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Saturday 30 August 2008

WEB EXCLUSIVE: Tax the rich (more) - Intelligence Squared debate report

James Forsyth on the latest Spectator / Intelligence Squared debate

There was a particular buzz of anticipation before the latest Spectator / Intelligence2  debate - perhaps because the motion would materially affect the audience. Judging by appearances, I’d wager that almost all of them paid the top rate of tax and that north of 90 percent of them earned £100,000 a year, putting them in the sights of all those who think that the rich should pay more. If nothing else, the evening was going to settle whether or not Turkeys ever do vote for Christmas.

Evan Davis, the BBC’s former economics editor and now a presenter on the Today programme, was in the chair. This induced in me a Pavlovian longing for a cup of coffee and a glass of orange juice and I half expected members of the audience to dash out wailing ‘I’m going to be late.’ But Davis’s introduction of a stellar panel soon assured us that we were set for a treat at the end of the day rather than a stressful start to it.

John Kay, the distinguished Oxford economics don who had taught Davis at university, kicked off proceedings. He demonstrated that triangulation is as well understood amongst the Dreaming Spires as trigonometry. He started off by announcing that in the 1970s he had co-written a book saying that tax rates on the rich were far too high but he now thought they were rather too low. Established as the voice of moderation, Kay then took a few rather eloquent pot shots at the nom doms and private equity folk who pay, proportionately, so little in tax.

One felt that Kay had won over the audience. They sensed he wasn’t proposing to tax them too much more, but just enough to make them feel better about themselves. The pips would be massaged rather than squeaked.

James Bartholomew, the banker turned journalist and author, responded. He spent his time trying to make the case that raising tax rates on the rich could actually lead to the revenue received from them in tax falling. Bartholomew made this sophisticated point rather well and backed it up with the statistics from the respected Institute of Fiscal Studies. Bartholomew had pulled back much of the advantage that Kay had gained for the proponents of the motion.

Next up was Polly Toynbee. She received the same kind of warm applause that Andrew Strauss draws from the members at Lords when he walks out to bat in a Test match on his home ground. She ran through a litany of statistics. The effect, though, was rather spoiled by her habit of adding the phrase ‘or so’ after almost every mention of the word billion.

In an interesting reflection of the current political mood, Toynbee was keen to stress that she would use the extra money raised from the rich not to increase spending but to take more of the poor out of tax altogether.

Toynbee was followed by Lord Jacobs, a Lib Dem life peer. The noble Lord left me feeling very odd: I agreed with everything he said, not something that is normally the case when I listen to a Lib Dem speak for ten minutes. Lord Jacobs proposing closing some of the more egregious loopholes but then went onto propose a series of revenue neutral reforms that would substantially reduce the tax burden on the poor and mildly ease it on the rich. If George Osborne delivered Lord Jacob’s speech as the first Tory budget, then I suspect the vast majority of Spectator readers would be delighted.

At this point, the debate began to turn into the Kelvin Mackenzie show. Mackenzie, denied the chance to fight David Davis over 42 days, was clearly itching to get into the action and Anthony Hilton, the city editor of The Evening Standard, gave him just the opening he needed. A few lines into Hilton’s speech, the speaker’s mobile went off. He quipped to Mackenzie that it was the editor of The Sun wanting a column. Without missing a beat, Mackenzie replied: ‘If he wants a dull one, he can have your one.’

After this, there was no stopping Kelvin. His own speech was a wonderfully light-hearted knock. He admitted early on ‘I don’t normally deal in facts, Much easier to find a famous person whose made a slight error and pour a bucket of s**t over them.’ For the rest of his remarks, he amused and appalled the audience in equal measure. The one person who did not find it at all funny was Toynbee who had a face like thunder throughout his rant. But amidst all the jokes, Kelvin did introduce a key point into the argument: why does anyone need to pay more tax when the government already wastes so much money?

Just before the debate was thrown open to the floor, Evan Davis read out the results of the entrance poll. 248 were in favour of the motion, 338 were against and 117 were on the fence. The vote was going to turn on whether the audience were more offended by the non doms who pay so little tax or government wasting so much of our money.

I would guess that the debate was settled by the emergence of the most sympathetic non dom imaginable, an Australian woman who works at a London hospital doing medical research. She personally challenged Toynbee’s assertion that no non doms would leave because of the new restrictions on them. The audience were sympathetic to her and there were more hisses than claps when Toynbee dismissively told her that ‘if you want to live here, pay our taxes.’

Before this, though, there had been a moment of equally high drama on the dais. Bartholomew and Kay kept going back and forth over those IFS figures, Kay who had been its founding director was clearly loathe to dismiss them but one could tell he didn’t agree with them. However, when Bartholomew accused him of wanting to set tax rates based on ‘prejudice’ rather than facts the don’s inner beast was woken. From that moment on, Kay rather marvellously demolished arguments left, right and centre. If he had been in this mood at the start of the evening, there would have been no way back for the other side. But as it was when the votes were counted, the noes had it 384 to 265 with 50 still undecided.

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