We Should All Support The 10p Tax Cut

Olly Neville February 5, 2013 1
We Should All Support The 10p Tax Cut

Milton Friedman famously said: ‘I am in favour of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.’ He expressed a sentiment that any economically literate and morally upstanding practitioner of common sense should agree with: taxes hurt the productive economy. Feldstein in a 1999 study of the US showed that ‘the dead weight cost of income tax could be as high as $2 for every $1 taken.’ So I would expect those that support a smaller state to be following Freidman’s words and fighting for every tax cut possible.

Not so it seems. Robert Halfon MP has proposed a sensible step towards a lower tax Britain via bringing back the 10p tax rate, cutting tax on the poorest in society substantially. Whilst many support this admirable move, there are some on the low tax side of the spectrum who oppose it. Whether it’s because it is not flat taxes, or not raising the personal threshold or whatever their pet project is, they are fighting against Halfon’s brave stand.

Frankly, they are idiots. Cutting tax to 10p isn’t perfect, but it is the option that is on the table. All people do by opposing it is harm the low tax agenda and give ammunition to its opponents. There is no serious bill being put forward to make taxes flat now and there is no motion to raise the personal allowance above minimum or ‘living’ (what a nonsense concept) wage levels. Either you back the move to cut tax here, or you support the current high tax system.

Whatever your views were on AV, the most deluded group were the No2AVYes2PR types. By voting against AV they removed the chance of changing a voting system they opposed for generations. My point? The perfect option isn’t always (and most often) isn’t available. To oppose a good option because it is not perfect is the most self-defeating idiocy around.

Campaigning for the 10p tax cut doesn’t mean you can’t support raising the personal threshold; it is perfectly feasible to support both and hope to bring them both in. Maybe raising the personal threshold would be easier. Maybe the 10p tax code will mean a few more lines of tax code (in actual fact it will be a minuscule amount, the tax code gets complicated around the special rates and breaks for business and an extra tax band is not a particularly onerous or complicated amount of code to add) but it still means a tax cut.

The worst thing to do is make the perfect the enemy of the good. If you will only accept perfection then you will spend your life wallowing in rubbish. It is not a compromise to accept a piece of good legislation that isn’t perfect, because it is taking you in the right direction. You aren’t selling out to support a 10p tax rate because it is better than what we have now.

The most important part of any journey is travelling in the right direction. Refusing to get in the car because it isn’t quite going to the exact street you want to will see you left behind. Worse it will see the direction being changed by those with different agendas. There is no immediate prospect of raising the personal allowance or making taxes flat. If and when it does come about I will throw my support fully behind it. For now the only offer is 10p tax. Either you support it, or you supporting the current high tax system. Your choice.

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  • https://www.twitter.com/tommy5d tommy5d

    I’m afraid I can’t really agree. Robert Halfon isn’t presenting the “only option on the table”, it’s not even on the table, it’s a pet project from an irrelevant back-bencher.

    On the other hand, raising the personal allowance is the current game in town. It’s Lib Dem policy, probably the one being pushed most by their section of the coalition. Cameron, etc. are very keen to jump on the bandwagon and claim the policy as their own and I wouldn’t be surprised if Labour tried to adopt it as future policy come 2015.

    You talk about a significant tax cut but 10% up to £12,000 will only offer a saving of £200/year to the average family. Yes, you’re right, we shouldn’t turn our nose up at that but why not push for no taxation up until £12,800 which would provide a saving of £560/year and will likely be Lib Dem and Tory policy come 2015?

    If we’re stuck for things to do after that then we can start pushing up the National Insurance threshold from the current meagrely £5668/year towards the minimum wage. Achieving this would result in an additional £856/year tax cut for the average family.

    I do agree that support for the two isn’t mutually exclusive but why when we have a credible, simply tax cut on the table don’t we focus our efforts on uniting behind that?

    The main problem with the 10p band is it’s just a cumbersome way of doing what the personal allowance already does. 10% until £12k is the same as pushing the allowance to £11k, except that the allowance rise helps the poorer more because you get the full benefit when earning £11k whereas with the 10p band you have to earn £12k to get the full cut.

    Also, it’s not about lines in the tax code, it’s about normal people’s perceptions of our tax system. It’s about the message you can take out to people, not just for political reasons but to get people working. Which is a better message “pay nothing on your minimum wage” or “pay nothing on the first £10k, 10% on the next £2000 and then 20% on the final £800″

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