Monday, 26 March 2012

Budget 2012

A response to the 2012 budget

 

Dear MP

[1]  I, and other Quakers in the North East, support the need to progress firmly towards a balanced budget.

[2]  We recognize the need for British tax policies to be related to the tax policies of our major trading partners in Europe or North America; it would be Quixotic to be too far ahead in the direction of fairness and equality. But we also recognize the absolute value of justice, the inherent wrongness of exploitation, and the infectious and corrosive nature of greed. We think it would be appropriate for Britain to lead (as we did in the case of slavery), or at least point the way, towards a more moral, equal and integrated society, rather than to follow others (shamefully) in the opposite direction toward inequality and greed.

[3]  The fact that the gap between the rich and the poor continues to widen in advanced capitalists societies convinces us more forcefully than any economic argument that there is something wrong with the system. That trend leads to social disintegration, exploitation, and eventually to revolution. We believe that the need to curb the growing wealth of individuals and groups trumps the need to attract greedy entrepreneurs to this country. We ask for effective measures to break up large accumulations of wealth, as well as for adequate progressive taxation. The significance of a progressive tax structure lies as much in the signal it gives of a government's stance on this issue as in raising revenue. We believe that withdrawing the 50% tax rate gives the wrong signal.

 [4]  We understand that Parliament was told that the removal of the 50% tax rate after only one year of operation was justified on the grounds that it yielded several fold less than was predicted. We also understand that such was largely because profits were brought forward into a year that escaped the tax, which would inevitably be only a one-off effect. We would strongly condemn any deliberate attempt by Government to 'pull the wool over the eyes' of Parliament and the British people. We do not see why tax avoidance (and possibly criminal tax evaison also) should be rewarded by withdrawl of the tax.

[5]  Punitive tax regimes do not encourage philanthropy; rather they tempt people into tax avoidance and evasion (as we have just seen). Can more be done to encourage those liable to high rates of tax to lower their tax liability by voluntary donations to registered charities? 

[6]  I endorse the suggestion by Tim Harford (1) that the  Government sould aim to implement reccommendations of the Mirrlees Report (2), including:  "broadening the tax base, unifying national insurance with income tax, abolishing the majority of special treatments, aligning tax on income with that on capital gains and dividends, taxing property and land" .

Refernces:

(1) http://timharford.com/2012/03/mr-speaker-let-an-economist-speak-sense/

(2) http://www.ifs.org.uk/mirrleesReview

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