Going for broke on taxation

We have just witnessed the annual merry-go-round, aka the Autumn Statement, and I am still no wiser as to how we are going to balance the books in the near future without confronting the elephant in the room.

What we appear to be being promised after five years of what some pundits might have called ‘austerity lite’ is a further few years of ‘austerity max’. As a County Councillor since 2001, I can tell you that the ‘lite’ version has been pretty awful; but it would appear that, to quote the late Al Jolson, “you ain’t seen nothin’ yet.”

Perhaps the ‘Barnet graph of doom’ (that’s the council, not the ‘formula’ guy) may be coming true after all and that £19 billion black hole in local government finances by 2020 looks pretty frightening.

When talking about taxes in this country, my ‘go-to’ phrase is normally “people in this country expect Scandinavian levels of public services on North American levels of taxation”. Obviously, none of us who experienced the 1970s would want to return to the punitive levels of taxation around then, which saw the exodus of many of our top people, like Rod Stewart, Mick Jagger and Michael Cain. Seriously though, a lot of valuable people did relocate, and I don’t mean pop stars, actors and bankers. Squeezing some of our citizens “until the pips squeak” as Chancellor Dennis Healey famously said, turned out to be counter productive at many levels.

What we need is fair taxation, both at local and national level. Perhaps it’s about time that we dusted off Local Income Tax. Certainly the Council Tax needs reforming. What about adding a few bands? Don’t get hung up on a ‘Mansion Tax’. I know that it is technically easier to tax property, as it doesn’t move, whereas bank accounts do.

However, if you really can afford to live in a £2m plus house, unless you really are cash poor, you will probably be able to pay someone to help you avoid paying it, or at least make it very difficult to collect.

So, what do we do? Keep taking the medicine because Doctor George tells you it’s good for us, or actually ask people if they would be prepared to pay a couple of percent on their income tax if, for example, you could guarantee that it would be spent exclusively on the NHS, as Shirley Williams suggested to a member in the audience in last Thursday’s ‘Question Time’? The answer she got was affirmative.

With some kind of replacement for Trident looking more justified now that Mr Putin is playing macho man in the Ukraine, and projects such as HS2 more or less equally dividing opinion, there is now very little wriggle room left for more massive cuts except in public services.

From my experience, most ‘efficiency savings’ are more about smoke and mirrors than in actually saving money. We may, as a nation, have to make some difficult choices: Libraries or proper Adult Social Care, fracking or nuclear power, to give just two examples. The biggest choice we should be asked to make should be between tax cuts and tax increases. I know which one I would choose if there really was no other option available to avoid a massive breakdown in our society.