Danny Alexander

VAT: the sneakiest tax

I suppose the bedrock of any coalition must be the readiness to compromise. It is for that reason that the Lib Dems have had to swallow (among other things) the Tories’ aggressive cuts agenda and Michael Gove’s potty ‘Free School’ nonsense in return for progress towards a £10,000 tax threshold, limited political reform and the ability to restrain the mouth-foaming wing of the Conservative Party.

Within the culture of compromise there still have to be red lines, however. With George Osborne’s ‘Emergency’ Budget on the horizon, first and foremost among these should be a Lib Dem refusal to countenance any increase in VAT.

As I’ve written before, VAT is the worst tax of all. It gives the impression of fairness (no one is exempt, the more you spend the more you pay in tax) yet disproportionately punishes the poorest because they naturally spend a higher proportion of their income (VAT accounts for 13.6% of the gross household income for the poorest 10%, compared to 4.1% for the wealthiest 10%). In addition the wealthy can afford to have their accountants play with the books and claim large chunks of VAT back from the taxman – those on the minimum wage cannot.

Let’s not forget that the Tories spent most of the election campaign bitching about the rise in NI contributions (in fact, they could barely squeeze a sentence out of their over-indulged mouths without uttering the campaign’s most irritating soundbite – “Labour’s Jobs Tax”) yet now there’s every chance they will impose an additional cost on small businesses in the form of VAT. Never mind, at least the super-wealthy won’t be too badly affected.

Of course, Labour supporters will erupt in faux outrage if and when Osborne raises VAT on Tuesday, conveniently ignoring the fact that their standard defence when asked about an increase during the election campaign was exactly the same as the Tories – “We have no plans to raise VAT” or “You can’t expect me to reveal what would be in our first Budget”. They will try to have a field day on this issue, but anyone from the Labour Party who tells you they wouldn’t have raised VAT if they’d won the election is either dishonest, deluded or both.

Lib Dems are naturally opposed to regressive forms of taxation such as VAT – or at least, they should be. There’s little dispute that, allied with a certain level of spending cuts, taxation will have to rise to offset the deficit left by the last government, but surely the fairest – and most honest – way of doing that is via Income Tax. This most straightforward of taxes is based on what you earn, and is clearly outlined in your payslip. It is universally regarded as the most ‘progressive’ form of taxation and, while no one particularly likes paying it, at least we would all know where we stood. Why then are the Coalition so scared of it?

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The Torygraph: a rant

It seems the Daily Telegraph’s Expenses File is the gift that just keeps on giving. If there’s muck to be raked, that broadsheet bastion of Middle England is the one to do it. Hot on the heels of David Laws’ regrettable but unavoidable departure from the Treasury, the Telegraph has now turned its attention to his replacement, Lib Dem Danny Alexander.

As others have pointed out (notably Anton Vowl on his ‘Enemies of Reason’ blog and Mark Pack at Liberal Democrat Voice) the Alexander accusations are actually a complete non-story. They boil down to the new Chief Secretary to the Treasury not paying tax which wasn’t even due. (I guess the Telegraph, grieving that it doesn’t have the unfettered majority Tory government it wanted, is working on the principle that if you sling enough mud a certain proportion of it is going to stick.)

But amid this piety about financial probity do we get a word about George Osborne’s less than pure expenses file? Or David Cameron’s naked grasping over his Oxfordshire pile? Or even the tax status of the Barclay Brothers, reclusive owners of the Telegraph? Of course not, because the Telegraph is, if nothing else, the go-to-paper of the grasping, venal tax avoider, while effortlessly accommodating the excruciating pub bore who rants about what Brown did to his pension, or the great gold reserve give-away, or how the country has gone to the dogs at the hands of a bunch of left-wing homosexuals hell-bent on handing our national identity over to Johnny Bloody Foreigner.

The Telegraph’s bottom line is that we should all damn well know our place. It paints a rose-tinted vision of a glorious British past (most likely the 1950s) where Tories ran the country free of any scrutiny from the media, and the rest of us were grateful that our masters had learned what to do on the playing fields of Eton or Harrow. (These days you can add St Paul’s School to the equation, but probably not Westminster – bloody Lib Dems!)

The Telegraph used to be fun (for all the wrong reasons, of course). In between laughing at the musty old selection of mouth-foaming columnists, or the po-faced irony-free zone of the leading article, there was always amusement to be gleaned from the ‘Telegraph Letters Page Game’. Rifle through the outraged missives from the Torygraph’s ageing readership and award yourself points for finding the following: retired military officer, comedy double-barrelled surname, Peer of the Realm – find the full set and pour yourself a brain-numbingly large Tanqueray and Tonic.

Many of the Telegraph’s readership are at least self-aware enough to realise that they ought to be embarrassed about the fact – these are the crusty old (and in some cases worryingly young) farts who claim they only buy it for the crossword or the sport pages. Well, the crossword is an insult to the intelligence, and in any case the Guardian’s sport coverage is a country mile better than the rugby-porn extravaganza of the stuffy, dull old Nazigraph’s doggedly broadsheet pages.

Is it a good thing that this most unrepresentative organ should pick and choose the make-up of the government? Aided and abetted by the other poisonous rags that make up the right-wing press, they pour bile over those elected to run the country and play kingmakers to the Tory Party, itself hardly an organisation known for having its finger on the nation’s pulse. Their interventions are accountable to no one and they offer nothing of any benefit to wider society, yet still they have disproportionate power to wield. And which politician will dare say so publicly, when they don’t know the thickness of the Telegraph’s file on them?

With the demise of the ‘Dead Tree’ press only just around the corner, the Torygraph seems to be having one final flourish of ordure-heaping on the democratic processes of this country. I suspect that they are no more comfortable with the Coalition than I am, although for entirely different reasons. Perhaps in the end they will choke on the excrement they continually expel into the public domain – but I doubt that life’s ever that fair.