Thursday, June 08, 2006

Simple Sums

The Liberal Democrat proposals on tax announced today are a substantial shift in the right direction. Taxes should be simplified and the burden of taxation must be capped, and preferably reduced from the current high level. The logic of our business policies- deregulation and the wholesale abolition of the DTi can help us achieve this.

The decision to create penalty taxes to encourage green behaviour should not be seen in the context of the general taxation pool- the whole idea of penalties is to change behaviour, and therefore ultimately the tax yield form these penalties will fall. The key change in the proposals is the decision to shift tax away from income and on to wealth. This is a radical shift- and a necessary one. Indeed I would go further and advocate a shift towards land tax- which can be the greenest tax of all.

The implicit commitment that the overall level of taxation should be capped is the right approach- and I hope that several other policies can now be recast with this in mind. This is a substantial step in the right direction.

Even more satisfying is the consternation that it is causing amongst the Conservatives. Their abject failure to put forward any coherent policies, and their unsustainable commitments to the public sector are particularly shown up by this joined up thinking from Vince Cable. The waffle of the Turquoise Tories is countered by the succinct and strategic thinking in these new ideas.

We may have just shot the Tory fox.

1 comment:

Jock Coats said...

Personally I think you are being over-generous. It sounded to me as if "Progressive Property Tax" (a compromise trying to maintain a property tax until we could implement a land value tax when the land register was properly completed) has not gone down well which can only mean that overall they reject the rationale for LVT.

I might leave teh scissors I've been carrying around in my wallet next to my membership card at home tomorrow, but probably the membership card with them...:)

I wonder if you mean to suggest that shifting onto behaviour taxes is actually a signal that we want to reduce tax - ie some things won't be replaced if they work as behaviour taxes and fall away to little or no tax take.