included, saying how the Tories had nicked all their best ideas and claimed them as their own, or how things would have been much worse if the Lib Dems hadn’t been there to hold the nasty Tories in check. Whether this is true or not I have
no idea, but I don’t know about you, to me it sounded very childish and I have no intention of voting for a party that thinks that the politics of the playground are mature enough to govern the country.
However, we did eventually get a couple of policy announcements. The first was a comparatively unimportant promise, in terms of national priorities, to de-criminalise the possession of certain drugs, which I will return to later. The other was a promise to increase the taxes on the rich. This is a favourite siren song amongst the Left, which would be great if it
worked - but it doesn’t.
When people see large houses standing in private grounds with expensive cars parked in the drive they can have a range of possible reactions. Some will say “I want some of that, and I’ll work hard to get it.” Others will say ‘Good luck to them. I wonder how hard they had to work to get all that. I’m glad it wasn’t me.”
Others will say “Why should they have all that while I have nothing? I’ll take that from them.”
Yes folks, it’s the politics of envy and the politicians that support that view and vow to make it happen are pandering to
it. There’s votes in that there resentment.
I’m not against a fair level of tax on higher earners to ensure that everyone pays a fair share towards the running of the
country, but I’m against the punishment of people just for being wealthy for one simple reason: In the end it will make us all poorer. But I’m getting ahead of myself.
First we have to establish who the rich actually are. What is the threshold for being ‘rich’? For many people the rich are anyone with more money than them. Under that definition I am rich. But my income is below the national average wage; I just have a little bit more money than some other people. So we have to get a much tighter definition than that if we want to tax the rich.
So where are we talking about? £40,000 to £50,000? Well, that takes in a lot of teachers, junior doctors, police officers and, horror of horrors, even some nurses. Over £50,000 then? Well, we’re talking professional people like solicitors, higher grade civil servants and local government officers and a few others who would by no means regard themselves as
being rich and who many of us don’t regard as being rich when we consider the amount of responsibility they hold.
OK then, business people; People who own their own companies. Not really. Most owners of small to medium sized businesses earn a lot less than £100,000 a year, but employ quite a few people. And here is where we start to run into trouble. Because the owners of small to medium sized businesses work very hard to set them up and keep them running in good times and in bad, but they don’t have to do what they do. If you tax them too highly, preventing them from hanging on to their earnings, they won’t do what they do and all the jobs they support will disappear like the morning mist, thereby making more people poor.
Ah, well, we’re not talking about the people who create jobs, you will be told. We’re talking about the fat cats. The bankers, the stockbrokers, the er, well anyone else we don’t like at the moment. But that doesn’t work, because you are then taxing people because of the their profession, not because of their income. You are also taxing them out of spite,
which is never a good thing.
The rich shareholders. Those are the ones we’re after. The ones that own all the shares in the companies but who don’t do any work themselves. Yes?
No. Although the Left will tell you otherwise and paint you a picture of a top hatted toff lying on a beach with his trophy wife, drinking champagne and lighting cigars with £5 notes it isn’t actually like that. Most shares aren’t in private hands. They’re in the hands of banks and insurance companies. They underwrite all our savings, investments and our pensions. They provide the income to allow banks to lend money for the mortgages that are granted so we can buy houses, which maintains the construction industry - all those building jobs that have been so scarce over the last 7 years.
Income from those investments is already taxed and is one of the reasons why you don’t get nearly as much of a return on savings and investments as you think you will.
There are a small minority of shares held by individuals, but not nearly as many as the Left would have you believe. The dividend on those shares is taxed and the sale of them by the owners is subject to capital gains tax. If you increase the level of tax on share dividend then you discourage investment in shares. If companies can't sell shares then they can't expand and create new jobs. If you can't create new jobs you keep more people on benefits and we all pay for that through our taxes. OK, maybe you can twiddle with the margins, but that doesn't mean that you will get a huge increase in tax revenue.
So who are we left with? Who are the rich that we can tax without shooting ourselves in the foot? The super-rich.
Yes, OK, maybe. But these are also the people who pay other people to make sure that they don’t pay tax, or at least not very much tax.
Well, in that case close the tax loopholes.
Good luck with that one. First of all politcians never vote for a tax that will affect them or their familes, so getting the law through Parliement is the first hurdle to overcome. But the bigger barrier is that the rich get the best accountants and the best lawyers to find the loopholes and keep them open. Why? They can afford to pay better than the Inland Revenue. They can afford to pay for cleverer people than the civil servants who draft our tax laws. This means that they will always be one jump ahead. OK, sometimes they get caught out (don’t they, Gary Barlow?), but most times they don’t. Besides, in the end the rich can always take their money somewhere with a more generous tax regime, and that itself creates poverty.
On Monday, on the Channel 5 TV programme The Wright Stuff (it very rarely is) I heard Scottish media figure Hardeep Singh Kohli express the view that if the rich want to leave the country then he, personally, would be happy to hold the door open for them. Does this man (a) hate working people, is he (b) very stupid, or is he (c) just very ignorant? Or is the answer (d): all of the above.
