Budget 17: Tax Is The Biggest Elephant In The Room

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We just have to talk about tax.

For a brief moment it looked like we were going to cross the Rubicon into a sensible discussion.  Surrey County Council’s plan to put proposals for a 15% increase in council tax – in order to pay for social care – to a local referendum seemed to be a break-through moment.

But in one blink it was gone. The “blink” seemed to be central  government’s,  whose so-called “sweetheart deal” on extra funding has been revealed by clandestine recordings of a meeting of the council’s ruling Conservative group.

Once again a debate on tax was dragged back into the political never-never land.

Until yesterday, when the Chancellor’s decision to raise National Insurance contributions for the self-employed catapulted tax back into the spotlight.  Outrage has followed.

Howe dare such a dirty trick – allegedly breaking a manifesto commitment –   be played on our “wealth creators,” who because they are self-employed are particularly vulnerable.

This furore is over a modest increase – from 9% to eventually 11%, meaning on average £240 per annum extra, with exemptions for the lowest earners and still below the Class 2 (or employee) rate of 12%. 

All this points to the inability to have a sensible, rational reasoned debate on taxation as being the biggest elephant in a room full of these beasts.

In fact, you can’t move in the room for elephants on taxation. Huge great issues that dare not speak their name.

Desperate under-funding of adult social care is one. Endemic tax avoidance is another (not much from the Taxpayers’ Alliance  on this, strangely).   The inescapable fact that for some things there is no free-market solution (take your pick from the Armed Forces to a national high-speed broadband network). We just pretend that they are not there because the discussion would have to involve talking about tax.

The latest row is indeed both symptomatic and depressing. A large slew of tax avoidance activity surrounds so-called bogus self-employment.  As finance journalist Paul Lewis quipped “Set yourself up as a company and take dividends:  low tax and no NICs at all.”

And significant  workers in the  ever-expanding “gig”  economy,  are effectively told  to  be self-employed as a  condition of getting the irregular jobs  they do.

But the bottom line is that the government needs money to run public services and things that the private sector either can’t or doesn’t want to do.  That money comes predominantly from taxation in one form or another.  To have turned taxation into the most sacred of all sacred cows is an act of supreme folly and self-delusion. We cheat ourselves by not talking about tax or condemning those who do.

This piece also appears in The Huffington Post

 

 

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