Thursday, 14 October 2010

Just what is wrong with a progressive Income Tax?

John Dixon at Borthlas puts forward an excellent analysis the current argument over the funding of further education he writes.

"There are, in fact, three ways of closing the gap therefore – reducing student numbers, increasing the contribution from general taxation, and charging students ever higher fees (and whether they’re recovered through repayment of loans or some sort of graduate tax supplement is more about presentation than principle). There’s nothing necessary or inevitable about the third choice – unless and until politicians choose to rule out the other options. And that’s the nub of the problem".

I agree with John. Indeed I would go further and argue that because of fear of  loosing votes, every government of whatever colour have tried to raise money through Stealth Taxes which are often regressive , and costly to implement. The fact is if we were to Tax the public the most equal and efficient manner then we should do so by almost totaly by taxing Income and includes national insurance in this. This would also include a de facto graduate Tax since those who earn the most (of which graduates make a large number) would pay more and even I don't seee whygraduates should pay twice.

However the problem with politicians is they realise that people would have a much clearer insight into what they actually were paying in tax and they assume (perhaps correctly) that people would be inclined to support any Party who would reduce this.

We cannot continue to go down the Stealth Tax route however because means that Chancellors are constantly juggling taxes in order to appease a particular section of the electorate, only for a new Chancellor to change things in order to appease another.

As Terry Pratchett Lord Vetinari: put it:

'Taxation, gentlemen, is very much like dairy farming. The task is to extract the maximum amount of milk with the minimum of moo. And I am afraid to say that these days all I get is moo.' (Jingo Victor Gollancz 1997)

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