These rich people spend money. They buy expensive cars, yachts and even aeroplanes. They eat in restaurants. They go to the theatre, opera and ballet (even if they don’t enjoy it). They stay in expensive hotels. They spend a fortune on their houses and gardens. They employ domestic staff, nannies, chauffeurs, gardeners, personal assistants, personal trainers,
personal masseurs et al. If they take their money abroad they take all those jobs with them. Great for the country they go to, but not so great for all those people in Britain who used to make a living out of their largesse.
How many jobs, ie people, are we talking about? A conservative estimate would be around 200,000. If you include all the manufacturing and service industry jobs its considerably higher. It’s what ‘trickle down’ actually means when we talk
about wealth. People who were doing OK, relatively speaking, suddenly become poor with all the attendant
consequences. And it s a double whammy. People who lose their jobs end up drawing benefits, which costs the taxpayer more, so we lose whatever tax the rich were paying and we pay out more in benefits. Not good economics, Hardeep, even if it got you a cheap round of applause on the telly.
You can never tax the rich without affecting the poor. But the poor will always feel the effects far harder than the rich.
Let’s establish what proportion of tax is paid by the better off. The BBC, and who am I to argue with them, says that the top 1% of earners pay 24% of all income tax and the top 10% pay 53%. If you look at the top 50% of income earners, that’s half the tax paying population, they pay 88% of all tax. So the better off are already paying the most. And this is where the problem really lies when it comes to trying to get the rich to pay more tax.
In the 1970s an American economist by the name of Arthur Laffer proposed that the higher the top levels of tax the less tax you actually collect. Many western countries, including Britain, heeded what Laffer had to say and reduced their top levels of taxation. They all, without exception, saw the amount of tax they collected increase, not decrease. Why? Because it becomes less economical to try to avoid paying tax. Tax accountants and lawyers are expensive, as are the management fees for tax avoidance schemes and there comes a point where it’s actually less costly to pay the tax than to try to avoid it.
Unfortunately, in 2014, people have forgotten history and a French economist by the name of Thomas Piketty is winning plaudits from the Left, especially those with short memories or who have never heard of Laffer, by proposing the exact opposite. This is the Thomas Picketty who is advising the French government of Francois Hollande and as a result of whose taxation policies wealthy French are leaving the country in droves, taking their money (and jobs) with them. Fortunately many of them are coming to Britain, Hardeep.
If more people avoid paying tax then the amount of tax collected falls and all the things that those taxes pay for start to suffer. The sacred cows of the NHS and the Welfare State will be hit as will schools, roads, bin collections, street lighting, the police, the fire service. I could go on but you get the idea. In order to redress the impact on those services and
restore them to an adequate level you then have to increase taxation on those people who can’t afford to indulge in tax
avoidance. That’s the bottom 50% of the income earners. That’s you and me. So trying to increase taxes on the rich makes the poor poorer. QED.
Labour, when they came to power in 1997, understood Laffer’s economic theories. Ed Balls had even lectured in Economics at an American university that had helped to bring Laffer’s ideas to prominence. That’s why Labour kept
the top rate of income tax at 40p for their entire term of office. They raised the top rate to 50p for the very last weeks of their tenure and they did it for one reason and one reason alone. So they could accuse the Tories of giving a tax cut to their ‘rich’ friends and supporters when they eventually reduced the top rate to 45p - still 5p higher than under Labour. Of course Laffer’s theories proved reliable once again and the amount of tax collected went up after the reduction, but you won’t hear that from Nick Clegg.
Like it or not, the Tories have taxed the better off at a higher rate for 4 years and 5 months longer than Labour did for their entire term of office. Argue that one Ed (Balls or Miliband, I don’t care which). It was Labour tax policy that benefited the rich, not Tory.
But of course we’re talking about Nick Clegg and the Lib Dems, so they should argue that one. Why all of a sudden is taxing the rich such a good idea? Could it be a desperate bid to win votes off Labour by tapping in to the resentment of the poor? It must be, because it certainly isn’t good for the country as a whole and it would be disasterous for low income earners.
Time to move on. So what of the Lib Dem proposal to de-criminalise certain drugs?
I’ve never been into drugs. I’ve never seen the attraction of consigning my brain to oblivion for recreational purposes and I remind myself of that every time I wake up with a hangover. But it seems that the Lib Dems are in favour of doing just that. BY the way, don't be fooled by the use of th term de-criminalisation. That is just a euphamism. What is really meant is legalisation.
Is this really a good idea? Well, we know that MPs and other people in the public eye don’t want to run the risk of their children facing criminal charges for possession of a few grams of hash. It’s bad for the image, as Nigella found out when she was ‘outed’ as a drug user, albeit for cocaine. But is this the only reason for proposing de-criminalisation (or legalisation)?
I’m against making something a criminal act if it serves no real purpose and this, I think, is where the Lib Dems are coming from. But I think we have to learn from history here. Less than a 100 years ago the use of both heroin and cocaine wasn’t a criminal act. While it wasn’t considered an act that one would do in polite company it is recognised that many people were drug users and they were indulging their habit legally. Authors have hinted at it (Sherlock Holmes?) and it has featured in the drama and literature of the Victorian and Edwardian eras.
