One of the measures set out in Chancellor Darling’s Pre-Budget report is the long-delayed tax increase for the wealthy. For those who helped the Labour government to power in 1997, they imagined that this was always on the cards from the beginning – how wrong they were. Labour, the new champions of trickle-down with a few social nips and tucks, has waited three elections before getting around to what its core supporters consider natural labour territory.
Much of the hysteria surrounding the American presidential election focused on just how much of a ‘socialist’ wealth redistributor Barack Obama would prove to be, leading to confusions (and deliberate falsifications) about where exactly on the income scale his tax plan would start to have a noticeable effect. Tax frightens Americans, there is a constant scaremongering about where it goes and to whom. This time however, there has been enough of a backlash against corporate fat cat culture and the filthy rich to enable an acceptance (despite the “spread the wealth” horror) of somewhat redistributive taxation. And where the US goes, Britain likes to follow.
Now it’s okay again to ‘tax the rich’, and no doubt ‘the rich’ will play along for some time yet. They can relax for the time being however, because the British plan isn’t even in the real pipeline until after the next election (read 2010), and it’s anyone’s guess whose election that will be. Capital spending on social infrastructure such as housing, transport and schools has now miraculously returned to the agenda, where previously everyone in government was happy to let their venture capitalist partners get on with the business of hospital and school building and the “provision” of housing. Darling’s VAT reductions and National Insurance rises appear too late; millions needed them years ago, at the time when the government, during the replete years, thought it could finance prosperity via the casino hall.
Like the Roosevelt depression years, and more significantly the post WWII years, the super-rich will probably sit-tight and allow this tax-tinkering to run its course until the economy has recovered enough for things to ‘get back to business’. It remains to be seen whether the claim of tax reform and global financial reform is a long-term plan or just a knee-jerk reaction and palliative measure with only cosmetic significance.
Sources: BBC, Reuters, Morning Star