Thursday, 27 November 2008

Conservatives should commit to 45p tax if social responsibility remains their message

Conservative Home is canvassing Tory supporters as to their preferred strategy on 45p tax for high earners. The website quotes shadow treasury spokesman, Phillip Hammond,

“Clearly if the government is going to announce a huge package of additional borrowing today there will have to be large tax rises after the election. Of course people on higher incomes will have to pay their share of that but don’t let anybody be deluded by the political spin into thinking that the black hole that Labour has created will be filled by a tax on a really quite small number of very higher earners, it won't. We are talking about a couple of billions of pounds, the hole is likely to be a hundred billon pounds big, its going to require tax rises across the board and I’m afraid it will be ordinary families and businesses that are hit not just the very rich.”

If the statement seems somewhat ambiguous on the merits of the 45p rate, I’d imagine that the ambiguity is deliberate. Labour will not recoup a significant proportion of its planned borrowing from introducing a higher tax band for a tiny number of earners. Then again it is difficult to argue that those who make over £150,000 a year could not afford to contribute some more. The Tories are rightly wary of criticising a measure which, whatever its expediency, is likely to garner sympathy from the majority of British people.

There is a yawning gap between someone who earns £35,000 and someone who earns £150,000, which I believe it is appropriate to recognise by means of progressive taxation. Of course there is an argument against discouraging high achievement and wealth creation, but it is right to strike a balance, and £150,000 a year is, in anyone’s estimation, an awful lot of money. If, intrinsic to the value system of Conservatism, runs a strong thread of social responsibility, then surely it is socially responsible to demand a little more money from the very rich?

If I am reading the fraternal doctrines expounded by Conservatives such as Danny Kruger, and developed so elegantly on the blog Burke’s Corner, correctly, conservatism respects and acknowledges expertise, knowledge, excellence - in short it recognises the existence of elites. As a corollary of this recognition, and the rewards which flow from it, conservatism demands from those elites a greater assumption of responsibility, as regards society. By such conservative precepts, if my understanding is correct, the principle of 45p tax should be unproblematic.

Understandably perhaps, the Tories seem a little unsure how to jump on this issue. Iain Dale wants the party to avoid making clear its position altogether. However, at a time when the party’s opposition to Gordon Brown’s economic package is being presented as reneging on its promises to be socially responsible, supporting 45p tax offers an opportunity to reiterate the party’s commitment to fairness. If Tories are still serious about advancing the notion of progressive ends by conservative means, to do otherwise might prove counter-productive.

1 comment:

Anonymous said...

Entirely agree. Leaving aside the fact that traditional toryism is not about being anti-tax, the public finances are in a complete mess.

And then there is the fact that serious conservative commentators (I'm thinking especially about David Brooks) have also recognised that inequality is a conservative issue.

Not everyone in the Cameron coalition will accept this. But surely pragmatism dictates that now is not exactly the right time to jump up and down on behalf of those earning £150k+ per year?