But then the law was changed. Why?
Emergency drug control laws had been introduced during WW1 but the changes weren’t made permanent until the Dangerous Drugs Act was passed in 1920. This was triggered by a series of deaths caused by cocaine use including the death of a young actress from a cocaine overdose in 1918. Other drugs were added to the proscribed list over the years . Drugs were banned over concerns for public safety. There must have been a feeling among politicians that drug use was putting people’s lives in danger. So why don’t the Lib Dems and others in the de-criminalisation lobby have the same concerns today?
I’ll ask you a simple question. If you were about to board a bus would you feel comfortable doing so if you knew that the bus driver was an habitual drug user?
I’ll answer that one on my own behalf with a resounding NO. Now let’s extrapolate that argument to other fields of employment. Airline pilots? Surgeons? Pharmacists? Nurses? Do you want your house built by someone who is a drug user? Your gas boiler serviced? Your cooker repaired? The brakes on your car repaired?
I’ll ask the question a different way. Do you want to be operated on by a surgeon who has just walked out of a pub after drinking six pints of Old Rot Gut? No, neither do I. Do you want to work beside someone who is operating heavy machinery while under the influence of alcohol? No, neither would I. So why would we be prepared to risk the same behaviour from people who use drugs? The laws to protect us currently exist, so why would we wish to remove that protection?
Possession of drugs indicates use. Use leads to impaired ability, just as it does with alcohol. And before you say, “well we have laws to stop drinking and driving, so we would have laws to prevent drug use at work” may I remind you that over 55,000 people a year are convicted of drink- driving. Remember, please, that this isn’t the number of people who committed the offence. This is the number of people that are caught committing the offence. We’ll call it the tip of the iceberg. How many people actually drink and drive? How many people go to work under the influence of alcohol? Who knows. We only know about the ones who are caught and punished for it. How many people go to work under the influence of drugs? Again, we just don’t know, but at least we have laws to discourage them. Remove those laws and you remove that discouragement.
Now, are you still in favour of de-criminalising the possession of drugs?
But this is just the thin end of the wedge. If you de-criminalise possession the argument that would follow is that you should also de-criminalise the supply of the same drugs. Have legal, licensed suppliers as they do in The Netherlands. This will do away with the drugs gangs and make the world a safer place. Balderdash. The Dutch don’t like what the legalised drugs trade has done to parts of their country and that should at least be a warning to us, but there’s more to it than that.
Drug dealers are in business because there is lots of (relatively) easy money to be made from dealing in drugs. If you make the sale of drugs legal the drugs dealers won’t go away, they will just look for another way to make easy money.
If they can’t sell ’soft’ drugs maybe they’ll sell people instead. We know that the two things already go hand in hand, so without the profit from the drugs trade they simply increase their activities on the sale of people, whether this is through prostitution, people smuggling, slavery or any of the other evils.
Maybe the drug dealer will switch from supplying the relatively low risk Class C drugs to supplying the more harmful Class A and B drugs. But first they would have to stimulate demand. So how many more addicts of heroin, cocaine and their derivatives are you prepared to accept in exchange for not being prosecuted for possession of marijuana?
Maybe they won’t sell heroin or cocaine. Maybe the small fry who currently make up the lower levels of the drug gangs will just turn to other forms of crime. Most street crime is actually on the decrease, but that doesn’t mean that the small time criminal who currently makes money by selling marijuana won’t turn to mugging or handbag snatching to fill the gap in their income stream. Burglary is also down as drug selling is more profitable and less risky. But what if the former drug dealer needs a new income stream? Maybe it’s time to check the security of your window catches.
Do you still want to de-criminalise drugs?
I do agree that we need more investment in drugs rehabilitation projects. Getting people off drugs restores their lives. But de-criminalising drugs won’t help in rehabilitation. Remove the risk of prosecution and you will have more people trying drugs which will create more people who are dependent on drugs, because the use of Class C drugs is a
precursor, for some people at least, to the use of Class A and B drugs. We all know that teenagers under 18 illegally buy alcohol, but when they get to 18 and can do it legally they don't stop buying it; they buy even more of it. The 'first legal drink' is a rite of passage and the 'first legal spliff' will be as well. De-criminalisation would create more addicts, not fewer.
Heroin and cocaine addiction isn’t lower in The Netherlands as a result of their relaxed drugs laws on the use of marijuana, its higher. Also don’t be taken in by the argument that marijuana is a ‘safe’ and non-addictive drug. A recent study by Professor Wayne Hall indicates strong links to addiction and serious health problems, both mental and physical. Of course those who are pro-cannabis use will dismiss this report, but if you read the article you will note the lack of any academic backing for their position, they just dismiss Professor Hall. As Mandy Rice Davis once said, “Well, they would say that, wouldn’t they.”
I suspect that this is an argument which already lost. Too many of our politicians and other influential people have experimented in drugs use, so the knowledge that their children are likely to do the same will drive the decision,
to the detriment of us all. But if you agree with me then please make sure your MP knows your feelings. There are votes to be won and lost on this issue.
Next week, maybe something a little more light hearted.
While you are here, on my website, why don't you take a look at some of the other pages?