Questions for the Lib Dems
No-one can complain that the . Have they, though, been wise?
On Thursday, they promised to make dramatic income tax cuts costing around £18 billion, paid for by a dramatic increase in green taxes - approx £8bn - and taxes on the wealthy - approx £10bn.
After speaking to the boffins at the Institute of Fiscal Studies I'm left with the following questions :
1: If the green taxes work - that is, they limit polluting behaviour - won't they raise less and less over time?
2: Why do they say they're helping the poor when the poor don't pay tax and therefore won't benefit from tax cuts? Since the poor do, however, pay green taxes to drive cars, won't they need to be compensated for the switch?
3: If you take these announcements together with the Lib Dem policy of replacing the council tax by local income tax, won't the real gainers be the politically sensitive middle group, whilst the rich will suffer and the poor won't gain?
4: Even so, will they ever persuade people of this? Whether you are a winner or a loser from the Lib Dem reform package will depend on an awful lot of variables (how much you earn, where you live, the size of your house, whether you have shares and other property, how much pension saving you do, whether you drive, whether you holiday abroad etc). The Lib Dems got in an awful mess trying to explain their local income tax changes at the last election. Won't this prove even harder and provide more nasty bits for the other parties to isolate?
The detailed plans aren't out till next month so answers may not come till then - but at least they've given us something to think about.
One last question. Given that the party desperately wants to contrast their serious policy development with what they call the Tories superficial spin, did they really have to have Ming marching in to music and cheering before a promo video of his colleagues telling us how marvellous he is?
I'm 
Comments
Nick, this doesn't seem what we should be getting from you as 91Èȱ¬ Political Editor. It's more like an anti-Lib Dem polemic. And, even worse, you just seem to be recycling the ideas of the Institute of Fiscal Studies. You may regard them as "boffins"; others may see them as right-wing, and no friends of the Lib Dems. As for your assertion, that poor people don't pay tax - that's simply not true. Poor effort, Nick. You can do much better than this.
You've forgotten point number 5:
"Even though the tax cuts only affect the rich, won't this impact on their middle class vote because ultimately everyone aspires to have more money?"
In other words, even those people who aren't affected by new taxes at all might be put off voting for these policies; they do not hurt them financially, but they might hurt their dreams.
Nick, I don't really think the 2 million who are going to be taken out of tax already can really be described as only "the politically-sensitive middle".
2: Why do they say they're helping the poor when the poor don't pay tax
You'd have to be very poor to avoid paying income tax at all these days! The personal allowance on income tax is currently £4895. A person on the minimum wage of £5.05 will be paying income tax if working only 19 hours a week. The Lib Dem proposals would increase the allowance to £7000.
I can't believe that the IFS would have made such a glaring error; are you sure you quoted them correctly?
I for one find the move on tax by the LibDems to be somewhat confusing. For many years, the LibDems have had a very clear policy on tax that differentiated them from the others parties - they intended to raise tax to spend on education and health.
Now they seem to be trying to steal a march on the Tories.
This may win middle-England votes, but it loses them the one policy that put clear space between them and the other parties.
This is a sad day for Liberal Democrats. It looks like they are trying to copy the 'sound bite politics' style of Labour. Party support should not be treated like stocks and shares which go up and down every time a company exec speaks. The Liberal Democrats may get some short term support but if they want true long term support which may translate into votes they should have a much more intelligent look at policies within their party system before they pronounce their half baked ideas to the public.
Reference number 2 above: You have a funny idea of what it is to be poor in this country. You seem to think that poor people drive cars and don't pay tax.
I know a lot of people who can't afford to run a car but who do indeed pay a fair wack of tax out of their pay every week.
It's nice to see a party willing to take a stand on the environment, it's just a shame that it's the liberal democrats who have no economic credability.
Also, If green taxes are successfull, there are a few things you can do. The first is continue to raise the taxes to further reduce usage. Another is to apply levies/taxes to other evironmentally unfriendly activities or (and perhaps most likely) just throw in a few more stealth taxes to make up the difference.
1. If, say, carbon taxes are at a level to discourage further growth in carbon emissions, then that revenue need never decline. Only if, for one reason or another carbon emissions start going down rapidly is the revenue in danger. That prospect is pretty remote.
2. You're mixing up two groups of 'poor'. Minimum wage earners who drive to work will be taken out of tax which will compensate them for green taxes. If they take the bus, they benefit. People out of work are most unlikely to be able to afford to drive anyway.
If any party proposed to simplify the tax system, and be honest about the need to collect revenue, rather than hide behind increasingly complex smoke and mirrors, they would get my vote.
Instead of a simple system of direct and indirect taxation, successive governments have sneaked in and then ramped up taxes that funnel money to the Treasury, usually when you can least afford it. Booking a holiday? taking out insurance? Moving house? Dying? Kerching!
I'll be moving house in the next month. Gordon will collect several thousand from me in stamp duty (a tax on moving house, ramped up by him). he'll also get the VAT on estate agents and lawyers fees, as I can't recover it as an individual, and a levy on any new insurance policies I take out. Gordon's total take will probably be over £10,000. I'm not particularly wealthy, it's money I can't really throw around, and which I will pay out of income already taxed, but I have to move, so I have to pay. Thanks Gordon!
