Labour, and timidity on tax

During the recent Conservative conference, James Cleverly, MP for Braintree, tweeted the following, about Labour’s general election pledges.

Labour’s manifesto committed to various proposals, such as funding higher public pay and free university tuition, which would be paid for by increased taxes on higher earners and businesses.

Anybody serious knows full well that the idea you can fund everything in this way is unrealistic; the IFS were just one of the organisations to point that out.

I’m not particularly interested in Cleverly’s claims of dishonesty, given that he himself stood on a manifesto which didn’t even try to explain how the books would be balanced. But we’ll come back to the right honourable member for Twitter later.

Aside from the dishonesty, however, there are other problems with Corbyn’s tax and spend policies which are worth discussing.

First, that they are conservative and unimaginative, and second, that they send completely the wrong message.

The left is currently said to be a place fizzing with ideas, in the midst of an exciting intellectual renewal. And yet, the centrepiece of this brave new world, the driver of all those pledges, is a set of tweaks to the existing system. Hiking income and corporation tax. Is that it?

For a start, have the impacts even been thought through? Is it wise to raise corporation tax as the country goes through Brexit and exporters find themselves at a competitive disadvantage? Where will these additional revenues realistically come from? Higher taxes on firms may sound good to left-wing ears, but any extra money will either come from consumers (higher prices), employees (lower wages), or shareholders such as pension funds (lower dividends). If firms choose to meet higher taxes by lowering wages, is that good?

And these proposals are so conservative; returning Britain to a higher tax environment rather than considering new ideas.

Why not consider reforms to the grotesquely unfair council tax? What about Land Value Tax, as a fairer way of raising revenue which may also help with the housing crisis? Is there a way to target wealth as well as income? Could the corporate tax system be better used to encourage good business practices? None of these are even considered.

For a politics which likes to style itself as radical, Corbynist tax proposals are woefully unimaginative. But there is a broader problem still.

Corbynism sells itself as a radical break from the failed consensus which has held sway for the past forty years, yet it is a sad shame that on tax it feels the need to accept the same ideas as the “neoliberals” it so despises.

Margaret Thatcher repeatedly reduced income tax, using North Sea Oil revenues to help plug the gap. Tony Blair’s governments were timid, pledging to freeze the top and basic rates of tax, and slapping down those who called for tax rises. With the notable exception of adding a penny to national insurance to fund the NHS in 2002, New Labour preferred to raise revenues via a more cloak-and-dagger approach. And David Cameron’s Conservatives cut both taxes for high earners and corporations.

The idea that tax is a burden which inhibits the private sector and the consumer is surely one of the assumptions which underpins the neoliberal model that Corbynites continually decry. So what a shame that Labour’s manifesto bought into the same line.

When your tax policy promises that you can get free tuition and better services, and that you won’t have to pay any more for it; when you are selling your party by saying that 95% of people will pay no extra tax, you are implicitly buying into the notion that Tax Is A Bad Thing.

This may be understandable electorally; nobody likes paying tax. But if Corbynism is about anything, isn’t it about grasping this nettle and changing the conversation?

If the abstention on that welfare bill was Year Zero for the Corbyn project, the moment it asserted that electoral considerations are not as important as doing what is right, surely it should have the guts to stand up and argue for what it believes, what we on the left all believe:

That tax is the price that we all pay for living in a civilised society with high quality public services and a strong welfare system. That there is a choice to be made between world-class services and low taxation, and Labour knows which side it is on.

Coming back to where we started, James Cleverly was right, in a narrow sense. We can’t just claim that everyone can have everything they want, and that someone else will pay. Not only is it not true, but it also relies on ideas that ultimately work against the left.

In the broader sense, however, Cleverly is wrong. His solution is to sacrifice the things we want (or, more accurately, need) and insist it must be so due to economic reality. There is, as always, a choice before us.

If Corbynism really is a radical politics, a fundamental break from what has gone before, it ought to start rethinking how the government might best raise revenue, and how to shift the national tax conversation. If, instead, Corbynism chooses to prioritise electability over making the argument, it is no better than those it has repeatedly condemned as being compromised.

I write blogs about the Labour Party, in an attempt to stop myself from screaming.