Tuesday 24 November 2009

In place of cuts

With spending cuts dominating political debate, there has been very little policy or political debate about the role of taxation. If we don't debate spending, cuts and debt in the round, it is difficult to see how informed public choices can be made.

The new Compass report 'In Place of Cuts' is well worth reading in full. Its authors George Irvin, Dave Byrne, Richard Murphy, Howard Reed and Sally Ruane set out a clear and detailed case as to what a progressive redistribution of the tax system could look like.

Taxation, spending and distribution are some of the most deeply contested issues in politics. No doubt, there will be debates about the revenues from and the merits of some of the specific measures proposed.

But the overall approach taken by Compass' authors is a promising one, particularly in showing how a public political argument could be framed around 'fair contributions' and win public support for a redistributive shift.

For example:

78% would like to see a tax system whereby the richest 10% at least pay the same percentage of their income in tax as the poorest 10%, only 14% disagree

It was interesting that Tory MP Michael Fallon's response on the Today programme this morning was to go for a generic catch-all 'threat of exit' argument, rather than to engage with the different proposals made.

Compass say that the package proposed would see 90% of the population as net gainers, so that the burden falls almost exclusively on the top 10% of the income range.

YouGov polling for the pressure group finds that 62% of the public back the package as a whole.

The new Compass poll findings chime with the polling and deliberative work carried out by the Fabian Society on attitudes to inequality and fairness, published by the Joseph Ronwntree Foundation.

That a more progressive taxation system could well be popular does not end the argument. Opponents may argue that the changes would be economically damaging, even if broadly popular.

But, if both the public case and the specific measures are framed in the right way, the political limits to redistribution are not necessarily as tight as the conventional Westminster wisdom often suggests.

1 comment:

Stuart White said...

Sunder: I agree.

I think this is a great report which makes a compelling case for fairer taxation as the way to respond to the budget deficit.