Now it seems the Lib Dems are going the same way, and back tracking from their earlier honesty over tax. A pity.
It's a little odd to criticise a tax proposal as too full of variables to explain - financing a national economy is a complex thing. Surely the greater crime would be to make it too simplistic to function?
As for asking whether this will prove harder to explain than local income tax did at the last election, the blunt truth is that we'd have explained that just fine too, with a sober leader.
Still, it's nice to see you write something about the launch - even if it does undermine my own post !
I take your point about the 'poor' tag. What they really mean is these proposals will help working class people. That’s great – I wish they would just say that and good positioning for the Lib Dems. It's not an electorate their do well with. While things have improved for those on the lowest incomes under this government, thanks to Gordon Brown’s top-ups, those just above his poverty definition have seen their quality of life diminish. An ever larger slice of their income is mopped up by never ending council taxes increases. As a great proportion of their income goes towards these taxes they have been hit much harder than the middle classes. Many working class people have very little chance of home ownership and social mobility is at an all time low. I hope the Conservative Party picks up this theme.
@Tom Scott: I think you're being a touch over-sensitive. If the Lib Dems want to be taken seriously they are going to have to get used to being subject to the same scrutiny as Labour and the Tories. Nick's post didn't really criticise the tax plans - just raised a few pertinent questions.
What ought to worry the Lib Dems more is the sparse coverage of these plans in the papers this morning. Can you imagine what the front pages would look like if David Cameron made that sort of announcement?
Nick, all this tax policy sounds very complicated which has caused all these questions to arise, but at the end of the day there is no simple solution to taxes and it is really a matter of personal opinion. No past government has implimented tax polices without critics and this will of course never change, so I suppose you have to access how far a policy balances the left and the right thinking views and is as fair as possible and I therefore think the lib dems could do a bit better than this
I am not sure why anyone, most of all the 91Èȱ¬'s political editor should bother to comment on the plans of a party that is not in power, and will not be in power in the foreseeable future! We know that and so does the uninspiring leader of the Lib Dems - clearly it's just a piece of headline grabbing in the face of declining popularity of an also ran party. The Lib Dems can promise whatever they want, secure in the knowledge that they'll never be accountable for delivering anything they promise. Meanwhile Labour who are accountable continue to promise yet more new initiatives with no more chance of delivering them than bewilderd Ming Campbell.
The Lib Dems lost all credibility for me after the way they unceromoniously dumped Charles Kennedy. That had all the hallmarks of Shakespeare's Scottish tragedy, with its undertones of treachery and daggers drawn in the dead of night. Sir Menzies has been promoted as the only leadership candidate with "gravitas" but unfortunately for them, he has merely demonstrated he has the age but none of the positive attributes that come with it. Charles Kennedy's principled opposition to the Iraq war kept them buoyant during the last election but even that factor is fading. Doing a U-turn on taxes merely reinforces a sense of panic and confusion. IMHO, they have entered a tunnel of their own making and it will be a long time before they see the light at the end of it.
To those who say the Lib Dems are an irrelevance just go and look at the current polls and how they would translate into seats. Most of them point to a Conservative lead but not enough of a lead to get an overall majority. That would make the Lib Dems power brokers. I suspect Cameron could probably accept the thrust of these proposals after they’ve been tidied up a bit - after all they don't want to increase taxes overall. As long as they don’t stamp their feet on electoral reform I could see a Lib-Con coalition government working. Deputy PM Ming? It could happen.
It is always good to see politicians being challenged, and I assume we can look forward to you showing your impartiality with your piece challenging the Conservative Party next:
1. We know you want less Punch and Judy but what are your policies?
2. We know you want to be green but what are your policies?
3. We know that you want happiness but what are your policies?
4. We know you promised to leave the EPP in the European Parliament but what are your policies?
5. What ARE your policies?
The fact is, the only reason you CAN have questions for the Liberal Democrats is because they actually stand for something and have put forward the policies to be an alternative to the government.
At this point, people might reasonably expect you to start pointing out the hollowness of the Conservative position and the nakedness of their new Emperor.
I think you are quite right to be sceptical about this type of hype, Nick.
We've seen it all before.It's Ming's 'Flat Tax' moment and it goes like this...
Rich people get to drive cars and poor people save the environment by walking. Rich people fly away to play and poor people go to Clacton.
In other words..
Rich people get everything and poor people get the usual nothing.
Politicians..they'll never learn the ways of us poor underclasses.
Gary
Unfortunately the lib dems lost my vote through their behaviour too long ago for any of this to matter.
They showed with Charles Kennedy that the moment someone becomes a little wobbley at the top (in this case a little too literally) they all charge in like hyenas as their fragile consensus breaks.
They were pre-empted on the environment by Cameron anyway and are just clutching at straws.
Before I take the libs seriously again they need to ditch the grandad and anyone else who was oh so supportive but stuck the knife into the one person in their party people recognised.
