Ross Clark

Whatever happened to the Lib Dems’ smart approach to tax?

Whatever happened to the Lib Dems' smart approach to tax?
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I have already decided how I am going to vote in the general election: for whichever party produces a manifesto with the fewest uses of the phrase ‘green jobs’. Was there ever such a numb-skulled phrase? It has become the fallback for any politician who hasn’t the faintest idea of how we are going to meet these self-imposed targets to eliminate all carbon emissions by 2050, 2030, 2025, next Tuesday or whatever. Are you worried that we might end up with no heavy industry, that you won’t be able to fly or drive anywhere, that the gas grid will be turned off and your house left freezing? Never mind, we’re going to have lots of ‘green jobs’ – which sounds like what Martians do when they crouch down for a crap in some dusty crater.

Obviously, then, I won’t be voting for the Lib Dems, as their manifesto, published today, is spattered front to back with green jobs. But then I noticed another phrase which would have put me off voting for them anyway:

'The Conservatives are pursuing a deregulated, low-tax Brexit that will set our economy back for generations'.

Okay, you might try to argue that the Conservatives had in mind some form of deregulation which will set back workers’ rights, or social conditions, for decades. Or that they won’t be able to fund public services properly if they cut taxes. But the idea that low taxes would set the economy back? What on Earth has Jo Swinson been on? Taxes and regulation might be necessary in order to provide public services and create civilised living and working conditions. But I’m sorry, the idea that tax generates economic growth is just a bit too much to take.

It is a phrase which sums up the Lib Dems in this election. They pose as the sensible Blairite middle ground. They have even scooped up some homeless Blairites such as Chuka Umunna to stand as candidates. But they are some way to the left of Tony Blair and his New Labour. Tony Blair would never have been caught saying anything other than that taxes should be as low as possible. He appointed Lord Haskins to lead his regulation task force – which wasn’t terribly successful, but at least it acknowledged that regulation should be as light as possible. New Labour never fetishized taxes and regulation as some kind of moral good.

Throughout the Lib Dem manifesto there are notably more criticisms of the Conservatives than there are of Labour. Some policies nod well to the left of the Blair-era Labour party. The Lib Dems want to do away with the capital gains tax allowance – merging it with the income tax allowance. They want to introduce a land value tax, which would fall on landowners rather than tenants as business rates do. There is some argument for that, in that it would discourage developers from sitting on land, but it would also encourage the wrong sort of development. Hit with a punitive tax based on potential land use, no land-owner could afford, say, to let outbuildings at a low-rate to an artists’ colony or leave it undeveloped for community use.

Elsewhere, there are touches from the May-era Tories. The Lib Dems want to revive the most unpopular of Philip Hammond’s policies – equalising rates of national insurance for the self-employed and the employed. That was soon dropped after it was pointed out that the self-employed do not enjoy the same benefits as employed people. The Lib Dems say they want to correct this by giving the self-employed full rights to paid holidays, paternity leave etc. But it just shows how little they understand about the sector. It is one thing to be self-employed on a contract; quite another to be, say, a plumber who works for any number of customers. How do you award holiday pay to the latter? Will we thumb through the Yellow Pages to find someone to fix the ballcock only to be told that the plumber is on holiday but we will have to pay him anyway, even though he is not around to do the job?

It is all so disappointing because the Lib Dems have often had some of the best ideas on tax. I have voted for them in the past often on this basis – in particular for their proposal, adopted by the coalition, to raise the personal tax allowance sharply. But I'm afraid there is nothing here to win me over.