Home > The Magazine > The Week

Saturday 22 November 2008

Dare to dream and make your ultimate trip a reality

The latest culture as recommended by our staff

Michael Henderson

Michael Henderson suggests

Email registration

Free weekly email update

Great products and special offers for Spectator readers

Click here for great value events

Click here for exclusive articles, offers, tasting notes and discussion

Taxing questions

Wednesday, 27th August 2008

The Spectator on the government's fiscal policy

Demoralised Labour backbenchers, watching helplessly as their government disintegrates and the prospect of electoral humiliation looms, have at last found a cause to which they can rally: higher taxes on the ‘super-rich’, both private and corporate.

In the first of those categories, the target is anyone with an annual income of £250,000 or more. In the second category, the proposal gathering support not only on Labour benches but also in opinion polls is for a windfall tax on utility companies which have jacked up the prices of electricity and gas so dramatically in recent months, blaming soaring wholesale energy markets, yet still have the gall to announce handsome profits.

Behind this bandwagon — currently driven by the Guardian’s Polly Toynbee — are two impulses. The first is an old-fashioned socialist urge to penalise the allegedly undeserving rich and lash out at the perceived evils of capitalism — and to use the proceeds to maintain benefits for the poorest segments of society, including, for example, the elderly on fixed incomes who struggle to pay inflated domestic heating bills.

The second impulse is to do something about the catastrophic state of the public finances. Public sector net borrowing surpassed £19 billion for the first four months of the current fiscal year and is likely to exceed £50 billion by the end of it. With economic growth already at zero and the flow of tax revenues dwindling as slowdown turns to recession, Gordon Brown is set to break all records for debt levels and fiscal deficits before he departs. Growth is not going to solve the problem for him, because there will be very little of it between now and June 2010, the last and most likely date for a general election. To restore the Treasury’s balance, either public spending must be slashed, or taxes must rise.

1 | 2 | 3 Next page

David Lindsay

August 30th, 2008 3:57pm

A windfall tax on the uilities?
No. Public ownership, as applied by the Tories to electricity in the first place. If you do not believe in public ownership, then you do not believe in national sovereignty.

Meanwhile, here we go again about how people on a quarter of a million pounds of annual income are not really rich at all, and would in any case all leave the country if anyone tried to make them pay some tax, as, allegedly, would the non-doms.

These rules are in fact a subsidy, just like the ones that governments in the Sixties and Seventies used to pay to loss-making factories and the like, except that those were to protect the jobs of large numbers of tax-paying Britons rather than to protect the lavish lifestyles of a tiny number of tax-dodgers, many of them foreigners.

The defenders of such arrangements are like the private schools lobby whenever anyone dares to point out that almost all such institutions would close overnight if it were not for gigantic public subsidies through the tax system, utterly unused to being spoken to in such terms, and practically reduced to blubbering if anyone does so.

The non-doms and other super-rich manage to run businesses in numerous other countries without needing to live in them. But then, only the United Kingdom and the Irish Republic have this bizarre concept of domicile, making London the only one of the great cities of the world where such arrangements are in place.

And these people consciously wish to live in one of the great cities of the world, or else why do they all live in or very near to London, rather than anywhere else in Britain? So the idea that they would move if they were made to pay tax is absurd – where would they go?

The only comparable city is New York, in a country to which many of our non-doms would be (and sometimes have been) refused entry, and where neither they nor their mates would discover anything remotely resembling the indulgent tax regime that they enjoy here.

In any case, they wouldn’t take their investments with them: I say again, they already have investments all over the place.

Mind your language

Dot Wordsworth

Queen Victoria complained of Gladstone: ‘He speaks to Me as if I was a public meeting.’

A child of our time

From the economic and psychological bedlam of the global downturn has emerged a particularly dangerous false dichotomy: namely, that there is somehow a choice for ministers over the next few years between economic reconstruction and the repair of Britain’s broken society, and that the government (whether Labour or Conservative) must prioritise the former at the expense of the latter.

Diary

Anne Robinson

The daughter and I spent the last few days before the American election in Arizona.

Politics

Fraser Nelson

Fraser Nelson reviews the week in politics

The Spectator's Notes

Charles Moore

‘A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.’ So said Ben Bernanke, now the chairman of the Fed, in a speech about how to ward off the ‘extremely small’ chance of deflation, which he delivered in 2002.