Monday, 26 March 2012

Tax doesn't have to be taxing, (if you're rich enough)

 “The tax man’s taken all my dough,” lamented Ray Davis in the Kinks’ Sunny Afternoon. “Let me tell you how it will be, there’s one for you, nineteen for me”, sang George Harrison, impersonating the Inland Revenue in the Beatles’ Taxman.

The year was 1966 and the great and the good of British pop music were royally pissed off at the confiscatory nature of the Labour government’s tax code, which could see up to 83 percent of top-rate income claimed by HMRC.

By the mid 1970s, many of them had decided that self-imposed exile was preferable to handing over roughly four fifths of their income to the state. The Rolling Stones went to comparatively libertarian France and wrote Exile on Main Street.  Cat Stevens jetted of to Brazil and worked on his seventh album Foreigner.  Even tartan-clad sleaze Rod Stewart jumped ship, going to America and realising Atlantic Crossing. A trip we’ve got to thank for the nausea-inducing nonsense of his number one hit, Sailing. There’s never an iceberg when you need one.

55 years later and they’re still at it. “I'm mortified to have to pay 50 percent tax!” said Adele last May. “While I use the NHS, I can't use public transport any more. Trains are always late, most state schools are shit, and I've gotta give you, like, four million quid – are you having a laugh? When I got my tax bill in from 19, I was ready to go and buy a gun and randomly open fire.”

A product of Britain’s only free, (i.e. taxpayer funded), school of performing arts, Adele’s attitude would seem to suggest it’s not just her sound that’s a throwback to the sixties, but also her sense of entitlement. Still, at least those comparisons to Britain’s most distinguished musicians will finally be deserved when she takes the same course of action they did and emigrates? Well, perhaps not. We can only presume this same thought must have played heavy on George Osborne's mind last week, as he announced a cut in the top rate of income tax in the budget, from 50 - 45 percent.

From next April those earning over £150,000 a year will find themselves with an even greater net income. Good news for Adele, who’ll be rolling in it even deeper. That is if she’s not opted for “non-dom” status instead. Good news ostensibly for much of the Cabinet too. Though ministerial salary’s peak at the Prime Minister’s £142,500 a year, just below the £150,000 threshold, when earning’s from other sources are taken into account many of the Government front benches are thought to be direct beneficiaries of the cut. No one knows exactly how many or who, despite Ed Miliband’s “hands up if you're going to benefit from the tax cut", line of questioning in last week’s PMQs. But with this Government boasting the richest cabinet in history – 23 out of the 29 are millionaires – it’s likely to be the rule rather than the exception.

Reducing the amount of taxes paid by the rich has long since been a consistent policy of the Conservative party. Indeed the 50 percent rate, which only came into being in 2010, was a belated Labour reaction to Conservative tax reform in the 80s, where the highest tax rate came down from 60 to 40 percent. But just because the changes are ideologically expedient doesn’t mean they are politically sensible. It’s a bit much to expect the public to buy into the “we’re all in this together” mantra, when money can be found to lower the Cabinet’s taxes, but not pay for things like the Educational Maintenance Allowance.

Everyday we’re reminded the country is broke. It’s used as a justification for policies that nobody likes, or at least nobody admits to liking. Benefits have been cut, VAT has gone up, and people have to work longer to get their pensions, etc., etc. Any dissenting voices are hit with a caste-iron riposte: the budget deficit. So it’s all the more surprising to hear the announcement of a government policy that will reduce the Treasury’s takings. It makes you question whether George Osborne fully understands the implications of what he has done. All that hard work de-toxifying the Conservative brand and then a tax break for the country’s richest percentile. Pandering to the complaints of celebrity moaners like Adele, or Tracey, “I’m very seriously considering leaving Britain”, Emin seems a missed opportunity to jettison some deadwood. Worse it may even entice the likes of Piers Morgan to consider moving back. 

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