Apr 2008 16

A window into the high tax mind3

Some publications can give more of an insight into the authors than the issue – and one such example is the Fabian Society’s new pamphlet "Defending Inheritance Tax". Aside from defending a tax that has been overwhelmingly rejected by all strata of the British public, and proposing an even more damaging new Inheritance Tax, the document gives us a fascinating window into the minds of those who want higher taxes.

My colleague Matthew Sinclair is dealing with the dissection of the misguided plan for "a reformed inheritance tax" in a separate blog post, but from my perspective it’s very interesting to look at the politics of the publication, and the strategies involved – and of course the errors I think they’ve made.

I would link to a pdf of the document for you to read it yourself, but the Fabians have sadly only made it available at the cost of £6.95 plus postage and packaging – hardly an accessible way to win over the taxpaying public – so I’m afraid you’ll just have to take my word (and some quotes from the report itself) on this.

The first interesting thing to consider is: where did this report come from? The preamble says that it was inspired by a seminar held in Oxford on September 28th 2007, a significant date in the politics of inheritance tax. That date neans that when the authors first sat down to discuss this it was still a full three days before George Osborne changed the debate forever by making that crucial pledge to drastically raise the threshold on IHT. As is now history, the popularity of that promise staved off a general election and the public reaction proved so strong that before you could say "we’ve had ten years to do it but hadn’t erm found the time", Alastair Darling had announced that he, too, thought IHT was wrong and should be altered to the point of near-extinction.

That the genesis of the pamphlet lies in the days before a very popular cross-party consensus was established on reducing the scale and scope of IHT does explain the slightly anachronistic tone of the report and its accompanying documents. The Fabians’ web site introduces the document with the words

Inheritance tax is under attack

which seems a slightly odd way of describing the state of something condemned by both the Government and the Opposition. Inheritance tax’s strategic situation is now rather more than "under attack" – it has been over-run and rejected by the people, the media and politicans of both sides.

The Fabians seem to have been stirred to write this defence of IHT by a sudden, panicked feeling that they were about to lose the fight (a premonition that was to seem more and more accurate in the days following that first seminar). This, then, is a last ditch attempt to save IHT; more Alamo than Alamein.

The problem is that it has taken them 7 months to move from the Oxford seminar to publishing this "defence of inheritance tax" – and over the thud of a closing stable door, it is distinctly possible to make discern the sound of a horse having bolted.

The pamphlet is about more, though, than a vain attempt to justify punishing people who save for the future of their children, it makes strategic proposals for the Left as a whole. Effectively it proposes the establishment of an Anti-Taxpayers Alliance, specifically

a citizen-led, public campaign for tax fairness, bringing together trade unions, anti-poverty groups, and others to contest the claims of anti-tax groups such as the Taxpayers’ Alliance.

The basis for this is a fascinating analysis of the failings on the part of the high tax lobby. The authors claim that the argument has simply not been made loudly enough for IHT.

We wish to promote a real debate, a debate in which there are actually two sides

When in reality there have been plenty of people carping on in favour of this damaging levy for the last century – the reason it has taken such a body blow now is indeed to do with vigorous campaigning against it, but that campaigning is founded on the fact that IHT is a bad product that the public do not want.

Setting that aside, it is heartening for the anti-tax lobby that the Fabians seem to be defining their tactics based on what we are doing – the pamphlet cites the TPA several times both as a leading protagonist in the campaign against IHT and as a model for the high-tax lobby to follow.

It is that which is of real interest. The high-taxers obviously feel that the low tax argument has been getting the upper hand of late, and indeed our polling suggests that on overall taxation, green taxes, council tax, IHT and a variety of public spending issues the public are increasingly supportive of our stated aims of lower taxes and better government.

The growth in our grassroots support base around the country attests to that, too, and it is the fact that we are drawn from an active base of real people outside Westminster who feel the burden of high taxes and poor services that gives real strength and energy to what we are saying.

The Fabians, it seems, have decided the best way to put their case – those high taxes that are so great but for some reason no-one supports – is to copy the TPA and go for a "citizen-led" popular movement in support of IHT. Great. There’s only one problem with that: people don’t like Inheritance Tax, and it has been overwhelmingly rejected by the public to the extent that even George Osborne felt it was ok to come out and oppose it.

