The TaxPayers' Alliance - Campaign

Defending the indefensible

Further to my comments on the Fabian Society's attempts to "defend inheritance tax" and launch an anti-taxpayers alliance, Nick Cowen over at Civitas has written up an account of the Fabians' debate on the topic, held last night.

It's an amusing account, and lays out several crucial arguments against both inheritance tax and the tinpot alternative that the Fabians' pamphlet proposed. I wish I could have attended myself and given you an account straight from the horses' mouth, but I'm not sure how well a speech from the TaxPayers' Alliance would have gone down! Nick's analysis of the meeting is well worth a read.

Three reactions to the ten per cent challenge

On Monday we launched the Ten Percent Challenge - throwing down the gauntlet to councils by identifying savings from non-essential and over-inflated budgets that could be used to reduce council tax by 3.5% across England and Scotland.

As you might expect, the reactions of people around the country has been enthusiastic. Council tax has doubled in the last ten years, and has reached simply unsustainable levels. We've had a lot of people get in touch with us and sign up to support the TPA.

The reaction from councils has been rather more mixed. This was to be expected - many of them have after all been telling their local electorate that there isn't any slack in their budgets and council tax has got to rise even further while services are cut yet again. The revelation that even a small reduction in only three budgets could produce savings of £660 million rather exposes their previous claims as a sham.

Whilst we expected some attempts at cogent (though erroneous) argument against our proposal, I was slightly surprised at the tone and level of some of the responses.

The Gazette in Essex reported the Challenge with reaction from the leaders of Essex County Council and Basildon District Council. They were, shall we say, less than edifying.

Lord Hanningfield, the leader of Essex County Council said:

"We wouldn't spend £4.3million on publicity. I think the total for last year was something more like £2million. They don't have a clue how we operate."

Unfortunately for Lord H, they very much would spend £4.3 million on publicity - judging from the fact that they did so. Here's a shot of their own 2006-07 accounts saying so:

So in fact, not only would they spend £4.3 million on publicity, in the year before the spent over £5 million. In fact, Lord H seems to make a habit of spending quite a bit more than £2 million on publicity. As Lord Hanningfield has been the leader of Essex County Council for some years, it is rather unfortunate that it appears even he "doesnt have a clue how [they] operate"!

The reference to how much he spent last year is interesting, as if he is referring to 2007-08's spending, the accounts haven't actually been published yet - though if he's got a copy he'd like to send to us we'd be very interested to have a look...

Next up in the queue came Cllr Malcolm Buckley, leader of Basildon Council with some aspersions of his own to cast:

"We are the fourth-biggest district council in the country so we would expect to spend more in those areas than the other Essex districts. I don't think the TaxPayers' Alliance do their research properly and come up with misleading ideas."

This is a barefaced piece of misinformation. The size of the council doesn't make hide nor hair of difference, because we are talking about how much could be saved from the average council tax bill, something that is always going to be spread across the population however large it is. There's no reason at all that Basildon District Council shouldn't be directly comparable to any other District.

As it happens, Basildon are the highest spenders on publicity, management and employer pension contributions of any District Council in Essex. I can't help but think Cllr Buckley would have been better off explaining his sky-high expenditure on non-essential budgets rather than mud slinging.

A welcome contrast can be seen in the reaction of Hammersmith and Fulham council leader Cllr Stephen Greenhalgh, though. He "backed" the Challenge, saying:

“Hammersmith & Fulham Council has managed to slash council tax by three per cent for the second year running by applying business nous to the way we run the council. The H&F story proves that it is possible to cut council tax and improve council services."

“We have successfully focussed our energy on delivering high quality public services and cutting red tape and inefficiency. We are the only council in the country to spend less on communications that we did ten years ago and we have recouped printing costs by allowing advertising by local businesses in our publications.

“H&F has been given the highest rating of four stars by the Audit Commission for the quality of our services and that’s why resident satisfaction is up for the second year in a row. This shows once and for all that local authorities can reduce the tax burden on residents while improving the way the services are run.

“We have done things differently here and that’s why we have been able to cut council tax by more than any other local authority in the country.”

Which shows that Hammersmith and Fulham are succeeding where Essex and Basildon are failing miserably for one fundamental reason - H&F acknowledge that "local authorities can reduce the tax burden on residents while improving the way the services are run". Until councils accept that the problem lies in their behaviour not in council tax not being high enough, things won't get better.

