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Stop the Lib Dem's 'poll tax'

Andy Newman

 

Bizarrely, the Lib Dems have managed to create an impression that they are to the left of Labour, through mendacious media spin and half truths.

A good example of how they present a thoroughly regressive policy as if it is progressive is the Lib Dem's proposed "local income tax"

http://www.libdems.org.uk/media/documents/policies/18LocalIncomeTax.pdf

At the launch of the Lib Dem's general election manifesto, leader Charles Kennedy stuttered and stumbled when pressed to name the household income at which people would pay more tax under their proposed local Income Tax. And then he pronounced the figure of just 40,000.

And remember this is household income. This means that in multiple occupation households where people are on low incomes, they will pay more! For example, four people sharing an inner city terraced house and each earning 15,000 a year would pay much more. A working class family, earning just average wages, but where they have an adult child in work would pay more.

The Council Tax is far from perfect, but the biggest problem with it is that Gordon Brown has refused to increase income tax on the rich, and therefore has sought to shift the taxation burden for local services from national to local government. Excessive increases in council tax hit pensioners and those on low income hardest, but this is a political choice by New Labour to preserve low taxes for the wealthy. Local councils no longer keep monies raised from the business rate. The Lib Dems do not intend to redress this.

And the Lib Dem's local income tax is thoroughly regressive. It will increase tax by a flat average of 3.74% in addition to the current tax rates of 10%, 22% and 40%.

This means the 10% rate goes up to 13.74%, an increase of 3.74%.
The 22% rate goes up to 25.74%, an increase of 1.74%
The 40% rate goes up to 43.74%, an increase of 0.94%
And the Lib Dems say that their local income tax will not apply at all to income over 100,000!

Let us be clear, the biggest increase of income tax burden would be on the lowest paid, and the lowest increase would be on the highest paid.

What is more the Lib Dems propose that no local taxes at all should be paid on second homes. This would mean that the provision of local services for those rich enough to own two homes would be absolutely free for their second home. In rural areas suffering the blight of the rich buying holiday homes this would be devastating. Areas such as Cornwall and Devon where there are high numbers of weekend homes for the rich suffer from low wage rates, and due to the dispersed rural population the cost of providing services is higher than average. Under Lib Dem proposals the tax burden for providing weekend retreats for the rich will fall on the shoulders of low paid rural workers. This is a return to the middle ages.

What is completely absent from the Lib Dem's proposals is any grasp of wealth inequality. Their local income tax is a flat rate, and they take no account of wealth other than income. They calculate that 8 out of 10 pensioners may benefit, but this is only because most pensioners have extremely low incomes. Any benefit for pensioners would of course be welcome, but this is shallow opportunism on the Lib Dem's part because the hardest hit by their scheme will be working families on low incomes.

This is no accident. The Lib Dems are a thoroughly Thatcherite party. They originally opposed the minimum wage when it was introduced, and have opposed increases in it. They are deeply hostile to trade unions, and their manifesto includes a pledge to ban strikes in "vital areas". They oppose state intervention to save jobs. They are deeply undemocratic and are in favour of key levers of the economy being handed to unelected bankers, indeed their advocacy of Euro membership will further shift control away from democratic accountability.

The weakness of the left in not standing up and damning the Lib Dems as a Tory party is deeply problematic.

 

April 2005

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