24 August 2024
We have a new government and many people will be paying more tax. One of the new Chancellor’s first decisions was that the Winter Fuel Payment of up to £300 to pensioners who don’t receive pension credit or other means-tested benefits is being scrapped for all. (I hope its withdrawal will be subject to ‘marginal’ adjustments so that somebody who gets, say, £10 more than the means-tested limit doesn’t suddenly lose the £300.)
However, I must admit that I applaud the principle. We have received this in the past but didn’t really need it ourselves so we gave ours to friends who needed it more and to a charity such as The Trussell Trust (who, incidentally, give a list on their website of household goods most welcomed by foodbanks, and where your nearest collection point is.)
Other hopeful signs that our new leaders realise that, once the family silver has all gone, you need to cut unnecessary costs and find another source of income. Limiting winter fuel payments is a positive step towards the former, as is the decision to write off the £700m already spent by the last government and cut the £10bn they had planned to spend over 6 years sending asylum seekers to Rwanda.
Rachel Reeves has also indicated that the autumn budget is likely to be tough but at least some of us are hoping she’ll feel able to unfreeze the ‘personal allowance’, which people can receive before they have to pay tax; the Tories thought this was a brilliant wheeze because it was worst for those who didn’t earn very much – which is exactly why I hope she will unfreeze it so people on the borderline do start to get some help meeting the ever-increasing costs of life’s little luxuries, like food and heating.
Spain’s socialist government tried an interesting experiment in 2022 when it introduced a “temporary” solidarity wealth tax to be collected in 2023 and 2024 from those whose net wealth exceeds €3m (£2.6m). It’s estimated that it will only apply to 0.5% of the households in Spain.
The Tax Justice Network is a British group of researchers and activists, founded in 2003 which “believes our tax and financial systems are our most powerful tools for creating a just society that gives equal weight to the needs of everyone.” It focuses on tax avoidance and tax havens and has calculated that a similar tax imposed worldwide would free up trillions of dollars to give help where it’s most needed, from relieving those suffering from starvation and ill-health to helping slow climate change. If it were introduced just in the UK (which Reeves has sadly ruled out), it could raise some £25bn a year …
This is of course a dream, but what a wonderful one! Let’s start with small steps and, full disclosure, I’d be happy to pay more tax despite not being in the top 0.5% of Britain’s wealthiest people, but nor am I in the bottom 0.5%. There’s enough wealth in this country for everyone to be able to live comfortably so why don’t we spread it around more evenly?
Reeves has said she is inheriting the worst financial position in 80 years and has accused the Conservatives of being economical with the truth about a forecast overspend of £22bn in government departments. While nobody really believes her predecessor was the sharpest pencil in the box, it is traditional for the incoming Chancellor of a new government to make things look as bleak as possible to throw the blame onto the previous government so we must expect some over-reaction in her first budget.
She’s already said she’s planning to raise more revenue from inheritance tax and capital gains tax and to cut public expenditure.
She’s likely to face the usual threats from the very rich to leave the country if they have to pay more tax but, despite similar threats when three Scandinavian countries introduced wealth taxes, only 0.01% of the richest households did actually move out. That’s one in ten thousand of them. Pessimistic estimates of similar migration rates from the UK in similar circumstances reckon that 0.02% (one in five thousand) of the richest families might leave the country.
Bon voyage!
(At this point, I realise that I can now expect an outraged email from my Conservative friend who believes that entrepreneurs should be allowed to grow businesses from scratch and build them up into huge corporations, becoming unconscionably rich in the process. Of course his opinion is valid, I just disagree because I don’t think it’s in the best interests of the greatest number of people. Nor do I believe that everybody receiving state benefits is milking the system and should just get on their bikes and get a job.)
Luckily, some people retain a sense of the absurd and the satirical artists’ collective ‘Led by Donkeys’ recently lowered a banner behind Liz Truss while she was giving a speech supporting Donald Trump’s attempts to get re-elected, showing a lettuce over the words “I crashed the economy.” (Remember The Daily Star newspaper featured a lettuce while she was prime minister to see if it would still be alive when she had to resign as prime minister, and it was?)
Led by Donkeys had predicted she’d say “That’s not funny” and storm off the stage. In fact, she said “That’s not funny” and stormed off the stage, adding that the group were “far left activists” and “I won’t stand for it”. Sit, lady, sit.
Another iconoclast is Banksy who has been active for longer than most of us realised. He’s done thousands of pictures, many of which just raise a smile but some of his works make clear social comment which is then endlessly analysed by critics who want his work to have deeper meanings. He remains anonymous, he doesn’t obviously do his work for money, and he seems to accept the transience of all graffiti.
Lesser Mutterings 