Mr McDonnell added: “My colleague Seema Malhotra is currently looking at the current system of so-called “tax expenditures” – the different get-outs and reliefs provided by the tax system.
“A thicket of different schemes has grown up, costing the taxpayer £110bn a year. Some of this will be justified. But some of it will not be. We’ll look at whether we need to simplify the system so it is fairer to everyone and encourages the growth a fair and prosperous economy.”
That’s not a £110 billion cost to the taxpayer of course. Rather, it’s a £110 billion not a cost to the taxpayer.
There’s a lot of breaks been given to “protect” or “encourage growth in” certain favoured industries. I imagine there’s a lot that the ASI types would love to see ripped up – obviously whether you’d come to the same conclusion as Seema Malhotra on what should go is unlikely (though Malhotra is a non-idiot) but it has to be good they’re not regarded as sacrosanct.
And when it comes to selling such changes to the electorate, what’s the best line? Yes, economists want to see the back of distortions, and yes “crony capitalism” is a Bad Thing, but the most successful (voter-friendly) line of argument is surely that as taxpayers the electorate would be in line for lower income tax if companies paid more (their “fair share” if you’re being moralistic about it). That’s all that McDonnell is doing here.
Timmy’s gotcha is technically correct, of course, but whoever won a policy argument on such an emotive issue by being technically correct all the time?
but the most successful (voter-friendly) line of argument is surely that as taxpayers the electorate would be in line for lower income tax if companies paid more (their “fair share” if you’re being moralistic about it).
No, it won’t be sold as lower tax, but more skoolznospitals.
“but the most successful (voter-friendly) line of argument is surely that as taxpayers the electorate would be in line for lower income tax if companies paid more (their “fair share” if you’re being moralistic about it).”
Perhaps, so long as you only imply and don’t actually say it. I think if you said it explicitly – we promise we’ll charge less tax than we can get away with because we don’t need any more than we’ve currently got, it’s not as if we’re currently borrowing loads of it to cover the gap – I think natural cynicism would kick in. The more often we can force them to state their reasoning explicitly, the more chance there is of the marks spotting the trick.
But it’s true. People only think as far as “rich corporations paying more” and don’t think to wonder who the rich corporations will pass the costs on to. Their high-street customers? Or their lowest paid employees?
It’s all about the seen and the unseen.
MBE
“…Malholtra is a non-idiot”.
I would have thought that anyone who was Harriet Harman’s special advisor and Millipede’s “Shadow Minister for Preventing Violence Against Women and Girls” would score fairly high on the idiot index.
Tim N
I was thinking about it from the point of view of (say) how the ASI might want to sell it. For Labour, or the Lib Dems or quite probably the Tories for that matter, I imagine you’re correct.
NiV
Spot on.
Theophrastus
She’s one of the few Labour MPs with a credible business background (Warwick graduate, Accenture, PWC – okay, management consultancy, but still – compare and contrast to RIchard Burgon, who’s somehow become their shadow City minister).
MBE
I was once a PWC management consultant: all – without exception – the women read The Guardian and many tended to whine about ‘equality’ and ‘sexism’.
And she’s a Labour MP, so she must believe shedloads of utter monsense.
I thought tax breaks were set up to direct spending into various areas otherwise under-funded but not viable at standard tax rates.
The removal of the breaks will then largely have the effect of moving money back out of those areas — they’re not going to stay in marginally profitable ventures for normal tax. So no headline £110bn a year even if all were canned overnight.