Views
Now's the time to tax the rich more - for The Inverness Courier
THE focus of the debate about the impending recession focused on tax last week. With the Chancellor due to give his pre-budget report on 24th November, the government has encouraged speculation that he will announce a "fiscal stimulus" — a boost to the economy using public money — paid for by extra borrowing. The right thing to do now is cut income tax for people on low and middle incomes.
A 4p cut in the basic rate – which is what the Liberal Democrats are arguing for – would put about £750 back into the pocket of someone earning £25,000 a year.
A tax cut like this would help families struggling to pay household bills and worrying about how to pay for Christmas. It would also give a boost to the economy because people on lower incomes tend to spend extra cash rather than save it.
The government has been arguing that the economic stimulus — potentially including tax cuts — should be funded by extra borrowing. Borrowing will rise substantially anyway. As more people lose their jobs the cost of benefits will have to be paid for.
But while there may be a case for borrowing for additional spending on key investment that creates jobs, I don't think this is right way to pay for tax cuts.
If cuts are paid for by borrowing they will only be temporary and taxes would rise again in future. But Britain has a hugely unfair tax system — the rich pay a smaller share of their income in tax than the poor.
We need to use tax cuts in this recession to rebalance our system permanently in favour of those who have least, while those who have most need to pay more. The government should be closing the loopholes it has introduced for the super-rich. There are plenty of people who can afford to pay a bit more. That is how tax cuts for those on low and middle incomes should be paid for.
Card account saved
There was relief in communities across the Highlands at the government's decision not to scrap the Post Office Card Account (POCA). There has been a huge campaign involving local people, community groups and post offices themselves. I presented a petition signed by more than 1000 local people to Gordon Brown in August.
In the end, the government had no choice but to keep the card account. It does show the importance and impact that campaigning effort can have.
Ministers knew the public outcry would be too huge to ignore. Everyone who made their views known or got involved should share in the credit for this sudden change of heart.
Labour ministers — like their Conservative predecessors — have a very bad record in relation to Post Offices. There have been two major closure programmes in the past five years — and we have lost large numbers of post offices. Those that remain have seen key pieces of public sector business taken away from them.
We shouldn't forget, either, that the threat to POCA was entirely of ministers' own invention. The announcement made by work and pensions secretary James Purnell last week could have been said by any of his predecessors over the last two years. Yet it had to be dragged out of them by huge public pressure.
So if this decision is to mark a real change in attitude by the government, it needs to be followed by giving the Post Office back the right to sell TV licences and other new government work. In many communities, their post office is the only place where people can access public services and financial services too. If post offices can be invested in and supported by government, the people and the communities they serve will be the real beneficiaries.
Posted on: 18/11/2008
