Monday, October 01, 2007

‘Lurch to the right’ is such a cliché…

David Cameron’s promise (February 2006): “The right test for our policies is how they help the most disadvantaged in society, not the rich.”

Minimum value of estate to benefit from Tory inheritance tax proposals: £300,000.

Total cost to taxpayer: £3.1 billion.

Amount of this helping the most disadvantaged in society: £0.

Standard by which Cameron’s failure can be judged: his own.

8 comments:

Cassilis said...

Not entirely fair Tom - to my knowledge the measure is cost neutral because the gap is plugged by the levy on non-domicile status so there is no 'cost to the taxpayer'.

Granted this particular measure isn't helping 'poor people' but Cameron's test can't be taken as some sort of exclusive test - all governments have such policies.

The removal of stamp duty seems to have escaped you...?

Tom Freeman said...

No, I think it's fair. How they raise the money is a separate matter from how they dish it out. There was nothing to prevent them from hitting the non-doms (which, if it works, I'm happy with) and then targeting the spend elsewhere.

On the stamp duty thing, I have to declare an immediate interest: my current flat-hunting predicament means that I'd be over 2 grand better off with this change (assuming that it didn't just result in price rises). But my vote's not for sale! The bulk of my pay for the next 30 years, on the other hand, that's something I'm absolutely delighted to be signing away...

Cassilis said...

Still not sure your criticism is entirely fair though Tom - you seem to be implying because this particular policy will only benefit people with estates between £300k and £1m (i.e. rich people) that it somehow contradicts Cameron's remark about the test for his policies being how they help 'the disadvantaged'.

In a literal sense, yes - this isn't a policy aimed at people who could fairly be described as disadvantged. But that line of criticism only holds up if you use a literal and very reductive approach to Cameron's remark. Governments of every colour must have policy stances that impacts all areas of society - that's just common sense. Cameron's remark was being used to illustrate what he considers past failings and was aimed at those who rejected his more traditional one-nation strand of conservatism (in contrast to Thatcherism). It was a sound-bite, a slogan - not some rigid policy test.

Applying it as such might allow his opponents a little dig at his expense but it hardly amounts to serious or substantial criticism of the policy. If that pattern is repeated across the week I'm sure DC would be quite happy...

Tom Freeman said...

Well, the less glib version - beyond throwing a dodgy soundbite back in his face - is that a focus on reducing poverty has been central to his repositioning of the party. He's talked a lot about the fact that poverty is bad for society as well as the individuals affected - and not just absolute but also relative poverty. The party's signed up to the goal of abolishing child poverty by 2020.

Yet when it comes to policy making rather than rhetoric, the priorities seem to shift. Taxing the non-doms to benefit the 94th to 99th percentiles of estates is a redistribution from the (mostly) extremely rich to the fairly/very well-off.

Even if the sums work out (and that seems to be no small if), could he really find no better use for this money? Entirely off the top of my head, a Tory-friendly tax cut that would be far less inegalitarian would be to raise the basic income tax starting threshold, which would benefit the vast majority of earners - including the ones that would benefit from the IHT cut.

This policy wholly plays to the (relatively small) grievances of better-off voters, largely in the south-east. I know all parties like to target their swing voters, but this does sit very uneasily with Cameron's other positioning. Why not share the proceeds, as it were, a bit more widely?

Sam said...

The specific details of this policy aside, the actual context is interesting and telling. Six months ago DC looked interesting as a candidate -- was building green cred, and was pushing his party to a position that was competitive with the central policies of Labour.

I think it's interesting that, against a strong Brown and reacting to traditional right wing elements in his party, Cameron loses his nerve so quickly and retreats well into Tory orthodoxy. I can't think of a more tory policy than scrapping inheretance tax, or a move more fitting of the word "pander".

His recent "insta-tory" behaviour arrives when under pressure to actually make a decernable policy. Policies that are not actually that interesting or even at times relevent. It also seems rather easy to quesion

tory boys never grow up said...

The other point to make is that inheritance tax is a largely a voluntary tax for the very rich who have access to accountants/lawyers. And what have the Tories said about readjusting the burden of inheritance tax on the very rich by cutting out the loopholes so as to be fairer ob those poor families who are being taxed on their family homes - short answer is absolutely nothing.

Also worth looking at what they are doing on non doms. Non doms are only taxed on their UK source income (some places actually try and tax residents on a share of their world wide income) - but what Osborn has said in effect is if you want to hide your UK source income in an overseas bank account we will not try and identify such income in overseas bank account if in return you pay a flat tax of £25k. This in effect means a fixed rate penalty for tax evasion no matter how much tax you evade - hardly a responsible attitude and certainly not consistent with the old tenet that tax should be levied according to the ability to pay - but the rich never believed in that anyway.

The overall impact of the non doms changes will be that there will be no benefit to the non dom teachers/nurses who will not be able to divert their UK Source income overseas - while richer non doms in the City and elsewhere will divert even more of their UK source income overseas in return for paying £25,000. My guess is very little extra revenue would be raised and certainly not the amount expected.

name said...

actually, that's brilliant. Thank you. I'm going to pass that on to a couple of people.

Tom Freeman said...

I'm closing comments on this post as it seems to be attracting quite a bit of spam.