aprèsSci

The right wing ideal of good governance is that fiscal policy should be for the benifit of all non evil men and women in this country and, to an extent, the world. I realise this is a fairly woolly aim but it is intended to contrast with other people (often good people of the left) who feel, that government should act in the medium to long term interests mainly of the poor. They feel that it is sometimes even worth making the total pie smaller in order to give the hungriest a bigger piece. And that is reasonable, to a point, but where we place that point is one of the big questions. However it is clear to me that there have to be some no-go areas.

There are two, massive, populist traps which catch people on either side of the path. Those of us whose sympathies lie to the right must, at all times be vigilantly wary of any instinct within us which writes off as irrelevant the interests of any one particular group, particularly the poorest. This is the cruelty trap and it is wrong on every level, it is unfair and it is contrary to the only moral aim that a centre-right government can have, namely, as set out above, to act for all. The Tories fell into this trap when they introduced the Poll Tax which was certainly wrong in scale, if not in principle.

The trap on the other side is, however, just as deep and appalling, if not more so. It is the trap of spite and it is this trap that Kelvin Hopkins, Hon. Mem. for Luton (North), has fallen into when talking about the 50p tax rate.

First a bit of rather obvious (perhaps skipable) economic background.

It is well understood that there comes a point when raising tax rates will no longer increase the tax take because as the incentive to aim for higher gross pay lessens other considerations become more important. People, especially the very rich, do care about things other than the size of their gross pay check. They care about the number of hours they have to work, they care about their enjoyment of the time they spend doing that work, they may chose to take some lesser, but untaxable, benefit in liew of a pay rise (or they may agree to take a pay cut on a similar rationale), or they may, perhaps with a heavy heart, chose to leave their nation because they see their tax bill as a rather over priced sort of rent and their patriotism runs only so deep.

30 or so years ago it was not uncommon to have 80 or 90% top rates of taxation and it is widely believed that at this time a substantial reduction in tax rates would have actually lead to an increase in the tax take. We are probably not, yet, at the level where this tax rise will cause a reduction in tax take, at least not in the short term. But at the same time we may not be far off (at least this is my instinct, which may be wrong).

The fact is that shortly before the next general election we are due to move to a tax system where to put a net. 100 pounds into a rich (I>£150,000 p.a.) man’s pocket costs someone over £230 (Ironically if they are a slightly less well paid making them £100 a year better off may cost their employer as much £290 per year [details available on request]).

I can’t say that I am sure that the 50p rate is a wrong decision, even though this it is my instinct and I can’t be certain that it is merely electioneering, although again I feel it probably is.

But what I will say for sure is that we do not need MP’s like Mr. Hopkins saying:

“if a handful of ageing pop stars and money-grubbing bankers leave the country as a result [of the 50p rate], I say good riddance… …In the Budget debates of last year and the year before I suggested much more radical tax changes that would reach further down, with tax rates on the mega-rich higher even than those suggested by the Government. We should go back perhaps a little way towards where we were in 1979.”

This is the politics of spite and it has no place in any nations politics - recession or no recession.

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