It's a philosophical question really, where the dividing line is between "doing the right thing" and "vote buying".
Yes, I am by instinct a tax-cutter, but at the back of my mind I would expect this to be electorally popular; at the other extreme is ruthless vote-buying where small, identifiable groups are preferential treatment - but as soon as a government is giving preferential treatment to every identifiable group, to be paid by everybody else, nobody ends up better off, and because of all the distortions and dead-weight losses, collectively, we end up worse off.
This story in the Evening Standard I found particularly sickening:
Millions of Londoners will get a council tax freeze next year after Labour unveiled a last-ditch move to avoid wipeout in the capital.
The Standard can reveal that all eight Labour-run town halls across the city will not raise the tax. As Gordon Brown scrambles to avoid a general election defeat, Cabinet colleagues hope that the move will persuade voters the party can cut costs without hitting key services. With Labour still struggling in the polls, the Prime Minister sees a tax freeze in London as a key example of the party helping people get through the recession.
OK, don't forget that Council Tax is a balancing figure (which raises less than a quarter of spending under the control of local councils), and that the government always skews the formula by which Whitehall allocates grants to local councils so that Council Tax is lower in councils which its party controls (and the Tories were just as bad as Labour in this respect).
The government has announced that in 2010 it will increase Employer's NIC by 0.5%, which must ultimately feed through into higher unemployment or lower wages (reducing annual wages by about £100 per employee); and it will increase VAT from 15% to 17.5% (in theory costing each household about £400 per year, but of course a lot of it is borne by the producer, and of the producer's share, most is in turn borne by, er, employees).
So that's a fairly grim increase. So why, oh why, are the very same people, only this time with their "Council Tax payer" hat on supposed to rejoice about the fact that these councils won't increase Council Tax, which, assuming it would otherwise have gone up by three per cent, "saves" each household about £50 a year?
Not to mention the facts that a) as a property tax, Council Tax has the lowest 'deadweight costs', and b) as an in-your-face-tax, it is least likely to be wasted by those who collect it.
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8 comments:
Well, fairly obviously, because NI and VAT are invisible, whereas council tax isn't. If council tax was deducted at source this cunning plan would have no weight at all.
Simple: A lot of people are terrible at maths/logic/critical thinking.
The popularity of ID cards went up after the government announced that they would be "free". Unless the government had found Magic ID Card Elves to run it, the cost to the user would be the same.
When William Hague announced that he would cut duty on fuel by 15p his poll ratings shot up. If you actually worked it out, the saving to the average driver is something like £50/year. Far less than the tax rises that Blair had already been implmenting to the average family.
Similarly on a car front, I've met people who are changing their car "for better fuel economy", despite the fact that buying a model that's 5 years newer delivers such marginal improvements that it takes 10-20 years to get a return on the fuel.
I'd like to see the breakdown of dispersement of the proceeds.
Can't help feeling that most local councils are quite good at wasting it, "in your face tax" or not.
An equal Citizens Dividend would be a strong pressure to cut state waste (and thus increase the divi).
RLJ, exactly. I added points a) and b) at the end as an afterthought but you beat me to it.
OC, excellent further examples!
JH, the proceeds of what? From whom they are raised or on what they are spent?
AC, of course, but the shorter and more direct the chain between taxpayer and service provider the better.
AC1, in theory yes, but there always be special interest groups clamouring for a bigger share. Seeing as a CD is much the same as a higher tax-free personal allowance, why isn't there the same pressure to cut waste and increase the tax-free personal allowance?
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