Here's one last bit of food for thought. Given part of the issue is publicity and communications spending, how do the different councils perform? I phoned Essex County Council's press office on Monday to correct the untrue comments made by Lord Hanningfield. They haven't returned my calls. His taxpayer-funded blog ("my attempt to connect directly with the people of Essex") has been written on only five times this year so far.

I emailed Cllr Malcolm Buckley on Monday pointing out his errors and asking his views on the level of council tax. He hasn't replied.

By contrast, Hammersmith and Fulham got in touch with me to pass on their leader's statement and thank us for the report. What a revealing difference.

Norfolk TPA: working for lower Council Tax

Norfolk TPA campaigners met with senior members of Norfolk County and South Norfolk District Councils yesterday to discuss how the County and District can achieve tax cuts for hard-working families across Norfolk next year. 

Our senior campaigners Tony Flynn, Barbara Lockwood and Tony Callaghan met with Cllr Daniel Cox (Leader of Norfolk County Council) and both Beverley Spratt and Cllr Martin Wilby, the Deputy Leader of South Norfolk District Council.  Tony Flynn gives his report of the meeting here:

After introductions and some small talk, we established the purpose of the meeting. It was agreed that taxation at its present high level was now creating enormous problems for the majority of the people of Norfolk, the average income for most people being well below the average income for London and the South East of England.

All present put the case for lower taxes, showing examples of other councils having cut their Council Taxes and that we need to work together for lower taxes.  We know lower taxes work and that the people support them.  Part of the reason we turned up was to show the strength of feeling for lower taxes. 

After some discussion, we know we have to keep up the pressure and inform the council as to how we can help them cut taxes.  Then moving on, it was decided that we form an agenda along these lines and meet again at South Norfolk House on Wednesday May the 21st at 11am. This meeting will be to agree the agenda and then to agree a date and time for a Public Meeting for lower taxes, also at South Norfolk House to include all eight MPs representing Norfolk. As the instigator of this approach to Politics and Local Democracy, I take it upon myself to encourage all Members of Parliament to attend.

VAT and the EU

Two words guaranteed to strike fear into the heart of any good believer in small, efficient government!

Further to our recent work with the Cut the VAT coalition on the amount of money the Treasury made from the 2007 floods, the excellent EUReferendum blog has waded in (apologies for the pun) to criticise us for not mentioning the EU, which of course has control of VAT.

I could reassure Helen and Richard by pointing to my rather solid eurorealist credentials, but rather than talk shop, I'll make it clear.

Yes, I'm well aware (and the Cut the VAT coalition is, too) that the EU controls VAT rates, and that it is a difficult job wrangling a VAT reduction from the other member states. As it happens, I personally think it is wrong that our democratically elected Parliament does not have control over the taxes levied in this country.

That does not change the fact that reducing VAT would be a good thing, and there is a strong case for doing so - as well as a strong feeling in the relevant industries that it would be beneficial. Ideally I would like to cut it to 0%, but the EU forbids that - something I resent, but not something we can get around on this issue.

In terms of whether we are "blaming the wrong government", I think it is obvious that if you want a reduction in this application of VAT, the first people you need to get to agree are the British Government. It may be difficult to get permission from the EU to do it, but it is absolutely impossible without the British Government on side. That means they must be persuaded before we can get anywhere.

There are carrots to offer them - a VAT cut will help the housing stock, encourage energy saving measures and increase VAT revenues - but you also need a stick, and that stick involves embarassing them as the VAT collecting agents. Using VAT, the Treasury raked in huge amounts of money from the floods and levies taxes on disabled people for essential alterations to their homes - both disgraceful activities that they should be ashamed of.

As it happens, I think the case is so strong - for economic, housing and green reasons as well as those of political embarassment - that there is a decent chance of success on this one. The EU has already dipped its toe in the water by trialling a reduction on the Isle of Man, which resulted in an increase in the amount of money raise in VAT revenues, so they've shown some interest in the idea already.

And from Richard and Helen's eurorealist point of view, what is the worst case scenario? A strong case is built up, good media coverage rallies public support for a VAT cut and a wide coalition from industry is on side. I would like to see that result in lower VAT, but if it doesn't and the campaign is rebuffed by a Government unable to control its own taxation as a result of the ceding of powers to the EU, then it will make even clearer the sorry state of sovereignty in this country to an influential collection of organisations. The Government and Treasury officials come under pressure to do something popular and beneficial and are frustrated by the fact that they can't grab those popularity points because they've given the power to do so unilaterally away.

