Are the super rich getting away with it?

7 Oct 2012

Just before the Conservative Party Conference gets into full swing, David Cameron has reassured his party that he does not support the proposed ‘mansion tax’ on the super rich. The tax, proposed by his coalition partners the Liberal Democrats whilst they were in opposition, would be put on homes worth more than £2 million. Chancellor George Osborne suggested to Sky News that the government will extend the freeze on council tax in England for a third year running, but it is obvious that the Liberal Democrats aren’t happy and will continue to fight for the tax. 

 

George Osborne said during his interview with Sky News, "I don't think the mansion tax is the right idea because I tell you before the election it'll be sold to you as a mansion tax then after the election a lot of the people in Britain are going to wake up and find their more modest homes have been reclassified as a mansion.

"Nor do I think it's sensible to have a wealth tax in the sense of a tax on your wealth levied annually.

"But I'm very clear that the rich will have to make a contribution to closing the budget deficit."

Both the prime minister and the chancellor plan to make sure the rich ‘pay their fair share’ but, what is their plan to ensure that everyone pays equally? 

In the chancellor’s March budget, the top rate of tax for anyone earning over £150,000 a year was reduced by five pence. I would think that five pence to someone earning over £150,000 a year isn’t going to break the bank balance. However, it was insisted that the reduction would create jobs and stimulate the economy. Six months down the line we are still waiting to see if this is the case (although it’s pretty clear that we are not a great deal better off economically than six months ago). 

The Conservative Party needs to find another £16 billion of spending cuts in the last government year of 2015-16. Tax avoidance and evasion in Britain is worth over £70 billion. Problem solved. (No wonder I’m the Backbench Chancellor!) If the government were to crack down on the super rich and their anti-tax ethos, not only could we prevent further public spending cuts, we could erase tuition fees and stop spending cuts to the National Health Service.

David Cameron has pledged to stick by his promise not to cut benefits for pensioners, such as free bus passes and winter fuel allowances. Regulated train fare increases are going to be capped so that ticket prices will not rise by more than 1 per cent above the rate of retail-price inflation (RPI is the measure against which price changes are calculated), lower than the 3 per cent plus inflation limit that is in place currently and lower than the formula set out in the chancellor’s spending review in 2010. At the Conservative Party Conference, it is expected that the prime minister will clarify that he is not going to be dropping his austerity policies. 

It would seem that every Liberal Democrat proposal has been dismissed or rejected by their coalition partners. The Liberal Democrats don’t seem to be standing up for themselves or their policies. 86.96 per cent of people in the Backbench poll believe that the Liberal Democrats have not stuck to their principles enough whilst in the coalition, and it’s a feeling that resonates throughout the political world. Nevertheless, at their recent party conference, Nick Clegg vowed that he would only agree to further welfare budget cuts if a tax on the wealthy was imposed by the chancellor. It looks to be a tough few months for the coalition if they’re going to find it difficult to agree on where the money should be found.

What is most important is that the super rich pay their fair share and that the government does not allow them to get away without paying tax or paying less than everyone else. The Liberal Democrats need to focus on ensuring that their policies are not lost or forgotten in the coalition partnership. Will the government miss its key target for public sector debt to be falling by 2015? David Cameron implies that it is too early to say.

What is clear is that the economy is not going to heal any time soon. Our Backbench poll suggests that the majority of people, 82.86 per cent, do not have faith in George Osborne as Chancellor. If the economy doesn’t improve soon, Mr Osborne could be on the way out. 

Backbench Chancellor

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