a magic bullet, but experience from Scandinavia in particular shows that if you invest money and develop a more socialised culture then you will get better results.
Not content with regressive tax cuts, they also want to roll back ten years of moderately progressive legislation on human rights, labour rights and the environment. Redwood wants to double the road building and airport expansion programme even though transport is still causing a rise in the UK's carbon emissions. He's hardly very sensible on the subject (for example "global warming is good" and an approving note on the thoroughly discredited global warming swindle documentary).
I suppose on the bright side it reminds us all why the Tories have been unable to overturn Labour's huge Parliamentary majority. Now if only Labour would act like a Labour government and start seriously tackling some of the social and environmental injustices its leading figures claim to care so much about!
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I've gotta TOTALLY disagree with this comment that you wrote:
"By 2010 the threshold will rise to £350,000 and so only hit the wealthiest 6% of estates!"
That's just not true. Currently, the average house price is around 250,000 GBP. The AVERAGE. The way things are rising (and some predict as much as a 60% rise in the housing market in the coming year), the AVERAGE person will easily have a 350k house by 2010. Although we can argue from a statistical point of view as to what "average" means, let's just say it's the mid point, 50%, the norm. That means that the new threshold will not only hit the "wealthiest 6%", but also the next 44% too. In fact, if the rises are as high as some say, it'll probably be the next 55%.
If the tax free allowance of inheritance tax had risen in line with house prices in the last 15 years, the allowance would actually be £650,000. With the house prices rising so greatly, it is more important now than ever that these thresholds are raised as it's getting almost impossible for people to get onto the housing ladder. It leads to people overstretching themselves with mortgages over longer and longer terms, which people can barely afford to repay. The number of people I know with 30 year, interest only, self-certification mortgages scares me greatly.
Bear in mind that the tories are only proposing exemption from the primary family home, not from the entire estate (where the wealthiest will probably have several houses, expensive cars, yachts etc!).
Sorry Andy, you come out as your "average" middle class twat here. "Average" house being £250K ? Maybe in the rich, egoistic, twattish South of the country. Up here (and pretty much everywhere else but in the London commutable belt) the average is currently around 120K or less. The "average" middle-class twat owning a 350K house in 2010 is not "average at all, unless your statistics only include members of the Tory party (the party of people complaining on the Sunday Times about taxes on second homes -- gosh!). Realistically, house prices will increase up to 30% max from now to 2010 (if we are lucky and the bubble doesn't burst, which sooner or later it will do). Even starting from your 250K, +30%, we end up with less than 350K. From reality, 120K + 30% ends up at 160K, faaar away from 350K. Please tell David Cameron never to get a job as estate agent.
Truth is, the Tory Party is still a reactionary force. David Cameron is playing the "compassionate conservative" game that G.W. Bush played on his first election, but as soon as he gets in office, like GWB, he'll enable legislation to rob the (working) poor to give to the (ultra)rich.
Anyway, I agree that this post doesn't belong to PlanetKDE.
I can assume from your tone that you're a typical northerner with a huge inferiority complex.
My partner's family comes from the North East, just outside of Newcastle and the average house there is over 200k. My sister lives in Leeds, go check the average there. Last time I saw, there were flats in the centre going for 1 million+. Of course, anyone who spends that kind of money to live in the north needs some sense knocked into them, but still, I think it illustrates the point that prices are moving nationwide.
Maybe you live in the more run-down areas of Wales where you can get a street for 100k? Either way, it's time to look around you and see what's really going on. The irony is, I don't even support the tories! I just think the idea of giving a larger break to the family home is a good idea. If you live somewhere so cheap that you don't need the help to get on the ladder, good for you. I'd rather live somewhere nice though.
According to the BBC the average house price at the moment is £211k, and prices rose on average by 9.25% last year. So your estimate of £250k is a little way off, though perhaps it's a fair assessment of the mean average family home given that the £210k figure includes flats. Your estimate of a 60% price rise in the next year is also frankly ludicrous, you'd only see rises like that in highly overvalued areas of London, and most people I know who work in property think the silly rises we've seen here in recent years are going to end soon. Currently only 6% of households pay inheritance tax, and the highest estimates put the peak at 40%.
But here's the thing - let's say you're a family in 2010 and you own a home that's worth £370k. You can still give £350k of your assets to your spouse and kids when you die, tax free. You only get taxed on the rest. Give families a larger break? If they have paid off their mortgage and are able to pass on that kind of asset to their kids then frankly I think their kids will be OK!
Let's use progressive taxes like inheritance tax to tackle real problems like the lack of affordable housing, the sort of problem that neither Labour nor the Tories are very keen to get stuck into. After all, building lots more social housing, using compulsory purchase orders to solve the land price issue and giving a leg up to housing co-operatives isn't going to sit very well with the kind of middle class opinion makers at the Evening Standard who own their £400k family home in north London!
