I haven’t been following the changing of the guard at the City’s ambassadorial residence too closely beyond thinking that it’s convenient that the surnames of the two leaders begin with C. It helps with an alliterative turn of phrase that comes to mind. However, I laughed when I read that David C is announcing ‘reforms’ which amount to a “historic and seismic shift” in British politics. It’s not inaccurate I suppose, as tectonic plates probably do shift back to the position they were once geographically situated in.
Today then, which the Guardian journalist described as “yet another breathless day at Westminster” (has mass erotic-asphyxiation broken out among the Tories already?) what were the reforms announced?
There might also be difficulties ahead over electoral reform, with the Tories insisting that the number of MPs is reduced and the size of constituencies equalised – a move that could give the party an advantage at election time.
So far so Fine Gael. Kenny’s lot have made a big thing of the need to reduce TDs and sort out constituencies. This isn’t reform of the electoral system, which was supposed to be about PR (I thought), but about the consolidation of electoral power. Every party in power makes changes which makes it easier for them to get reelected in larger numbers the next time. Or so someone told me the other day.
On the central economic issues, the Conservatives have secured their red-line commitment to cut £6bn from public spending this year, as well as a greater emphasis on deficit reduction through spending cuts, as opposed to tax rises.
Har, bloody har.
Liberal Democrats have also watered down their plans for a giant redistributive tax switch, turning it more into a tax cut for middle-income earners. Previously the expensive reform was to be funded by a redistributive mansion tax and a tax on pensions allowances for higher earners, but these have been dropped.
So with a Conservative led government which was supposed to have ditched its policies in favour of those of the Liberal Democrats in order to secure a deal we see that they are doing exactly what the Tories planned to do anyway (unless there is no difference between the two parties). Also, they are doing precisely what the Irish government did here. No surprise there, perhaps. But I wonder, when the Tories are trying to implement these changes whether they will have such an easy time arguing that they have a “progressive tax system”. Here it’s a push over, even though, as Michael Taft has shown so clearly, there is very little difference between the tax paid by the highest income group and the national average. And that doesn’t include various tax exemptions, and the fact that VAT, the highly regressive indirect tax that Ireland bases so much of its taxation on, hits the poorest 10 percent the hardest.
The top decile paid less than 10 percent of their income on indirect taxes while the poorest 10 percent paid nearly 21 percent.
However, when indirect taxation is included
…the tax liability of the highest income group – 37 percent – is not much more than the national average – 34 percent. Given that the lowest income decile pay 26 percent, the level of progressivity is highly limited.
Or to put it another way, progressive in name only.
*Picture courtesy of the artist known locally as the daughter