The trouble with tax

MPs are clip-clopping their way through the corridors of power once again this morning after the summer recess. Not unlike the first day back at secondary school, those returning to Parliament bring their rows and rivalries back with them from the beach. There are those vying for a place in the reshuffle, who could find themselves remaining on the outside of the tent while an old foe is beckoned in within the next 24 hours, and there are those who prefer to remain on the outside, offering advice.

Former Conservative leadership candidate David Davis will be doling out some of that wisdom from the outside this lunchtime when he gives a speech to the Centre for Policy Studies calling for deep tax cuts to help businesses, and deregulation. His colleague on the Conservative backbenches Mark Pritchard echoed those calls this morning on the Today programme, arguing that the government needs to ‘reward job creators, innovators, entrepreneurs’. ‘My view is that high taxes are the enemy of growth, not the answer,’ Pritchard said.

But he was joined by Tim Farron, who as a Liberal Democrat has a different attitude toward tax. The Lib Dem president argued that ‘in a fair society, those who are the wealthiest should be paying the highest share’. Farron’s argument is that you can make society a fairer one using tax. It’s a compelling one to make to the electorate (‘do you agree that stinking rich fat cats should pay more tax?’ yes, you probably do). The Liberal Democrats want to demonstrate to their members that they are pioneering ‘fairer tax in tough times’ ahead of their conference bearing the same slogan. To that end, Vince Cable insisted yesterday that his party will continue to push for the wealth tax that met with such a frosty reception last week.

Meanwhile Pritchard’s argument that the ‘government needs to reward success, not penalise it’ points to the importance of keeping wealth creators in the British tax system in order to give the economy a chance of moving. But it’s a trickier line to sell: it’s perfectly easy for Labour to fire off a few press releases saying the Tories remain the friends of the rich simply because they do not see high taxes for the better-off as the way forward for growth.