I want to see this tax reduced, and I think this is the best way of going about it. If the bare worst that can happen is that the campaign highlights the fact that our democratically elected Government has been emasculated and no longer has control of important tax rates then surely that is a helpful thing to the eurosceptic cause, too. I hope Richard and Helen will be signing up at www.cutthevat.co.uk

Taxpayer funding for political parties - a weak case weakens more

An excellent Policy Exchange report out today has hammered some important nails into the coffin of taxpayer funding for political parties. We've long argued that the reason parties are struggling financially is nothing to do with the needs of the modern political industry, and all to do with the fact that they are failing to sell their product to the public.

The fall in voter turnout and the corresponding collapse in donations from the wider public show that people are deeply unattracted by both the behaviour of many politicians and more fundamentally put off by the policies (or in some cases lack of policies) on offer. They are an industry whose product is simply not selling.

So, instead of updating their business model and improving the product to meet what customers want, they have simply decided that their work is perfect, rather it is the modern environment which is wrong. The keystone of that argument is that there has been a political "arms race", with costly advertising and glossy literature becoming essential and driving costs upwards, beyond what can be covered by donations.

The Policy Exchange paper holes that idea below the water line by calculating that the parties spend the same amount - and less in some cases - than they did 40 years ago. It also rightly points out that there is already huge subsidy of political parties through Special Advisers, party political broadcasts, Short Money, councillors' allowances and various other sources.

Given the recent spectacle over MPs' expenses, the public's attitude to the idea of even more taxpayer funding of political parties is already hostile - this report does a great deal to further that opposition and sweep the legs from under the already dubious argument put forward by politicians who simply aren't willing to change to engage the public.

Happy St. George's Day

All of us here at the TaxPayers’ Alliance would like to wish all our supporters and activists a happy St. George’s Day. 

On this day for England, however, please also spare a thought for the Barnett Formula.

John Redwood: Labour tries to tackle fuel and child poverty by creating tax poverty

This government just doesn’t get poverty. Rather, it begets it.

The government thinks there is child poverty and fuel poverty. Today – and next week in Parliament – the pressing issue is tax poverty.

Poverty is a shortage of income for people to pay the necessities and have a decent lifestyle. There are three ways of tackling it.

The political parties all agree the best way is to create a climate in which the economy generates enough well paid jobs, so people can go to work to earn what it takes to afford to keep themselves and their dependents.

They agree that for some, it is necessary to take money from the many to give to the few who cannot find or hold a job.

The third way would be for the state to let people keep more of their money, instead of taking so much from them in tax. If those on lower incomes paid less income tax they could afford the fuel bills and could manage the food and housing bills without requiring a benefit top up.

The government is hoist on its own targets to cut so-called child poverty. It is a curiously misnamed set of targets. Practically all children are poor. We have legislated to make sure they remain so, as we believe we should prevent children under the age of 16 from working for pay to take them out of poverty. (Please note, I support the banning of child labour!) We also usually prevent children from inheriting or receiving larger sums from relatives with property and money  to give them an independent savings income which they control as minors. This government wishes to take this approach further, by preventing 16-18 year olds from entering full time work for pay without an educational component, something I do not support. I want 16-18 year olds to have opportunities for more education if that is what they want, but I do not favour compulsion.

What the government means is it wishes to cut parent poverty. That’s a good thing to want to do. I also want to cut it, along with cutting poverty for childless couples and for single people. The government’s determination to tackle parent poverty has led it into the dangerous political quagmire of abolition of the 10p tax band, offering compensation to some parents through benefits and tax credits, whilst taxing single people and childless couples more. Transferring money from one group of low income earners to another is not what a lot of Labour MPs came into politics to achieve. It is certainly not what I am about. I want to tackle the low net incomes of all.

Today there is a summit on fuel poverty. Yes, the fuel bills are spiralling upwards. No, there is nothing in the short term the government can do about the ever higher oil, gas and coal prices. Yes, the fuel companies have to pass on most of the increased costs of fuel to them. Yes, that will make them unpopular and the objects of political diversionary attacks.

Yet if you buy fuel for your car or van, for your working vehicle or for the delivery vehicle to your home, more than two thirds of the rip off price is tax. The energy companies are great tax collectors, taking money from poor and rich alike for their product, only to hand over lots of it to the government. People could afford even today’s high bills if they kept more of their own income. The government’s removal of the 10p tax band undermines everything and more besides that it is trying to do to alleviate fuel poverty. There would be no fuel poverty for the many if taxes were cut.