Tom , you're right. I found that BBC page yesterday and the average is indeed £211k. I got £250k from a poster I saw at a bank near where I work. I checked it out more closely yesterday and it refers to houses in the area. Still, 39k out isn't bad when you're talking about quarter of a million ;)
I understand what you're getting at, I was discussing this with a friend the other day about what happens if, say, a couple have 4 children. The tax free amount gets split between all of them and we were discussing whether we thought it might be more fair if there was a tax free amount for each. I've only got one sibling so it's not so much an issue for me, but it was an interesting thought. After all, if the value of the parent's house is enough to give each child an equal leg-up relative to people with only 1 or 2 kids, then that would surely be more fair.
I personally think that the housing problem we have today is caused by the number of people investing in properties to let. One solution would be to dramatically raise the tax on owning "extra" housing. That would deter people investing like this and hopefully make the housing shortage go away, or at least ease the situation. It would also bring house prices down to more affordable levels.
Andy, the interesting thing about the number of kids dilemma is your use of the word "fair". Comparing two families with houses of the same value but different numbers of children makes the current system seem unfair, but how about comparing them both to a family with a home with ten times the value, and a family with very little by way of assets to pass on to the children? The only way to make sense of inheritance is to see it from the dying person's point of view, to argue that they ought to be allowed to pass on a chunk of their earnings to other people. As soon as you argue from the child's point of view it all falls apart, you get led down the path of state redistribution of all inheritances.
There are better ways to ensure children have a decent start in life, as well.
I agree about buying to let, it's another contributory factor for sure, especially where I live in south London! We regularly get letters through the door from estate agents encouraging property owners to let to yuppies (as though we're not worthy of living there any more). Most houses that go on sale have a "to let" sign outside them a week after they've sold!
So Sweden, a country with a population density of ... 20 people per square kilometer ... is happier than UK with population density of 240 people per square kilometer.
Oh ... let me show you why. 133.000 euros buys this in Sweden :
http://www.homesonsale.co.uk/mansion_in_sweden-o50211-en.html
Everybody knows what appartment size you can get in England for 100.000 euros. Homes for 100.000 euros ? You're not going to find them (except complete dumps perhaps).
You need to match EVERY parameter as close as possible except the one you try to draw conclusions from. Either that, or you need a lot of data entries to compare. It doesn't work with just 2 examples.
Clearly economic freedom, which means lower taxes, leads to more successfull countries. Anyone actually disputes that ? Also, increased welfare collapses.
And about the lives of the poor improving : just about every town in Africa has electricity today. Now isn't that a huge improvement ? And yes, it doesn't bring Africa to the level of the world's richest people.
Two things, however, are abundantly clear :
1) africa will soon catch up
2) because of hard work of africans, and NOT because of foreign aid (and most defineately not because of increasing taxes in the UK)
So happiness is directly correlated to the cost of houses? The property market in the UK is a reflection of population growth and density, bad government policy and overinflated valuation, nothing else.
What about looking at the average level of educational achievement, or the rates of teen pregnancy, alcoholism, clinical depression and violent crime, or income distribution and living costs. Despite having more "economic freedom" than most other Western European countries, the UK consistently performs worse on these metrics. Child poverty rates have stabilised in the UK under Labour only because they raised taxes, invested in employment schemes and began to roll back some of the harmful neo-liberal policies of the last Conservative government that damaged the poor's ability to collectively bargain for better pay and working conditions.
How do you square that with your claim that "lower taxes [lead] to more successful countries"?
As for countries in Africa, of course foreign aid isn't the solution (did I ever say it was?) The solution will come from civil society organising itself to the point where it can demand and implement good governance and sound management of their economies; when international institutions such as the WTO are more democratic so they can tackle Northern protectionism; when they can spend all of their tax income on improving their infrastructure and investing in core services like health and education, rather than servicing bad debt and struggling to cope with health crises like AIDS/HIV, TB and malaria; when a whole host of things happen that are not direct consequences of increased "economic freedom" (i.e. less regulation of business and capital to the detriment of society).
Hey Tom, could you please categorize your blog, I'm sick of reading your political stories on planetkde (not that I disagree with them). But the planet's a tech blog site, not your personal green party domain.
Hi Tom,
As Kleag just said, it sounds more like our brand new elected ubiquitous president in France.
It's "funny" how taxes are always presented as a cost and never as a benefit for society and how people easily forget years of social progress.
Ultra-liberals are imposing their incomplete system as time advances. Who's gonna pay the price in 20 years?
Regards
Hello Tom,
All what you present here looks so much like our newly elected president, here in France. The new friend of George W. Bush. I hope that in UK you will not replace your not so left wing Labours by these ultra-liberal as ours. Please keep a little bit or leftness in Europe ! Yes, it's a French people who asks that to an English one ;-)
Best regards,
Higher taxation isn't a magic bullet, but experience from Scandinavia in particular shows that if you invest money and develop a more socialised culture then you will get better results.
Which the current right-wing government here in Sweden is doing its utmost to destroy...the solution to everything seem to be to lower the taxes and crippling the social security net we have in place. And if that doesn't work, lower the taxes even more.
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