So who will make up the Anti-taxpayers Alliance? The starting prospects do not look good, given that within its first few pages the authors either thank or are smugly congratulated by a motley collection of the usual suspects, including:

Polly Toynbee
The TUC
Julian le Grand, hectoring paternalist of note
and various left wing think tanks.

None of this really brings anything new to the debate or adds anything to the high tax lobby. We already know that Polly Toynbee believes in higher taxes. We already know that Julian le Grand believes in getting the State to decide how people manage their own affairs. The only way to actually create a "citizen-led" movement is with the support of citizens, rather than from the top of the same old ivory tower.

And it is there that the Fabian plan has a problem – not only is there next to no public support for Inheritance Tax, there is practically no prospect for that changing. Fundamentally, the point of division is that we believe in letting people keep more of their own money and do with it as they wish, whereas this putative campaign the Fabians propose would be taking money from people, removing their freedom to manage their own affairs and telling the public that the Government knows best how their money should be spent.

Even their own research that they cite in the pamphlet showed that 71% of people wanted the tax abolished or the threshold raised. That research is old, having been carried out in 2000 before the hard campaigning slog of the last couple of years, and our polling in 2006 showed 78% of people support abolition or a rise in the threshold. At the most basic level, it’s difficult to run a mass movement without any public support, and it’s especially hard when your message is one of centralisation and making people worse off. The pro-IHT lobby has always been made up an elite who can afford to philosophise at the expense of the people outside the coccoon of Westminster, academia or wealthy political dynasties.

The Fabian Society should really reassess this one – things have changed even since they held that initial seminar, and there is no public support for IHT, still less for a vastly complex resuscitation of it in a  different form. The proposal of an Anti-taxpayers Alliance is an encouraging sign that TPA is making headway; after all, imitation is the sincerest form of flattery. The problem the Fabians and the rest of the high tax lobby face is that their product is simply antagonistic to ordinary people – they have spent years now pushing taxes up, and people have simply seen the money wasted on inefficient, over-centralised and poorly managed services.

In one sense, this idea of a popular campaign for high taxes has already been tried in the form of the euphemistically named Tax Justice Network, who recently tried to claim their lack of coverage was actually a sign of how good their work was, rather than how little appeal their message has amongst the real people who live outside the Westminster bubble. Unless the Fabians can get rid of the people and elect another, they are on a hiding to nothing.

Related Posts

  • Politicorich

    Bravo! A symphony of common sense if ever I heard one.
    IHT is the least fair of taxes. People should not have to deal with the taxman and the undertaker on the same day. IHT is also the second or third time that people will have been taxed on that same money, having first paid income tax when it was earned, and often stamp duty or capital gains tax whilst they held it or sold the asset. The proceeds of IHT constitute a tiny part of the total government expenditure, dozens of times less than is wasted every year. People who do the right thing and save for their children should not be penalised to fund a chavtastic welfare state mollycoddled by the usual suspects in the chatterati. Apart from anything else, IHT is a disincentive for people to work and to build up their assets and GDP will simply settle at a lower level making everybody worse off.
    Last year IHT was sensibly reduced. Now it is time to abolish it altogether.

  • Hardeep_Singh

    Private companies always know that regardless of the silly and at times imprtactical demands of customers they can’t stray too far of the mark without risk of loosing their custom. Therefore why don’t government and think tanks such as the Fabians realise this? Why do they ‘debate’ fundamental issues like this as without consideration of the fact that we could are not enslaved to this land nor government. In other words we could up sticks and move elsewhere, the Fabians clearly need to dispell this notion that we are not enslaved. Under such circumstances where would the tax revenue come from when the high earners have moved out? This would serve no purpose and was rightfully mentioned in the column above, you need public support to convey your message.
    I think the Fabians have scored an own goal in showing their real hand and having been inadvertently wrong footed by George Osborne’s speech. They clearly thought that the public would still be hypnotised by the call for higher taxes and this report’s timely announcement would help render the low taxation argument to the historical archives of economic sense. Thankfully it turned it quite the opposite and was a pivotal point for the low tax argument which has since been gaining momentum.

  • robert tressell

    The Super Rich,Non Doms and High earners can piss of out of the country as far as i am concerned if they do not want to pay their fair share,good riddance.
    These people COULD and SHOULD pay more.The Moral position otherwise is indefensible,and unerpinned by PURE GREED.