I believe the best anti poverty programme you can have is cutting taxes. Under this government, far from playing Robin Hood and taxing the rich to pay the poor, as socialists would like, the government is playing Sheriff of Nottingham. It is taxing the poor to give to the new rich, the Chief Executives of the ever expanding state, to the well paid bureaucrats, to the legal advisers, the management consultants, the spin doctors, pollsters and focus group masters, to the computer contractors and the PFI/PPP providers who cluster attentively around Labour’s great public sector money making machine. Labour even wants to add the political parties to the list of those who deserve more tax cash from the poor to sustain their expensive habits. There are just  not enough multimillionaire footballers and movie stars to take the money off, especially when they can leave the country at the very whiff of higher taxes on their fabulous incomes.

If the government were serious about tackling parental poverty and fuel poverty, if it understood that it needs to tackle single person and childless couple poverty as well as pensioner and parent poverty, it would curb its own insatiable appetite for cash for the grandees of the public sector. It would cancel or seek value from all those consultancy, research, financing and  management contracts that festoon in the profligate public sector. Ministers would curb the Ministerial drinks cupboard and cut back on the air travel.

So come on Labour. Put in place a real anti poverty programme. Understand poverty is a shortage of spending power for anyone who is poor, whether they are young or old, single or married, with or without children. It is bad news for anyone suffering from it. The best and quickest way to get more people out of it is to lower taxes. That means reining in the excesses of the multilayer government and the quango state.

Cross-posted from John Redwood's Diary

A week to save the 10p tax band

Next week Labour MP Frank Field will table an amendment to save the 10p tax band.  If you’ve read a paper, watched the news or, really, just been awake at any time in the past fortnight, you’ll have heard of the gathering storm in the Labour Party about the abolition of the 10p tax band. 

Millions of pensioners and workers will be hit hardest, seeing their income tax rate double.  These are people who get up to go to work, sometimes doing jobs that most Britons don’t want to do.  These are people who have made the choice to work as cleaners or bar staff.  They could have fiddled the benefits system and taken the easy life sitting in front of the TV all day living off you and me.  But they haven’t.  They get up every morning and go to work.  So I think it’s time we threw our support behind Frank Field’s campaign to save the 10p tax band and stand by those who are being hit hardest for doing an honest day’s work.

It’s strongly recommended you contact your MP to spur them on, give them support and let them know the country is behind them if they rebel against the government.  You can find your MP by using the Write to Them website or through the parliament website.  Alternatively, you can contact your MP through their own website if you know who your representative is.  Make it clear you support retaining the 10p tax band and that abolishing it is a deeply unpopular move. 

Too often MPs standing on a point of principle are warned by the Whips of de-selection and trouble at the coming election.  This is your chance to even the balance between principle and the Machiavellian manoeuvres of party machines.  Get your friends, colleagues and anyone you know who wants to see a better deal for taxpayers to contact their MP and urge them to vote against the abolition of the 10p tax rate. 

The tax on disability

The TPA is a strong supporter of the Cut the VAT coalition, a wide range of organisations from the Federation of Master Builders and the Empty Homes Agency to the Countryside Alliance and National Energy Action that has grouped together to push for a cut in VAT on home improvement and repairs.

There are several major benefits that a cut would bring - not least that empty houses would be revamped and energy efficient improvements would be encouraged - but there are also several instances where this application of VAT is even more pernicious and damaging than usual.

Last week we revealed that large amounts of VAT was screwed out of people who were simply trying to get their lives back on track after last summer's floods - now it has emerged that disabled people who need to adapt their homes are in many cases taxed for doing so, even where the Government knows the works are essential. This is a grossly unfair tax and it's an insult for the State to munificently talk about helping and even distribute grants to support people, only to then tax the very same people when they spend the grants.

I'd urge you to sign this petition on the Number 10 web site, which isn't by Cut the VAT or the TPA but has been sent to me by a likeminded supporter today. Our strength as taxpayers lies in the wide alliance of different groups who all suffer from high and unreasonable taxes rallying round to win each individual victory. So sign up, and send the link round to your friends and family. Each blow struck builds the case for lower taxes for all of us.

The West Midlands Blog

The TaxPayers' Alliance West Midlands has its own dedicated blog.  Click here to view it.