Monday, May 11, 2009


There are situations where the left and right agree on a principle, but not enough to stop them disagreeing completely about how and when it should be applied, which makes the whole thing idiotic and confused.

So, for example, with inheritance. The right thinks we should, and we shouldn't, inherit from the past, and so does the left. They just disagree over which bits are which. The right prefers the good things (our parent's money); the left prefers the bad: guilt for slavery, liability for colonialism and so on. The only traces of consistency are that the right prefers material inheritance and the left moral. Neither side seems to me to be very clear about the ramifications of the collective inheritances of infrastructure (bridges, roads) and of culture.

The latest example of this confusion is the contrast between the fuss over Parliamentary allowances and expenses, and the rumbling campaign against tax avoidance being conducted by Richard Murphy and the Guardian. The right is, broadly, upset about the Parliamentary expenses revelations we've been seeing and relaxed about tax avoidance, whereas the left is either mute or downplays the expense claims of MPs and peers while worrying about the tax paid by corporations and individuals.

In both cases the situation is one where fairly complicated rules for things that are at least arguably reasonable have been exploited to their full. Most people can claim expenses in connection with their employment, but many MPs seem to have been milking an unduly lax system. Differential tax rates and conditional allowances have led to businesses and individuals adopting arrangements purely to minimise their tax bills. In neither case has the original or declared intention of Parliament been honoured.

Thus, there seems to have been no explicit intention of enabling property flipping for personal gain when the Parliamentary allowances were brought into effect, but that's what has been happening. Similarly, like most people with high equity stakes in the companies they work for, I take a small, even nominal, salary and the rest of my income in dividends. This wasn't the reason why differential tax rates were introduced, but I'd be mad not to do so.

If you were going to try to apply a consistency of approach to both issues, you have to say both things were bad. But how to avoid them?

The only way, really is to make MPs and peers subject to exactly the same tests as everyone else. They can claim expenses, but only in exactly the same way I can. If I work away from home and can't claim for broken lavatory seats, or new kitchen furniture, neither should they. Parliamentary expense claims should, in other words, be as acceptable to the Revenue as my own must be.

And the tax system should be simplified. Identical flat taxes on any kind of income (if we have to tax income at all) would make it irrelevant how I took money from my business. I don't need tax breaks or grants to be encouraged to invest in my business, I'll benefit from doing so if the investment is sound. But I do need to be taxed less, so I have more money to reinvest.

No comments: