When you’re surviving on £102 a week, tax cuts make sense
Oh, I know we can’t promise tax cuts. I know we can’t say exactly which way we would crank the great levers of the Treasury, if and when a Tory government were to get in.
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I know that George Osborne is bang on when he says that stability is the number one priority, and I know the public would rightly doubt the value of whatever we said so far from an election.
And I also know that, as soon as we gave the very ghost of a tax-cutting commitment, the great Labour lie machine would chunter into action. Ed Balls would start boggling indignantly from your screens. Gordon would begin his nasal dronathon about closed hospitals, axed nurses, cancelled heart operations and mutilated stumps.
But in case there is anyone out there who doubts the evil of how Gordon Brown taxes the poor, let them hear the ill-effects on those in our Armed Forces who slave to put bread on the table for their families, and who are walloped for their pains by the Chancellor.
Last week, I met a woman who works for the RAF. It is fair to say that, without her efforts, and the efforts of thousands like her, our helicopters would not fly. Our Army would not be victualled, our soldiers would not be shod or armed.
She works 45 hours a week in RAF supply, and receives from the MoD £11,500 per year, as well as a small London weighting. She pays income tax at a rate of £116.01 per month, National Insurance at £61.45 per month, and her pension contributions are £37.92.
And then of course there is council tax, good old council tax, and for the privilege of having her bins emptied and travelling on well-lit streets, she has to cough up about a tenth of her income — that is, £118 per month, on top of her rent, which is £366 per month for a three-bedroom house.
She has two daughters, and to make ends meet she drives 12 miles every Saturday morning (in a rented car, which costs a bomb, but the buses are no use for her purposes) to work in a building society.
By giving up a large chunk of her weekends, she is able to bring in another £1,500 — a year. She can’t earn overtime in the RAF; the best she can do is work extra hours at the base, and so earn paid days off.
The result is that, at the end of it all, she has about £102 per week to spend on herself and the rest of the household. That is £102 on light, heat, car, clothes and any incidental pleasures or excitements that she may be able to eke out of the remainder.
Now imagine if that poor helicopter lady gets a parking ticket. Imagine the financial chaos, the sense of doom and oppression, if she were to suffer the kind of mishap that occurs to me just about every day: getting the car clamped, hitting a ball through a window, falling off a bicycle and ripping my trousers.
Imagine what it means to pay an unexpected £50, when you are trying to survive on £102 per week. Think how it must be to find yourself in the toils of some debt you never meant to incur, and which was entirely the fault of the authorities.
Last year, the benefits people decided that she was poor enough to qualify for working tax credit, and then they changed their minds. Now they want her to pay back £1,000 and of course she doesn’t have it, and she doesn’t see how she can get it.
She doesn’t get any benefits: that’s right, not a bean, not a sausage of any of Gordon Brown’s means-tested benefits. She has been told that she is not quite destitute enough to qualify for family credit, income support, working tax credit, housing benefit, incapacity benefit or council tax benefit, and the wonderful thing about this woman is that she doesn’t even want any benefits.
She is socially responsible; she sees herself as part of the productive sector of society, not a drain. She thinks of herself as a hard-working member of the Armed Services, who is helping to contribute to Britain’s huge international effort, and she is right. She is a small part of our struggle to bring democracy to Iraq. In so far as we have a coherent plan to remove the Taliban from Afghanistan, she is an invaluable part of that plan. She is doing her bit for her country.
What is her country doing for her? The MoD has kicked her off the patch — the RAF base — because her RAF husband walked out on her, and, instead of showing any sympathy for her predicament, and the extreme difficulty she has in paying for her rent and her council tax, her MoD bosses are just siphoning the council tax money out of her pay slip as though she had no rights whatever over her own money.
It is no consolation to her to say that interest rates are low. She has no mortgage. It’s the tax that’s making her life so much harder — the huge amount the state claws back from the derisory sum it gives her.
It is the council tax that does for her, the council tax that has been pumped up by Gordon Brown as he imposes ever more unfunded liabilities on local government, the council tax that Labour now wants to raise by revaluing her property; and if the government snoopers think the view from her bedroom window is sufficiently charming, they will nudge her up from one band to the next and make her pay even more.
So when those Labour people come on and say it’s only the greedy Tories who care about tax cuts, think of the lady who keeps the helicopters flying, and her unbearable cheerfulness.
I think it’s true that much of Middle Britain is suspicious of “tax cuts” as a political slogan. It’s true that people want good hospitals and schools.
But then much of Middle Britain doesn’t feel the impact of tax in the way that low-paid personnel in the Armed Services feel it, and it is people like the helicopter lady who should have the first call on our protection and support.
Boris, I believe you have left out a rather large fixed cost in your calculations. When you say she has:
you forgot FOOD.
Boris as you very well know tax cuts are required for economic stability not an antidote to it . David Cameron dragging public sector borrowing into the argument was Brown-esque obfuscation and fooled no one. Tax cuts cannot be promised because the public sector is so swollen that unless you want Turkeys to vote for Christmas offering tax cuts is scarcely an option. Deary me has it come to this ?
Poor chap . Once more you are interesting position of being part of the inner cabal and yet retaining the post of provocative columnist. How entertaining it is to watch as you try to reconcile being a professional opinion former with not being allowed to have an opinion.
Never fear; you supporters understand, but would you be able to continue if you were elevated to Deputy PM as is your just desert?. Lord how I wish it was you swishing your leonine mane about the fast east instead of the idiot Prescott.
On the unfair burden of taxes you are of course entirely correct and the solution to this would equally obviously be to reduce the tax burden . I cling to hints about simplification that the boy David has let drop . I believe he is charting the only electoral course towards a lower tax economy and further winks and nudges from your good self will be much appreciated .
Another great article under tricky circumstances. All power to you
Yes, Raincoaster, I was wondering about food too. But I’m also wondering why a single mother with two children on a lousy £11.5k pa isn’t entitled to ANY benefits or reliefs. If so, a classic case of someone who’d be better off not working?
If only shrinking local and national government was that easy. Turkeys and Christmas, as Newmania says. It could be achieved by a near-total freeze on recruitment, coupled with internal redeployment and an obligation to reduce numbers by natural wastage. Any new jobs should be subject to ruthless examination against a set of principles describing what local councils should – and equally importantly, should not – provide.
A tax cut would be nice, but instead I get a tax-rise every year.
Like many other people in this country I have student loans to pay back. I don’t begrudge this, I spent the cash, but the repayment threshold is locked on £15,000 / year.
My 0% threshold increases annually, in line with prices (conveniently excluding property rental and council tax prices) as does my 10% and my 22% threshold. My 31% threshold, where I start paying my student loans back stays the same, effectively decreasing every year. Why should all us Blair-era graduates have a tax-rise every year? First he gave us tuition fees, now an annual tax hike!
Like I say a tax cut would be nice, but what I’d really like is someone to stop my effective tax rate increasing every year.
She isn’t paid well for what is a highly-skilled job, is she? Who’d want to join the army with pay and treatment like that, not to mention shoddy equipment or lack thereof. You’re spot on about tax, but the situation is now ludicrous. Think about all those taxes that go by another name: speeding/parking tickets, on-the-spot fines, parking permits etc. We really are robbed blind in this country, so it’s no surprise that everyone who can is upping sticks and leaving! Too many taxes at too-high-a-cost, too much regulation, too many layers of government (many unaccountable)… It really is beginning to sound like a socialist nightmare. The worst thing? So many people in this country just don’t understand economics and walk around with their eyes, ears and minds closed. They’re dragging us all into the gutter by sustaining (yet another) failed Labour government. Lord help us all.
I suppose simply raising the pay rates of your armed forces personnel is out of the question? I mean, you do have a bit of a recruiting draught, and this could well be a contributing factor (people aren’t always as dumb as you think).
This way or a tax cut, the money still comes from the government, so no net cost change. But people always prefer it if you put money directly in their pockets, as opposed to just not taking as much out as you used to.
Ah, I’m reminiscing about the recessions of the early 1970s,1980s and 1990s. I remember them well, or at least the last two.
All three recessions had common factors:
First Barber’s then Lawson’s unsustainable booms sent earnings and prices sky high.
Inflation went skywards with them. In the 70s and 80s it was over 20% in 1990, 10%.
I remember going shopping and wondering what prices would have risen to this week.
The Chancellors respectively tried to correct soaring inflation rates with high nominal interest rates. 1970s and 90s 15%, 1980s 17%.
Consumer spending and business investment consequently ground to a standstill. And every point that inflation and interest rates rose by, consumer and business confidence dropped to a corresponding low.
House prices fell and many young people became trapped in negative equity situations, stuck in flats with children and unable to sell or afford to buy anything else.
Private sector deficits and business and personal debt went skywards nd businesses and individuals came crashing down. Unemployment rose, part of which was due to the down sizing the white collar sector.
UK competitiveness plummeted as the exchange rate for sterling went ballistic. Oil price rises added an extra jot of misery. For a time it seemed there was nothing that we could do except suffer miserably until it all went into reverse, as it always did.
What is etched on my memory most of all are the high flyers who were working for me doing unskilled manual work. One was a Chief Executive from the Ministry of ……, another a businessman who’s business had gone bust. A formula one racing car engineer, a self employed driving instructor, several secretaries, two carpenters, an LGV driver, a number of salespeople, a plumber….
It was hell for millions of us. Now tell me, please, how all of you who want tax cuts
plan to overcome the consequent boom bust cycle this will inevitably set in motion.
So the problem happens because people have money? Gotcha.
Thanks! That’s the best argument for true communism I’ve ever heard on this site!
It’s not the amount of tax, it’s the manner in which the tax is gathered.
Ah, Boris. The Council Tax. A famous Thatcher fudge, cooked up when the Poll Tax nonsense blew up in her face. Neither worked – except in the eyes of the beancounters charged with maximising treasury revenue (without consideration of the social consequences, of course: beancounters are never concerned with that).
The UK is obsessed with housing. Our homes are our castles; our entire wealth and creditworthiness is bound up in the notional value of said homes; our television viewing is dominated by programmes dedicated to the great British game of money-for-nothing property investment. And of course the public services we receive are linked directly to the perceived value of our homes – irrespective of that tiny warning down there at the bottom of the document announcing that the value of your investment can go down as well as up.
Naturally, the current Government continues to fudge the Council Tax rules when they need to bring in extra cash to pay for their armies of advisors. They do it because they CAN, and a Conservative Government would be doing exactly the same at this point, for as long as the Council Tax remains The Law.
Break the connection. Link the cost of local services to an individual’s ability to pay, just as we do for national services.
Dead simple, but I wonder if we’ll ever have the courage to say ‘it’s not about the value of your house?’ I doubt it: the money lenders might start to call in some of the trillion pounds of debt that’s keeping us all afloat. And then where would the British be?
We’re a selfish race, with delusions of grandeur. No wonder the rest of the world laughs at us.
Why do tenants have to pay the council tax? It seems to me that this should fall naturally to the homeowner: you don’t pay the insurance for the cab when you get a ride downtown, do you?
Frankly I would love a real house price crash. As someone with a low-value house but with more than my house value in cash savings, then bring the crash on. I could then afford to buy the sort of house I want.
(Higher interest rates would be nice as well. There are some of us who benefit by them. Not all of us are foolish enough to be up to our ears in debt)
You can discuss to oblivion house prices, inflation, recession, poll tax, stealth tax, carpet tacks… but dominating all these is a core problem. There are far too many people on the public payroll doing pointless jobs.
Not only are their jobs pointless and unproductive but they usually have the effect of stopping the rest of us from being productive.
These people might as well be on the dole, the only difference being a job gives them a sense of purpose and pride. It is also an excellent way of ensuring they will vote for you (nuLab) in gratitude for paying their wages.
But I sometimes wonder if a determined effort to pare down the public sector would be the electoral suicide most politicians fear. For every pen pusher there are several voters who would be absolutely delighted to see their taxes cut by his removal or redeployment to useful work.
Of course it’s not as simple as sacking half the town hall staff. The process must begin with ditching petty legislation and redefining the working methods which require whole departments to run them.
Who, for instance, is going to administer the command/control/penalise system of scaling on-street parking permits to the CO2 emissions of each vehicle?
A new cluster of council staff, of course. And we all know who’ll be paying their salaries.
TAX
Paul D “but dominating all these is a core problem. There are far too many people on the public payroll doing pointless jobs”
Yes. This makes the electoral strategies available to David Cameron. severely limited ; some of them must vote for him . I would add to the core problems only one, which is not unrelated.
It is the damage that has been done to the supply side over ten years. Despite Black Wednesday, and so on, Gordon Brown inherited an economy with great underlying strength. Since then indicators of competitiveness have slid downwards alarmingly. While managing demand in the economy is relatively short term, this sort of strength is not . It requires real life changes , and the political bottle to see them through .
raincoaster. True Communism.
A society based on real social justice – from each according to his(?)ability, to each according to his(?) needs? A society free of the multitude of dehumanising master and slave relationships produced by the dichotomy of Capital and Labour. And freedom from its inevitable, planet destroying corollary, the fetishism of commodities?
I’m reminiscing about the 1970s, 1980s and 1990s again
Those courageous young people so cruelly wiped out on Tiananman Square. The frightened faces of young people who’d lost the freedom of speech whispering in corners in Rumania. A two week hunt to buy a can opener that I never did manage to track down – because ‘Russia has all of our metals’. Supermarkets filled with nothing – nothing – but row upon row of pickled gherkins. Mile upon mile of grey concrete terraces crammed into filthy ghettos. The palatial homes of fat cat Party members. The plasticised bodies and organ lottery of Chinese political ‘criminals’.
Where is your true communism, raincoaster? Over a 160 years since Marx in his Hegellian youth wrote his remarakbly perceptive Paris Manuscripts, yet it seems to me that his true Communism is nowhere and nowhen, except perhaps a few tribal societies.
Even the Bushpeople of the Kalahri have lost it now and are becoming Capitlists.
Apologies for spelling mistakes, I should know better than to rush out postings from my office.
Flo, I’m not and have never been a Leninist, and Marx would have been horrified at the ridiculous fascist states that operated in his name. Please don’t jump to conclusions like that about me or Marx.
You said that the problem was the boom and bust cycle; it’s a core part of market-based capitalism. So what’s your solution then, if not to reject market-based capitalism?
Auntie Flo’
Aren’t you getting back your Soviet-style super-state with the EU?
raincoaster. I can’t see anything in my posting which suggested that I’d jumped to any conclusions about you. However, if I’m wrong and I did implicitly suggest that you’re a Leninist, I apologise for that.
Regarding Marx, I don’t believe that I jumped to any conclusions in respect of him either. My posting briefly summarised some of Marx’s views and ideals and contrasted these with the dreadful reality of Communist and pseudo-Communist States. The conclusions I’ve reached about Marx and his theories are the result of 4 years study of the man and his dialectical methodology while I was a student. I have great respect for much of Marx’s work, his theory of Commodity Fetishism, for example, is inspired. However, as with all other thinkers, there are inconsistencies and contradictions in Marx’s system. One of these inconsistencies is Marx’s view that the Working Class are the universal class of history who will usher in a totally just social system. Nothing in either past or recent history supports that view. Marx’s view that it was possible to develop a systematic and scientific theory of, highly complex, human society, one with predictive power was, in my view, unrealistic.
I agree with you that Marx would be horrified by many of the Communist States set up in his name – that’s what his ‘I am not a Marxist’ statement was all about. However, the gap between Marx’s Communist ideals and the reality of Communist States, in itself, raises the issue of the unachievability of Marx’s theories.
I forgot to mention the boom and bust cycle. Blair’s government has shown that it is possible to control this cycle. Though many, of course, take issue with how this has been achieved. My view is that there are other policies which could control the cycle – and that Green economics may well be the way to do it more sustainably. You may say that the very idea of sustainable Capitalism is a contradiction in terms. That may be so, or it may not, however the alternatives to that, from where I’m sitting, here on the British Isles, are not rushing to present themselves.
Jeremy Jacobs said:
Auntie Flo’ Aren’t you getting back your Soviet-style super-state with the EU?
How is it ‘my’ EU super-state? I detest the EU.
My apologies, Flo. Obviously I was traumatized by Christopher Hitchens as a youngster (I’m sure I’m not the only one).
I mistook your contrasting Marxism and Stalinism for implying that fascism was inherent in Marxism and also jumped to the conclusion that you’d categorized me as a Guardian-style leftie, all Euston Manifesto and such. And, since I’d like to slap them with a red beret, obviously I hated that.
As for avoiding the boom and bust cycle, as a Canadian I’m a kneejerk Keynesian, but increasingly I’m wondering if the whole thing isn’t a charade dependant on offshoring poverty: moving manufacturing to China, importing an illegal and therefore not-technically-existant workforce, etc.
Dear Boris, thanks for all the first class entertainment on have I got news for you, we are all big fans of yours here in my house.
I have to congratulate you on picking up on the frustrating financial situation for many hardworking people in this country
myself and my husband spent a week in the summer hearing a little of how this is all rigged, so that the depth of creativity and resources of ordinary people is stifled, for the advantage of a few – who already have plenty of readies.
so I have taken the liberty of including a few paragraphs from the person we met in the summer, any one interested can find her book “It doesn’t have to be like this” available from the Iona Community, or the rest of the article
will shut up and introduce you to the fun loving Margaret Legum
http://www.newcurioshop.com/cloisters/index.htm
New Economics
4 CREATING NEW MONEY DEBT-FREE
by Margaret Legum
Old economics assumes that the current economy is pretty well inevitable. New economics seeks replacements for policies that produce malign results. Growing debt, for example. Is it inevitable – always with us, like the poor? In fact it is not inevitable, but a symptom of a distressed global system, and a danger to us all.
Lending money …
My friend Joe Bloggs just sold his house for R3.4 m. The buyers got a 100% bond (mortgage). They are paying the bank R40,000-odd a month in interest alone.
Let’s unpick that. Where did the bank get that money? From others’ deposits? Did the bank warn other customers not to use their money because it had been lent to Joe? No; the bank created the money out of nothing. They wrote an entry into an electronic ledger in Joe’s name, and told him to go forth and spend it. On the other side of the ledger they wrote, as collateral, the house he was about to buy, which would revert to the bank if he didn’t repay the money that it had just sucked out of its thumb – plus of course a rate of interest.
In that way the banks get, every day of every week, free lunches galore. There is a theoretical limit to that out-of-nothing money creation, but it is easily surmounted.
You might say, so what? Nice work if you can get it, and nothing malign about it. It oils the wheels of the economy. If there weren’t an expanding amount of money in the economy it would grind to a halt. Someone has to make it. So why not the banks?
Boris you are disappointing of late.
You know fully well that if you are surviving on £102 per week tax cuts are not at all of interest. Chances are you are not paying much income tax, and let’s face it the Tory party are not proposing to abolish VAT. In fact on £102 per week you are probably not in favour of tax cuts at all because it might mean cutting some of those benefits you get from the state.
Come to think of it, it’s really only the rich who are interested in tax cuts. Wonder why that is?