The Daily Express' front page story today reveals that the Prime Minister's Special Adviser wants the ceiling on National Insurance contributions to be abolished, heralding a 51p in the pound tax rate for those earning over GBP32,000 a year. In his book The New Egalitarianism, Patrick Diamond recommends abolishing NI for the low paid and floats the idea of soaking the better off. He asks: "Is it not time to remove the ceiling altogether?"
The newspaper quotes the TPA's description of the proposals as "a massive attack on the hardworking middle classes." TPA Chief Executive Matthew Elliott said: "Labour implied heavily during the election that it would not increase National Insurance again. But now we appear to be glimpsing their real plans."
Peter Webb, Chairman of the Surrey Tax Action Group - an Alliance Member of the TPA - has written to the Daily Telegraph today responding to their leader which argues that "locally run services should as far as possible be locally financed." This is what Peter thinks:
SIR - Today in your leading article you say that locally run services should as far as possible be locally financed. They already are. But with centrally driven prescription we don't know who runs what local services, and 'local' and other taxes are recycled between areas by grant and between people in benefits before being put to work. Tax is not a price for local services and does not measure anything for accountability. 'Local' tax is as much a lie as is 'national insurance fund' (there isn't one).
To separate tax raising from tax distribution would allow great reform for simplicity, transparency and national well-being. The Lib Dem Party is to be congratulated for its vision, and action to investigate flat tax.
Any devolved operation should be able to tap into centrally banked tax. After all Local Authorities are now required by law to conduct the full panoply of corporate planning and associated disciplines. This unavoidably renders the budgets as better than centrally imposed grants as the measure of revenue required.
I have been able personally to give Sir Michael Lyons, leading the Lyons inquiry set up to prescribe for an improved council tax, a simple non-bureaucratic scheme for accessing revenue which does not conflict with national strategy and fiscal responsibility. And it is possible on one sheet of paper, or personal tax statement, to show the national accounts and the link to local spending, an objective which some experts have turned somersaults to try and achieve at great cost and complexity with local income tax design.
All taxpayers should beware the carpet baggers of the bureaucracies that surround us. They can always justify what they do as necessary and important by declaiming broadbrush visions and worthy goals. How can "promoting regional economic growth" or "developing the arts" or "helping inclusiveness among the disadvantaged" ever be wrong?
Look inside these worthy aims and you find what actually goes on while they spend our money. King among the buzz phrases now are "partnerships". Worthy types in suits meet others to develop these arrangements. Endless meetings on plans and structure and programmes of consultation abound.
What this means in reality is one tax-funded salary meeting with other tax-funded salary in tax-funded rooms in tax-funded organisations. Arts Council staff regularly meet with County Councils to discuss art in the community in schools, public buildings and open spaces in its "creative partnerships". OK, so now we've got an art bureaucrat, a county planner or two, an educationalist, a community architect and a town manager - no doubt with a publically funded tame artist or two in attendance - all in one room that we pay for - talking about a programme we didn't ask for and never hear about.
"Economic partnerships" are another boondoggle. At the top level you get the big companies in a local area meeting with the local economic development team. They talk about something called "strategy". That means second guessing the labour force, housing market, transport needs, and business content of the local community. They are then usually split up into "partnership working groups" on transport, workforce, occupational health and so on. You then get meetings between economic planners, transport bureaucrats, and skills advisers with an occupational health observer working out whether forcing everyone out of their cars and onto the buses (central government policy) will damage regional business competitiveness (regional government policy) or promote healthier lifestyles (health service policy) or make skilled workers move elsewhere (nobody's policy).
The truth is that our world is far too complex to plan. We are doing ourselves a dis-service when we provide tax revenues to bureaucracies that then adopt the conceit of partnering. Clamping down on tax and hence government spending has its own added value; it prevents wasteful intra-governmental chit chat.
In response to two articles in today's Daily Telegraph, the TPA wrote the following Letter to the Editor:
SIR - Proof that governments across the world are all the same when it comes to cost-cutting. On page six of today's newspaper (May 19) you quote David James saying that Sir Peter Gershon had "his hands tied" when carrying out his review of government waste and on page nineteen you report that the Czech government has shut down a department assigned to "trimming the fat" in the bureaucracy. As Sir Humphrey said: "The public doesn't know anything about wasting government money. We are the experts."
Forbes have just published their excellent Tax Misery Index. This year, as in 2004, the French government inflicts the greatest tax misery on its citizens. The next worst place is the Beijing area of China, followed by Belgium, Sweden and Italy. Britain is half way down the index but, following last year's personal allowance freeze, has risen one place - indicating tax misery has increased - to 25.
John Sunderland, president of the CBI and executive chairman of Cadbury Schweppes, last night criticised the government for spending taxpayers' money on non-jobs such as "gender and diversity observers" rather than more doctors, nurses and police. Mr Sunderland's intervention in the government waste debate is extremely welcome because it will keep the pressure on all political parties to root-out wasteful spending.
The speech also highlights once again the need for political parties to be specific in the cuts they propose to the public sector. The Government is hiding behind the vagueness of the Gershon Review and the Conservative Party is hampered by their refusal to outline in detail which public sector workers would lose their jobs where the James Review to be implemented.
This has important electoral ramifications for the Conservative Party, an issue which was highlighted this week by David Smith in the Sunday Times. In regions outside London and the South East - areas where the Conservatives have to win seats to form a Government - public sector spending now accounts for more than half of regional GDP and well over fifty percent of households rely on the public sector for their main source of income.
Talk of "axing non-jobs" understandably makes everyone in the public sector afraid that they will lose their job. The Conservative Party's commitment to maintaining front-line services will only resonate if they are more specific about precisely which jobs will go under a new administration. Until the full details of the James Review are published, this confusion and electoral handicap will remain.
Many newspapers today have reported that Labour ministers who lost their seats at the election will be receiving GBP200,000 'golden goodbyes' from the Government.
Speaking to the Daily Star and the Daily Express, TPA Chief Executive Matthew Elliott said: "The big pay-offs to former Ministers are a disgraceful waste of taxpayers' money. When the voters said 'You're fired!' they certainly did not expect Ministers to have a golden goodbye and a gold-plated pension."
An article in The People today reported that the RAF has spent over GBP2,200 for former aircrafswoman Stephanie Hulme to retrain as a stripper.
Matthew Elliott, of watchdog TaxPayers' Alliance, said of Stephanie's case: "This is a disgraceful use of taxpayers' money. The MoD and the RAF should be spending their money on far more important things."
There's a very good article in today's Daily Telegraph about the Tax Pledge 2005 campaign by Malcolm Moore.
The Conservatives have banned their candidates from promising not to raise taxes after the election, even though the party is campaigning for GBP4billion of tax cuts.
The Taxpayers' Alliance, a low-tax lobby group, e-mailed all prospective MPs asking them to sign a pledge that they would not vote for higher taxes. So far, the pledge has attracted only one Conservative signatory.
"On the day it launched, Conservative Central Office sent out an e-mail to all candidates telling them not to sign the pledge," says Matthew Elliott, the Alliance's chief executive.
"I have had phone calls from 20 to 25 Conservative MPs and candidates saying they morally support the campaign, but they cannot back it publicly because Conservative Central Office told them they cannot," he adds.