Nick, you're absolutely right once again. I just cannot believe how unbelievable the Lib Dems are becoming, even more so than before under Charles Kennedy. I fear that they exist simply to make the figures add up, not necessarily to provide any real challenge to the Labour or Tory parties.
Labour introduced minimum wage, but imposed tax on it. That's why the Lib Dems are trying to change it so that people on minimum wage can keep all their salary. I think it is a good move towards introducing a fairer tax system for Britain.
The Lib Dems have got almost non-existent media coverage. (I haven't quite figured out why this is the case, do you have to pay the press to report for you or what?) It's no surprise that the British public don't know what they stand for.
The Lib-Dems are simply recognising the increasing feeling abroad (even in the Labour party ?) that public spending as a share of the economy (and the encroachment of the tax base) has now gone too far and must be reigned in.
Shame that their tax tinkering will not change the overall spend !
So called "green taxes", i.e. mostly just increasing costs when no viable green alternative yet exists, will rightly always lose votes.
Stronger incentives/direct funding/deadlines for (e.g.) the introduction of hybrid/electric cars might, on the other hand, be a vote winner.
Listening to the corrupt green lobby, and just taxing gas a bit more, will be a disaster for the LibDems.
The Lib Dems can afford to promise anything, because they won't get into power, anyway.
Nice not to be reponsible for coming out with wild fantasies.
The Liberal Democrats lost any chance of getting my vote when they continued the playground politics of Parliament within their own party. This set of policies is as opportunistic and muddled as the characters behind them.
Unless the Liberal Democrats can deliver a strong and sensible programme, like Labour, and a more flexible and approachable style, like the Conservatives, they will remain outside of any form of government for the foreseeable future.
As both Labour and the Conservatives spent years in the wilderness finding themselves, I suspect, the Liberal Democrats are facing the same difficulty. How long they spend soul searching is up to them. A little self-honesty helps.
Oh, one last comment, Nick. On previous occasions I thought your blog was getting a little shrill. This last topic seems much more moderate and rounded, as well as raising the important questions about policy and character. I really like this approach. It strikes a more considered and polite tone, which is something that British public policy debate sorely needs. Once again, thanks Nick.
There is a chance for people to put these and other questions to Ming Campbell on the Liberal Review website.
I notice that Financial Times was supportive of the broad lines of the Lib Dem tax policy.
After so many years of suffering at the hands of the social-engineering New Labour lot, I am now very sceptical of any political party looking to gain votes by fiddling with the amount of money in my pocket. (deap breath!).
I suppose, if nothing else, they can be applauded for their honesty. Blair would have sworn blind that these changes would have benefited everyone. At least the Lib-Dems openly state that there will be losers as well as winners.
So currently these are the choices:
New-Labour : will say what you want to hear - but give something very different.
Lib-Dems : will say what you don't want to hear - but even that doesn't add up.
Conservatives : have said very little!
Great choice!
Nick, Surely the point that Ming has missed is that the poor and low paid pay a disproportionate amount of their earning in Tax and NI. Ming the Merciful needs to come back to earth and relearn the Lib-Dem dogma. The proposals will as always hit the politically sensitive middle-earners, who will dump the party in droves.
Green taxes never work. Those who propose them say that they raise signifcant revenue and reduce environmentally harmful behaviour. They cannot do both. If they succeed in raising significant revenue they will have failed in reducing harmful behaviour. If they succeed in reducing harmful behaviour they fail in raising enough revenue.
I'd agree with Charles Porter - the Lib-Dems ahd got themselves into a position where they held distinct moral high ground, and looked like a growing force under Kennedy.
Following his ousting, and the results of the ensuing scrabble for position, they look more like a growing farce.
If the libdems can promise what they like as many people seem to think and it really doesn't matter - why don't they just promise to cut taxes for all? give free cars to everyone, and other people pleasing, unaffordable, unrealistic policies?
could it be that they are actually a party that is serious about being an effective opposition, a real alternative to the tories and labour and a party that wants to be in Government to affect real change for the improving society for everyone?
I second a lot of the complaints - a poor column not least because it neglects VAT which we all pay, rich or poor.
Where I do agree however is this is such a big shift in the tax system it will be hard to explain. One way the Lib Dems might try is to point out that the benefit of their tax system is you have ways to get out of paying taxes, by being green. No matter how virtuous I am I have to pay income tax and VAT. But if I choose to live near work and cycle or walk - I get out of paying the tax that long-distance car-driving colleagues face. I find this an appealing notion (not least because their cars driving past my house make my neighbourhood noisier and smellier, so the least they could do is pay for the priviledge.)
The bottom twenty per cent of the population pay no income tax whatsoever, so the Liberal Democrat's proposals are entirely redistributive to the middle-classes.
The Liberal Democrats like to think of themselves as progressive, or heaven forbid, 'to the left of Labour'. Well, sorry to break the bad news to the Muesli-eating class, but handing over taxpayer's money to students, property owners (Council Tax reductions) and middle-income tax payers is not socialism but electoral Machiavellianism.
I was a candidate at the last election, and even I'm a bit confused by this new tax policy. If the desire of "green" taxes is to prevent pollution etc and they work, won't that mean that the overall tax take will go down? Where is the difference going to come from?